10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________________________________________________________________

FORM 10-Q

(Mark One)

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024 or

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to__________.

COMMISSION FILE NUMBER: 000-26489

ENCORE CAPITAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	48-1090909
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

350 Camino De La Reina, Suite 100

San Diego, California 92108

(Address of principal executive offices, including zip code)

(877) 445 - 4581

(Registrant’s telephone number, including area code)

(Not Applicable)

(Former name, former address and former fiscal year, if changed since last report)

_______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value Per Share	ECPG	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at May 1, 2024
Common Stock, $0.01 par value	23,686,865 shares

ENCORE CAPITAL GROUP, INC.

INDEX TO FORM 10-Q

 

	Page
PART I – FINANCIAL INFORMATION	3
Item 1— Condensed Consolidated Financial Statements (Unaudited)	3
Condensed Consolidated Statements of Financial Condition	3
Condensed Consolidated Statements of Income	4
Condensed Consolidated Statements of Comprehensive Income	5
Condensed Consolidated Statements of Equity	6
Condensed Consolidated Statements of Cash Flows	7
Notes to Condensed Consolidated Financial Statements	8
Note 1: Ownership, Description of Business, and Summary of Significant Accounting Policies	8
Note 2: Earnings Per Share	9
Note 3: Fair Value Measurements	9
Note 4: Derivatives and Hedging Instruments	11
Note 5: Investment in Receivable Portfolios, Net	13
Note 6: Other Assets	16
Note 7: Borrowings	16
Note 8: Variable Interest Entities	19
Note 9: Accumulated Other Comprehensive Loss	20
Note 10: Income Taxes	20
Note 11: Commitments and Contingencies	20
Note 12: Segment and Geographic Information	21
Note 13: Goodwill and Identifiable Intangible Assets	22
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3 – Quantitative and Qualitative Disclosures About Market Risk	43
Item 4 – Controls and Procedures	43
PART II – OTHER INFORMATION	44
Item 1 – Legal Proceedings	44
Item 1A – Risk Factors	44
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 5 – Other Information	44
Item 6 – Exhibits	45
SIGNATURES	46

PART I – FINANCIAL INFORMATION

Item 1—Condensed Consolidated Financial Statements (Unaudited)

ENCORE CAPITAL GROUP, INC.

Condensed Consolidated Statements of Financial Condition

(In Thousands, Except Par Value Amounts)

(Unaudited)

	March 31, 2024		December 31, 2023
Assets
Cash and cash equivalents	$	172,990	$	158,364
Investment in receivable portfolios, net	3,531,387		3,468,432
Property and equipment, net	102,776		103,959
Other assets	277,622		293,256
Goodwill	602,400		606,475
Total assets	$	4,687,175	$	4,630,486
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities	$	180,206	$	189,928
Borrowings	3,364,029		3,318,031
Other liabilities	189,081		185,989
Total liabilities	3,733,316		3,693,948
Commitments and contingencies (Note 11)
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, 23,687 and 23,545 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively	237		235
Additional paid-in capital	8,648		11,052
Accumulated earnings	1,072,410		1,049,171
Accumulated other comprehensive loss	(127,436)		(123,920)
Total stockholders’ equity	953,859		936,538
Total liabilities and stockholders’ equity	$	4,687,175	$	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. 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. See “Note 8: Variable Interest Entities” for additional information on the Company’s VIEs.

	March 31, 2024		December 31, 2023
Assets
Cash and cash equivalents	$	26,879	$	24,472
Investment in receivable portfolios, net	736,226		717,556
Other assets	11,280		19,358
Liabilities
Accounts payable and accrued liabilities	1,005		1,854
Borrowings	492,027		494,925
Other liabilities	253		2,452

See accompanying notes

3

ENCORE CAPITAL GROUP, INC.

Condensed Consolidated Statements of Income

(In Thousands, Except Per Share Amounts)

(Unaudited)

	Three Months Ended March 31,
	2024		2023
Revenues
Revenue from receivable portfolios	$	315,852	$	295,674
Changes in recoveries	(12,409)		(9,501)
Total debt purchasing revenue	303,443		286,173
Servicing revenue	20,379		22,585
Other revenues	4,564		3,872
Total revenues	328,386		312,630
Operating expenses
Salaries and employee benefits	104,184		103,850
Cost of legal collections	58,721		54,101
General and administrative expenses	36,241		37,965
Other operating expenses	30,367		27,556
Collection agency commissions	7,434		8,150
Depreciation and amortization	7,848		10,870
Total operating expenses	244,795		242,492
Income from operations	83,591		70,138
Other expense
Interest expense	(55,765)		(46,835)
Other income, net	2,666		1,732
Total other expense	(53,099)		(45,103)
Income before income taxes	30,492		25,035
Provision for income taxes	(7,253)		(6,409)
Net income	$	23,239	$	18,626
Earnings per share:
Basic	$	0.98	$	0.79
Diluted	$	0.95	$	0.75
Weighted average shares outstanding:
Basic	23,784		23,548
Diluted	24,468		24,942

