(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Exhibit Number | Description | ||||
Press release dated August 2, 2023 | |||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
ENCORE CAPITAL GROUP, INC. | ||||||||
Date: | August 2, 2023 | /s/ Jonathan C. Clark | ||||||
Jonathan C. Clark | ||||||||
Executive Vice President, Chief Financial Officer and Treasurer |
Exhibit Number | Description | ||||
Press release dated August 2, 2023 | |||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Three Months Ended June 30, | |||||||||||||||||
(in thousands, except percentages and earnings per share) | 2023 | 2022 | Change | ||||||||||||||
Portfolio purchases(1) | $ | 274,325 | $ | 173,007 | 59% | ||||||||||||
Estimated Remaining Collections (ERC) | $ | 7,979,353 | $ | 7,559,820 | 6% | ||||||||||||
Collections | $ | 476,522 | $ | 497,711 | (4)% | ||||||||||||
Revenues | $ | 323,044 | $ | 356,917 | (9)% | ||||||||||||
Operating expenses | $ | 234,972 | $ | 237,969 | (1)% | ||||||||||||
GAAP net income | $ | 26,305 | $ | 60,439 | (56)% | ||||||||||||
GAAP earnings per share | $ | 1.08 | $ | 2.29 | (53)% |
June 30, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 184,871 | $ | 143,912 | |||||||
Investment in receivable portfolios, net | 3,330,986 | 3,088,261 | |||||||||
Property and equipment, net | 107,218 | 113,900 | |||||||||
Other assets | 401,299 | 341,073 | |||||||||
Goodwill | 852,196 | 821,214 | |||||||||
Total assets | $ | 4,876,570 | $ | 4,508,360 | |||||||
Liabilities and Equity | |||||||||||
Liabilities: | |||||||||||
Accounts payable and accrued liabilities | $ | 203,050 | $ | 198,217 | |||||||
Borrowings | 3,203,425 | 2,898,821 | |||||||||
Other liabilities | 236,260 | 231,695 | |||||||||
Total liabilities | 3,642,735 | 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, 23,485 and 23,323 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 235 | 233 | |||||||||
Additional paid-in capital | 3,906 | — | |||||||||
Accumulated earnings | 1,300,594 | 1,278,210 | |||||||||
Accumulated other comprehensive loss | (70,900) | (98,816) | |||||||||
Total stockholders’ equity | 1,233,835 | 1,179,627 | |||||||||
Total liabilities and stockholders’ equity | $ | 4,876,570 | $ | 4,508,360 |
June 30, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 2,537 | $ | 1,344 | |||||||
Investment in receivable portfolios, net | 470,666 | 431,350 | |||||||||
Other assets | 3,151 | 3,627 | |||||||||
Liabilities | |||||||||||
Accounts payable and accrued liabilities | 99 | 150 | |||||||||
Borrowings | 448,424 | 423,522 | |||||||||
Other liabilities | 129 | 105 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Revenue from receivable portfolios | $ | 301,184 | $ | 306,282 | $ | 596,858 | $ | 610,387 | |||||||||||||||
Changes in recoveries | (3,486) | 25,150 | (12,987) | 192,373 | |||||||||||||||||||
Total debt purchasing revenue | 297,698 | 331,432 | 583,871 | 802,760 | |||||||||||||||||||
Servicing revenue | 21,008 | 23,788 | 43,593 | 49,934 | |||||||||||||||||||
Other revenues | 4,338 | 1,697 | 8,210 | 3,905 | |||||||||||||||||||
Total revenues | 323,044 | 356,917 | 635,674 | 856,599 | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Salaries and employee benefits | 95,855 | 98,880 | 199,705 | 195,836 | |||||||||||||||||||
Cost of legal collections | 57,150 | 55,148 | 111,251 | 110,865 | |||||||||||||||||||
General and administrative expenses | 34,529 | 34,967 | 72,494 | 68,501 | |||||||||||||||||||
Other operating expenses | 26,349 | 27,405 | 53,905 | 54,432 | |||||||||||||||||||
Collection agency commissions | 10,387 | 9,923 | 18,537 | 19,528 | |||||||||||||||||||
Depreciation and amortization | 10,702 | 11,646 | 21,572 | 23,475 | |||||||||||||||||||
Total operating expenses | 234,972 | 237,969 | 477,464 | 472,637 | |||||||||||||||||||
Income from operations | 88,072 | 118,948 | 158,210 | 383,962 | |||||||||||||||||||
Other expense | |||||||||||||||||||||||
Interest expense | (49,983) | (37,054) | (96,818) | (71,687) | |||||||||||||||||||
Other (expense) income, net | (1,755) | 1,795 | (23) | 2,187 | |||||||||||||||||||
Total other expense | (51,738) | (35,259) | (96,841) | (69,500) | |||||||||||||||||||