See accompanying notes

4

ENCORE CAPITAL GROUP, INC.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited, In Thousands)

	Three Months Ended March 31,
	2024		2023
Net income	$	23,239	$	18,626
Other comprehensive (loss) income, net of tax:
Change in unrealized gain (loss) on derivative instruments:
Unrealized gain (loss) on derivative instruments	5,475		(8,053)
Income tax effect	(2,685)		876
Unrealized gain (loss) on derivative instruments, net of tax	2,790		(7,177)
Change in foreign currency translation:
Unrealized (loss) gain on foreign currency translation	(6,146)		16,008
Income tax effect	(160)		(383)
Unrealized (loss) gain on foreign currency translation, net of tax	(6,306)		15,625
Other comprehensive (loss) income, net of tax:	(3,516)		8,448
Total comprehensive income	$	19,723	$	27,074

See accompanying notes

5

ENCORE CAPITAL GROUP, INC.

Condensed Consolidated Statements of Equity

(Unaudited, In Thousands)

	Three Months Ended March 31, 2024
	Common Stock			Additional Paid-In Capital		Accumulated Earnings		Accumulated Other Comprehensive Loss		Total Equity
	Shares	Par
Balance as of December 31, 2023	23,545	$	235	$	11,052	$	1,049,171	$	(123,920)	$	936,538
Net income	—	—		—		23,239		—		23,239
Other comprehensive loss, net of tax	—	—		—		—		(3,516)		(3,516)
Issuance of share-based awards, net of shares withheld for employee taxes	142	2		(5,761)		—		—		(5,759)
Stock-based compensation	—	—		3,357		—		—		3,357
Balance as of March 31, 2024	23,687	$	237	$	8,648	$	1,072,410	$	(127,436)	$	953,859

	Three Months Ended March 31, 2023
	Common Stock			Additional Paid-In Capital		Accumulated Earnings		Accumulated Other Comprehensive Loss		Total Equity
	Shares	Par
Balance as of December 31, 2022	23,323	$	233	$	—	$	1,278,210	$	(98,816)	$	1,179,627
Net income	—	—		—		18,626		—		18,626
Other comprehensive income, net of tax	—	—		—		—		8,448		8,448
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes	159	2		(6,355)		—		—		(6,353)
Stock-based compensation	—	—		4,052		—		—		4,052
Purchase of capped call options, net of tax effect	—	—		(13,865)		—		—		(13,865)
Unwind of the existing capped call options	—	—		28,542		—		—		28,542
Settlement of convertible notes	—	—		(12,374)		(22,547)		—		(34,921)
Balance as of March 31, 2023	23,482	$	235	$	—	$	1,274,289	$	(90,368)	$	1,184,156

See accompanying notes

6

ENCORE CAPITAL GROUP, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited, In Thousands)

	Three Months Ended March 31,
	2024		2023
Operating activities:
Net income	$	23,239	$	18,626
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,848		10,870
Other non-cash interest expense, net	3,727		4,594
Stock-based compensation expense	3,357		4,052
Deferred income taxes	170		1,369
Changes in recoveries	12,409		9,501
Other, net	717		(1,843)
Changes in operating assets and liabilities
Other assets	(6,223)		(3,139)
Accounts payable, accrued liabilities and other liabilities	5,740		(8,117)
Net cash provided by operating activities	50,984		35,913
Investing activities:
Purchases of receivable portfolios, net of put-backs	(291,367)		(274,625)
Collections applied to investment in receivable portfolios	195,035		166,682
Purchases of asset held for sale	(212)		(22,596)
Purchases of property and equipment	(6,861)		(4,885)
Other, net	12,523		4,709
Net cash used in investing activities	(90,882)		(130,715)
Financing activities:
Payment of loan and debt refinancing costs	(10,202)		(5,850)
Proceeds from credit facilities	248,549		229,128
Repayment of credit facilities	(696,351)		(140,043)
Proceeds from senior secured notes	500,000		—
Repayment of senior secured notes	(9,770)		(9,770)
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	23,564		(10,684)
Net cash provided by financing activities	55,790		110,374
Net increase in cash and cash equivalents	15,892		15,572
Effect of exchange rate changes on cash and cash equivalents	(1,266)		(710)
Cash and cash equivalents, beginning of period	158,364		143,912
Cash and cash equivalents, end of period	$	172,990	$	158,774
Supplemental disclosure of cash information:
Cash paid for interest	$	46,469	$	38,072
Cash paid for taxes, net of refunds	1,542		908
Supplemental schedule of non-cash investing activities:
Investment in receivable portfolios transferred to real estate owned	$	2,045	$	1,105

    

See accompanying notes

7

ENCORE CAPITAL GROUP, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1: Ownership, Description of Business, and Summary of Significant Accounting Policies

Encore Capital Group, Inc. (“Encore”), through its subsidiaries (collectively with Encore, the “Company”), is an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. The Company purchases portfolios of defaulted consumer receivables at deep discounts to face value and manages them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial obligations to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. The Company also provides debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.

Through Midland Credit Management, Inc. and its domestic affiliates (collectively, “MCM”), the Company is a market leader in portfolio purchasing and recovery in the United States. Through Cabot Credit Management Limited (“CCM”) and its subsidiaries and European affiliates (collectively, “Cabot”), the Company is one of the largest credit management services providers in Europe and the United Kingdom. These are the Company’s primary operations.

The Company also has investments and operations in Latin America and Asia-Pacific, which the Company refers to as “LAAP.”

Financial Statement Preparation and Presentation

The accompanying interim condensed consolidated financial statements have been prepared by the Company, without audit, in accordance with the instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”) and, therefore, do not include all information and footnotes necessary for a fair presentation of its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).

In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of the Company’s condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.

The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in the Company’s condensed financial statements and the accompanying notes. Actual results could materially differ from those estimates.

Basis of Consolidation

The condensed consolidated financial statements have been prepared in conformity with GAAP and reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. The Company also consolidates variable interest entities (“VIEs”) for which it is the primary beneficiary. The primary beneficiary has both (a) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance, and (b) either the obligation to absorb losses or the right to receive benefits. Refer to “Note 8: Variable Interest Entities” for further details. All intercompany transactions and balances have been eliminated in consolidation.

Translation of Foreign Currencies

The condensed financial statements of certain of the Company’s foreign subsidiaries are measured using their local currency as the functional currency. Assets and liabilities of foreign operations are translated into U.S. dollars using period-end exchange rates, and revenues and expenses are translated into U.S. dollars using average exchange rates in effect during each period. The resulting translation adjustments are recorded as a component of other comprehensive income or loss. Equity accounts are translated at historical rates, except for the change in retained earnings during the year which is the result of the income statement translation process. Intercompany transaction gains or losses at each period end arising from subsequent measurement of balances for which settlement is not planned or anticipated in the foreseeable future are included as translation adjustments and recorded within other comprehensive income or loss. Translation gains or losses are the material components of accumulated other comprehensive income or loss and are reclassified to earnings upon the substantial sale or liquidation of investments in foreign operations.

8

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within the segment measure of profit or loss. This guidance will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024. This ASU will likely result in additional required disclosure when adopted. The Company is currently evaluating the provisions of this ASU and the impact on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The new standard is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Note 2: Earnings Per Share

Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period.

The number of shares used to calculate the diluted earnings per share is computed by using the basic weighted-average number of common shares outstanding plus any dilutive potential common shares outstanding during the period, except when their effect is anti-dilutive. Dilutive potential common shares include outstanding stock based awards, and the dilutive effect of the convertible and exchangeable senior notes, if applicable.

A reconciliation of shares used in calculating earnings per basic and diluted shares follows (in thousands, except per share amounts):

	Three Months Ended March 31,
	2024		2023
Net income	$	23,239	$	18,626
Shares:
Total weighted-average basic shares outstanding	23,784		23,548
Dilutive effect of stock-based awards	200		291
Dilutive effect of convertible and exchangeable senior notes	484		1,103
Total weighted-average dilutive shares outstanding	24,468		24,942
Basic earnings per share	$	0.98	$	0.79
Diluted earnings per share	$	0.95	$	0.75

There were no anti-dilutive employee stock options outstanding during the three months ended March 31, 2024 and 2023.

Note 3: Fair Value Measurements

Fair value is defined as the price that would be received upon sale of an asset or the price paid to transfer a liability, in an orderly transaction between market participants at the measurement date (i.e., the “exit price”). The Company uses a fair value hierarchy that prioritizes the inputs used in valuation techniques to measure fair value into three broad levels. The following is a brief description of each level:

•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•Level 3: Unobservable inputs, including inputs that reflect the reporting entity’s own assumptions.

9

The Company’s cash and cash equivalents, certain other assets, accounts payable and accrued liabilities, and other liabilities approximate their fair values due to their short-term nature, which are determined to be a Level 1 measurement.