Income before income taxes | 36,334 | 83,689 | 61,369 | 314,462 | |||||||||||||||||||
Provision for income taxes | (10,029) | (23,250) | (16,438) | (78,274) | |||||||||||||||||||
Net income | $ | 26,305 | $ | 60,439 | $ | 44,931 | $ | 236,188 | |||||||||||||||
Earnings per share: | |||||||||||||||||||||||
Basic | $ | 1.11 | $ | 2.48 | $ | 1.90 | $ | 9.63 | |||||||||||||||
Diluted | $ | 1.08 | $ | 2.29 | $ | 1.83 | $ | 8.77 | |||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||
Basic | 23,670 | 24,359 | 23,610 | 24,539 | |||||||||||||||||||
Diluted | 24,280 | 26,411 | 24,611 | 26,945 |
Six Months Ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
Operating activities: | |||||||||||
Net income | $ | 44,931 | $ | 236,188 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 21,572 | 23,475 | |||||||||
Other non-cash interest expense, net | 8,660 | 8,149 | |||||||||
Stock-based compensation expense | 7,925 | 9,040 | |||||||||
Deferred income taxes | 2,785 | 3,699 | |||||||||
Changes in recoveries | 12,987 | (192,373) | |||||||||
Other, net | 985 | 9,267 | |||||||||
Changes in operating assets and liabilities | |||||||||||
Other assets | (35,730) | 39,037 | |||||||||
Accounts payable, accrued liabilities and other liabilities | (1,492) | (37,952) | |||||||||
Net cash provided by operating activities | 62,623 | 98,530 | |||||||||
Investing activities: | |||||||||||
Purchases of receivable portfolios, net of put-backs | (544,721) | (337,932) | |||||||||
Collections applied to investment in receivable portfolios | 342,020 | 406,738 | |||||||||
Purchases of asset held for sale | (24,645) | (35,178) | |||||||||
Purchases of property and equipment | (9,503) | (11,937) | |||||||||
Other, net | 22,603 | 13,416 | |||||||||
Net cash (used in) provided by investing activities | (214,246) | 35,107 | |||||||||
Financing activities: | |||||||||||
Payment of loan and debt refinancing costs | (8,151) | (1,659) | |||||||||
Proceeds from credit facilities | 444,805 | 446,853 | |||||||||
Repayment of credit facilities | (259,843) | (298,743) | |||||||||
Repayment of senior secured notes | (19,540) | (19,540) | |||||||||
Proceeds from issuance of convertible senior notes | 230,000 | — | |||||||||
Repayment of convertible and exchangeable senior notes | (192,457) | (221,153) | |||||||||
Proceeds from convertible hedge instruments, net | 10,050 | — | |||||||||
Repurchase and retirement of common stock | — | (50,835) | |||||||||
Other, net | (14,238) | (10,523) | |||||||||
Net cash provided by (used in) financing activities | 190,626 | (155,600) | |||||||||
Net increase (decrease) in cash and cash equivalents | 39,003 | (21,963) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 1,956 | (13,387) | |||||||||
Cash and cash equivalents, beginning of period | 143,912 | 189,645 | |||||||||
Cash and cash equivalents, end of period | $ | 184,871 | $ | 154,295 | |||||||
Supplemental disclosure of cash information: | |||||||||||
Cash paid for interest | $ | 79,167 | $ | 64,366 | |||||||
Cash paid for taxes, net of refunds | $ | 36,822 | $ | 44,671 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
(in thousands, unaudited) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
GAAP net income, as reported | $ | 26,305 | $ | 60,439 | $ | 44,931 | $ | 236,188 | |||||||||||||||
Adjustments: | |||||||||||||||||||||||
Interest expense | 49,983 | 37,054 | 96,818 | 71,687 | |||||||||||||||||||
Interest income | (1,123) | (588) | (2,067) | (1,025) | |||||||||||||||||||
Provision for income taxes | 10,029 | 23,250 | 16,438 | 78,274 | |||||||||||||||||||
Depreciation and amortization | 10,702 | 11,646 | 21,572 | 23,475 | |||||||||||||||||||
Stock-based compensation expense | 3,873 | 5,119 | 7,925 | 9,040 | |||||||||||||||||||
Acquisition, integration and restructuring related expenses(1) | 454 | 487 | 5,980 | 1,166 | |||||||||||||||||||
Adjusted EBITDA | $ | 100,223 | $ | 137,407 | $ | 191,597 | $ | 418,805 | |||||||||||||||
Collections applied to principal balance(2) | $ | 190,658 | $ | 170,112 | $ | 373,639 | $ | 223,679 |
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