Financial Instruments Required To Be Carried At Fair Value

Financial assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

	Fair Value Measurements as of March 31, 2024
	Level 1		Level 2		Level 3		Total
Assets
Interest rate cap contracts	$	—	$	10,039	$	—	$	10,039
Liabilities
Interest rate swap agreements	—		(11,976)		—		(11,976)
Cross-currency swap agreements	—		(39,004)		—		(39,004)

	Fair Value Measurements as of December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets
Interest rate cap contracts	$	—	$	16,950	$	—	$	16,950
Cross-currency swap agreements	—		361		—		361
Liabilities
Interest rate swap agreements	—		(22,510)		—		(22,510)
Cross-currency swap agreements	—		(28,039)		—		(28,039)

Derivative Contracts:

The Company uses derivative instruments to manage its exposure to fluctuations in interest rates and foreign currency exchange rates. Fair values of these derivative instruments are estimated using industry standard valuation models. These models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign currency exchange rates, and forward and spot prices for currencies. The Company’s derivative agreements are subject to underlying agreements with master netting arrangements, which provide for the right of offset in the event of default or in the event of bankruptcy of either party to the transactions. The Company reports its assets and liabilities subject to these arrangements on a gross basis for certain derivative agreements.

Non-Recurring Fair Value Measurement:

Certain assets are measured at fair value on a nonrecurring basis. These assets include real estate-owned assets classified as held for sale at the lower of their carrying value or fair value less cost to sell. The fair value of the assets held for sale and estimated selling expenses were determined at the time of initial recognition and in each reporting period using Level 3 measurements based on appraised values using market comparables. The fair value estimate of the assets held for sale was approximately $64.0 million and $70.6 million as of March 31, 2024 and December 31, 2023, respectively.

Financial Instruments Not Required To Be Carried At Fair Value

The table below summarizes fair value estimates for the Company's financial instruments that are not required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.

10

The carrying amounts in the following table are included in the condensed consolidated statements of financial condition as of March 31, 2024 and December 31, 2023 (in thousands):

	March 31, 2024				December 31, 2023
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets
Investment in receivable portfolios, net	$	3,531,387	$	3,582,622	$	3,468,432	$	3,515,651
Financial Liabilities
Global senior secured revolving credit facility	367,739		367,739		816,880		816,880
Encore private placement notes	19,540		19,409		29,310		28,922
Senior secured notes(1)	2,123,535		2,084,677		1,649,621		1,598,636
Convertible senior notes due October 2025	100,000		125,369		100,000		136,403
Convertible senior notes due March 2029	230,000		215,540		230,000		226,794
Cabot securitisation senior facility	322,110		322,110		324,646		324,646
U.S. facility	175,000		175,000		175,000		175,000
Other borrowings	65,902		65,902		24,904		24,904

_______________________

(1)Carrying amount represents historical cost, adjusted for any related debt discount.

Investment in Receivable Portfolios:

The fair value of investment in receivable portfolios is measured using Level 3 inputs by discounting the estimated future cash flows generated by the Company’s proprietary forecasting models. The key inputs include the estimated future gross cash flow, average cost to collect, and discount rate. The determination of such inputs requires significant judgment, including assessing the assumed market participant’s cost structure, its determination of whether to include fixed costs in its valuation, its collection strategies, and determining the appropriate weighted average cost of capital. The Company evaluates the use of these key inputs on an ongoing basis and refines the data as it continues to obtain better information from market participants in the debt recovery and purchasing business.

Borrowings:

The Company’s convertible notes, senior secured notes and private placement notes are carried at historical cost, adjusted for the applicable debt discount. The fair value estimate for the convertible notes incorporates quoted market prices using Level 2 inputs. The fair value of the senior secured notes and private placement notes is estimated using widely accepted valuation techniques, including discounted cash flow analyses using available market information on discount and borrowing rates with similar terms, maturities, and credit ratings. Accordingly, the Company used Level 2 inputs for these debt instrument fair value estimates.

The carrying value of the Company’s senior secured revolving credit facility, securitisation senior facility, U.S. facility, and other borrowings approximates fair value due to the use of current market rates that are repriced frequently, which are determined to be a Level 2 measurement.

Note 4: Derivatives and Hedging Instruments

The Company may periodically enter into derivative financial instruments to manage risks related to interest rates and foreign currency. Certain of the Company’s derivative financial instruments qualify for hedge accounting treatment.

11

The following table summarizes the fair value of derivative instruments as recorded in the Company’s condensed consolidated statements of financial condition (in thousands):

	March 31, 2024			December 31, 2023
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Interest rate cap contracts	Other assets	$	8,405	Other assets	$	14,564
Interest rate swap agreements	Other liabilities	(11,976)		Other liabilities	(22,510)
Cross-currency swap agreements	Other assets	—		Other assets	361
Cross-currency swap agreements	Other liabilities	(39,004)		Other liabilities	(28,039)
Derivatives not designated as hedging instruments:
Interest rate cap contracts	Other assets	1,634		Other assets	2,386

Derivatives Designated as Hedging Instruments

The Company may periodically enter into interest rate swap agreements and interest rate cap contracts to reduce its exposure to fluctuations in interest rates on variable interest rate debt and their impact on earnings and cash flows. Under the swap agreements, the Company receives floating interest rate payments and makes interest payments based on fixed interest rates. Under the cap contracts, the Company receives floating interest rate payments and makes interest payments based on capped interest rates. The Company designates its interest rate swap and interest rate cap instruments as cash flow hedges at inception.

The Company uses cross-currency swap agreements to manage foreign currency exchange risk by converting fixed-rate Euro-denominated borrowings and fixed-rate GBP-denominated borrowings including periodic interest payments and the payment of principal at maturity to fixed-rate USD debt. The cross-currency swap agreements are accounted for as fair value hedges.

The following table summarizes the terms of the derivative instruments designated as hedging instruments as recorded in the Company’s consolidated statements of financial condition:

	March 31, 2024
	Effective date	Maturity Date	Hedge Designation	Notional Amount	Receive Floating Rate Index
Interest rate cap contracts
2019 Cap	January 2020	June 2024	Cash flow hedge	$431.7 million	3-month EURIBOR
2021 Cap(1)	November 2021	September 2024	Cash flow hedge	$315.8 million	SONIA
2024 Cap	September 2024	September 2026	Cash flow hedge	$322.1 million	SONIA
Interest rate swap agreements
2023 Euro IR Swap	October 2023	January 2028	Cash flow hedge	$107.9 million	3-month EURIBOR
2024 Euro IR Swaps	June 2024	January 2028	Cash flow hedge	$447.9 million	3-month EURIBOR
2023 SOFR IR Swaps	November 2023	October 2026	Cash flow hedge	$150.0 million	1-month SOFR CME Term
Cross-currency swap agreements
2020 Euro Swaps	September 2020	October 2025	Fair value hedge	$377.8 million	—
2023 GBP Swaps	July 2023	February 2026	Fair value hedge	$379.0 million	—

______________________

(1)The total notional amount of the 2021 Cap was $442.1 million, of which $315.8 million was hedge designated and $126.3 million was not hedge designated as of March 31, 2024.

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	December 31, 2023
	Effective date	Maturity Date	Hedge Designation	Notional Amount	Receive Floating Rate Index
Interest rate cap contracts
2019 Cap	January 2020	June 2024	Cash flow hedge	$441.5 million	3-month EURIBOR
2021 Cap(1)	November 2021	September 2024	Cash flow hedge	$318.3 million	SONIA
2024 Cap	September 2024	September 2026	Cash flow hedge	$324.6 million	SONIA
Interest rate swap agreements
2023 Euro IR Swap	October 2023	January 2028	Cash flow hedge	$110.4 million	3-month EURIBOR
2024 Euro IR Swaps	June 2024	January 2028	Cash flow hedge	$458.1 million	3-month EURIBOR
2023 SOFR IR Swaps	November 2023	October 2026	Cash flow hedge	$150.0 million	1-month SOFR CME Term
Cross-currency swap agreements
2020 Euro Swaps	September 2020	October 2025	Fair value hedge	$386.3 million	—
2023 GBP Swaps	July 2023	February 2026	Fair value hedge	$381.9 million	—

_______________________

(1)The total notional amount of the 2021 Cap was $445.6 million, of which $318.3 million was hedge designated and $127.3 million was not hedge designated as of December 31, 2023.

The Company expects to reclassify approximately $7.3 million of net derivative gain from OCI into earnings relating to its cash flow designated derivatives within the next 12 months.

The following tables summarize the effects of derivatives designated as hedging instruments in the Company’s condensed consolidated financial statements (in thousands):

Derivatives Designated as Hedging Instruments	Gain (Loss) Recognized in OCI				Location of Gain (Loss) Reclassified from OCI into Income (Loss)	Gain (Loss) Reclassified from OCI into Income
	Three Months Ended March 31,					Three Months Ended March 31,
	2024		2023			2024		2023
Interest rate swap agreements	$	11,074	$	—	Interest expense	$	540	$	—
Interest rate cap contracts	(6,051)		(6,924)		Interest expense	(712)		(450)
Cross-currency swap agreements	(13,010)		2,066		Interest expense	(1,780)		(1,508)
					Other (expense) income	(11,510)		5,153

Derivatives Not Designated as Hedging Instruments

In September 2023, the Company partially dedesignated the 2021 Cap. As of March 31, 2024, £100.0 million (approximately $126.3 million based on an exchange rate of $1.00 to £0.79, the exchange rate as of March 31, 2024) of the notional amount of the 2021 Cap is not designated as a hedging instrument for accounting purposes. The gains or losses resulting from changes in fair value on the portion of the 2021 cap that is no longer designated as a hedging instrument are recognized in other income or other expenses. The Company recorded a gain of approximately $0.2 million resulting from the fair value change of the undesignated 2021 Cap during the three months ended March 31, 2024. Refer above for terms relating to the 2021 Cap.

Note 5: Investment in Receivable Portfolios, Net

The Company’s purchased portfolios of loans are grossed-up to their face value with an offsetting allowance and noncredit discount allocated to the individual receivables as the unit of account is at the individual loan level. Since each loan is deeply delinquent and deemed uncollectible at the individual loan level, the Company applies its charge-off policy and fully writes-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables immediately after purchasing the portfolio. The Company then records a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which ultimately equals the amount paid for a portfolio purchase and presented as “Investment in receivable portfolios, net” in the Company’s condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) based on the purchase price of the portfolio and the expected future cash flows at the time of purchase.

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Receivable portfolio purchases are aggregated into pools based on similar risk characteristics. Examples of risk characteristics include financial asset type, collateral type, size, interest rate, date of origination, term, and geographic location. The Company’s static pools are typically grouped into credit card, purchased consumer bankruptcy, and mortgage portfolios. The Company further groups these static pools by geographic location. Once a pool is established, the portfolios will remain in the designated pool unless the underlying risk characteristics change. The purchase EIR of a pool will not change over the life of the pool even if expected future cash flows change.

Revenue is recognized for each static pool over the economic life of the pool. Debt purchasing revenue includes two components:

(1)     Revenue from receivable portfolios, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR) and also includes all revenue from zero basis portfolio (“ZBA”) collections, and

(2)     Changes in recoveries, which includes

(a)     Recoveries above or below forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and

(b)     Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases).

The Company measures expected future recoveries based on historical experience, current conditions, reasonable and supportable forecasts, and other quantitative and qualitative factors. Factors that may change the expected future recoveries may include both internal as well as external factors. Internal factors include operational performance, such as capacity and the productivity of the Company’s collection staff. External factors include new laws or regulations, new interpretations of existing laws or regulations, and macroeconomic conditions. The Company continues to reassess its expected future recoveries in each reporting period.

Investment in receivable portfolios, net consists of the following as of the dates presented (in thousands):

	March 31, 2024		December 31, 2023
Amortized cost	$	—	$	—
Negative allowance for expected recoveries	3,531,387		3,468,432
Balance, end of period	$	3,531,387	$	3,468,432

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The following table summarizes the changes in the balance of investment in receivable portfolios, net during the periods presented (in thousands):

	Three Months Ended March 31,
	2024		2023
Balance, beginning of period	$	3,468,432	$	3,088,261
Negative allowance for expected recoveries - current period purchases(1)	295,714		276,431
Collections applied to investment in receivable portfolios, net (2)	(195,035)		(166,682)
Changes in recoveries (3)	(12,409)		(9,501)
Put-backs and recalls	(4,347)		(1,806)
Disposals and transfers to real estate owned	(2,045)		(1,105)
Foreign currency translation adjustments	(18,923)		29,194
Balance, end of period	$	3,531,387	$	3,214,792

_______________________

(1)The table below provides the detail on the establishment of negative allowance for expected recoveries of portfolios purchased during the periods presented:

	Three Months Ended March 31,
	2024		2023
Purchase price	$	295,714	$	276,431
Allowance for credit losses	644,514		659,644
Amortized cost	940,228		936,075
Noncredit discount	1,255,793		1,005,221
Face value	2,196,021		1,941,296
Write-off of amortized cost	(940,228)		(936,075)
Write-off of noncredit discount	(1,255,793)		(1,005,221)
Negative allowance	295,714		276,431
Negative allowance for expected recoveries - current period purchases	$	295,714	$	276,431

(2)Collections applied to investment in receivable portfolios, net, is calculated as follows during the periods presented:

	Three Months Ended March 31,
	2024		2023
Cash Collections	$	510,887	$	462,356
Less - amounts classified to revenue from receivable portfolios	(315,852)		(295,674)
Collections applied to investment in receivable portfolios, net	$	195,035	$	166,682

(3)Changes in recoveries is calculated as follows during the periods presented, where recoveries include cash collections, put-backs and recalls, and other cash-based adjustments:

	Three Months Ended March 31,
	2024		2023
Recoveries above (below) forecast	$	853	$	(15,358)
Changes in expected future recoveries	(13,262)		5,857
Changes in recoveries	$	(12,409)	$	(9,501)

Recoveries above or below forecast represent over and under-performance in the reporting period, respectively. Collections during the three months ended March 31, 2024, over-performed the forecasted collections by approximately $0.9 million. Collections during the three months ended March 31, 2023, under-performed the forecasted collections by approximately $15.4 million.

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When reassessing the forecasts of expected lifetime recoveries during the three months ended March 31, 2024, management considered, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment. The updated forecast resulted in changes in the timing and amount of total estimated remaining collections which in turn, when discounted to present value, resulted in a net negative change in expected future recoveries of approximately $13.3 million for the three months ended March 31, 2024. During the three months ended March 31, 2023, the Company recorded approximately $5.9 million in net positive change in expected future period recoveries.

Note 6: Other Assets

Other assets consist of the following (in thousands):

	March 31, 2024		December 31, 2023
Real estate owned	$	63,961	$	70,590
Operating lease right-of-use assets	63,243		67,019
Prepaid expenses	40,599		32,910
Deferred tax assets, net	13,709		17,277
Derivative instruments	10,039		17,311
Service fee receivables	9,669		9,080
Income tax deposits	7,427		8,735
Other	68,975		70,334
Total	$	277,622	$	293,256

Note 7: Borrowings

The Company is in compliance in all material respects with all covenants under its financing arrangements as of March 31, 2024. The components of the Company’s consolidated borrowings were as follows (in thousands):

	March 31, 2024		December 31, 2023
Global senior secured revolving credit facility	$	367,739	$	816,880
Encore private placement notes	19,540		29,310
Senior secured notes	2,128,357		1,654,989
Convertible senior notes	330,000		330,000
Cabot securitisation senior facility	322,110		324,646
U.S. facility	175,000		175,000
Other	65,902		24,904
Finance lease liabilities	2,262		2,818
	3,410,910		3,358,547
Less: debt discount and issuance costs, net of amortization	(46,881)		(40,516)
Total	$	3,364,029	$	3,318,031

Encore is the parent of the restricted group for the Global Senior Facility, the Senior Secured Notes and the Encore Private Placement Notes, each of which is guaranteed by the same group of material Encore subsidiaries and secured by the same collateral, which represents substantially all of the assets of those subsidiaries.

Global Senior Secured Revolving Credit Facility

In September 2020, the Company entered into a multi-currency senior secured revolving credit facility agreement (as amended and restated, the “Global Senior Facility”). As of March 31, 2024, the Global Senior Facility provided for a total committed facility of $1,203.0 million that matures in September 2027 and includes the following key provisions:

•Interest at Term SOFR (or EURIBOR for any loan drawn in Euro or a rate based on SONIA for any loan drawn in British Pound), with a Term SOFR (or EURIBOR or SONIA) floor of 0.00%, plus a margin of 2.50%, plus in the case of Term SOFR borrowings, a credit adjustment spread of 0.10%;

•An unused commitment fee of 0.40% per annum, payable quarterly in arrears;

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•A restrictive covenant that limits the LTV Ratio (defined in the Global Senior Facility) to 0.75 in the event that the Global Senior Facility is more than 20% utilized;

•A restrictive covenant that limits the SSRCF LTV Ratio (defined in the Global Senior Facility) to 0.275;

•A restrictive covenant that requires the Company to maintain a Fixed Charge Coverage Ratio (as defined in the Global Senior Facility) of at least 2.0;

•Additional restrictions and covenants which limit, among other things, the payment of dividends and the incurrence of additional indebtedness and liens; and

•Standard events of default which, upon occurrence, may permit the lenders to terminate the Global Senior Facility and declare all amounts outstanding to be immediately due and payable.

The Global Senior Facility is secured by substantially all of the assets of the Company and the guarantors. Pursuant to the terms of an intercreditor agreement entered into with respect to the relative positions of (1) the Global Senior Facility, any super priority hedging liabilities and the Encore Private Placement Notes (collectively, “Super Senior Liabilities”) and (2) the Senior Secured Notes, Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.

As of March 31, 2024, the outstanding borrowings under the Global Senior Facility were $367.7 million. The weighted average interest rate of the Global Senior Facility was 7.89% and 7.06% for the three months ended March 31, 2024 and 2023, respectively. Available capacity under the Global Senior Facility, after taking into account applicable debt covenants, was approximately $827.3 million as of March 31, 2024.

Encore Private Placement Notes

In August 2017, Encore entered into $325.0 million in senior secured notes with a group of insurance companies (the “Encore Private Placement Notes”). As of March 31, 2024, $19.5 million of the Encore Private Placement Notes remained outstanding. The Encore Private Placement Notes bear an annual interest rate of 5.625%, mature in August 2024 and require quarterly principal payments of $9.8 million. The covenants and material terms for the Encore Private Placement Notes are substantially similar to those for the Global Senior Facility.

Senior Secured Notes

The following table provides a summary of the Company’s senior secured notes (the “Senior Secured Notes”) ($ in thousands):

	March 31, 2024		December 31, 2023		Issue Currency	Maturity Date	Interest Payment Dates	Interest Rate
2025 Notes	$	377,762	$	386,324	EUR	Oct 15, 2025	Apr 15, Oct 15	4.875	%
2026 Notes	378,952		381,937		GBP	Feb 15, 2026	Feb 15, Aug 15	5.375	%
2028 Notes	315,794		318,280		GBP	Jun 1, 2028	Jun 1, Dec 1	4.250	%
2028 Floating Rate Notes	555,849		568,448		EUR	Jan 15, 2028	Jan 15, Apr 15, Jul 15, Oct 15	EURIBOR +4.250%(1)
2029 Notes	500,000		—		USD	Apr 1, 2029	Apr 1, Oct 1	9.250	%
	$	2,128,357	$	1,654,989

_______________________

(1)Interest rate is based on three-month EURIBOR (subject to a 0% floor) plus 4.250% per annum, resets quarterly.

The Senior Secured Notes are secured by the same collateral as the Global Senior Facility and the Encore Private Placement Notes. The guarantees provided in respect of the Senior Secured Notes are pari passu with each such guarantee given in respect of the Global Senior Facility and Encore Private Placement Notes. Subject to the intercreditor agreement described above under the section “Global Senior Secured Revolving Credit Facility,” Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.

In March 2024, Encore issued $500.0 million in aggregate principal amount of 9.250% Senior Secured Notes due April 2029 at an issue price of 100.000% (the “2029 Notes”). Interest on the 2029 Notes is payable semi-annually, in arrears, on April 1 and October 1 of each year, commencing on October 1, 2024. The Company used the proceeds from this offering to pay down $493.0 million of the drawings under its Global Senior Facility and to pay certain transaction fees and expenses incurred in connection with the offering of the 2029 Notes.

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The 2028 Floating Rate Notes had a weighted average interest rate of 8.12% and 6.38% for the three months ended March 31, 2024 and 2023, respectively. As discussed in “Note 4: Derivatives and Hedging Instruments,” the Company uses interest rate derivative contracts to manage its risk related to the interest rate fluctuation in its variable interest rate bearing debt. The weighted average interest rate of the 2028 Floating Rate Notes including the effect of the hedging instruments was 5.01% and 4.33% for the three months ended March 31, 2024 and 2023, respectively.

Convertible Notes

The following table provides a summary of the principal balance, maturity date and interest rate for the Company’s convertible senior notes (the “Convertible Notes”) ($ in thousands):

	March 31, 2024		December 31, 2023		Maturity Date	Interest Payment Dates	Interest Rate
2025 Convertible Notes	$	100,000	$	100,000	Oct 1, 2025	Apr 1, Oct 1	3.250	%
2029 Convertible Notes	230,000		230,000		Mar 15, 2029	Mar 15, Sep 15	4.000	%
	$	330,000	$	330,000

In order to reduce the risk related to the potential dilution and/or the potential cash payments the Company may be required to make in the event that the market price of the Company’s common stock becomes greater than the conversion prices of the Convertible Notes, the Company may enter into hedge programs that increase the effective conversion price for the Convertible Notes. In connection with the issuance of the 2029 Convertible Notes, the Company entered into privately negotiated capped call transactions that effectively raised the conversion price of the 2029 Convertible Notes from $65.89 to $82.69. These hedging instruments have been determined to be indexed to the Company’s own stock and meet the criteria for equity classification. The Company recorded the cost of the hedge instruments as a reduction in additional paid-in capital, and does not recognize subsequent changes in fair value of these financial instruments in its condensed consolidated financial statements. The Company did not hedge the 2025 Convertible Notes.

Certain key terms related to the convertible features as of March 31, 2024 are listed below ($ in thousands, except conversion price):

	2025 Convertible Notes		2029 Convertible Notes
Initial conversion price	$	40.00	$	65.89
Closing stock price at date of issuance	$	32.00	$	51.68
Closing stock price date	Sep 4, 2019		Feb 28, 2023
Initial conversion rate (shares per $1,000 principal amount)	25.0000		15.1763
Adjusted conversion rate (shares per $1,000 principal amount)(1)	25.1310		15.1763
Adjusted conversion price(1)	$	39.79	$	65.89
Adjusted effective conversion price(2)	$	39.79	$	82.69
Excess of if-converted value compared to principal(3)	$	14,622	$	—
Conversion date	Jul 1, 2025		Dec 15, 2028

_______________________

(1)Pursuant to the indenture for the Company’s 2025 Convertible Notes, the conversion rate for the 2025 Convertible Notes was adjusted upon the completion of the Company’s tender offer in December 2021.

(2)As discussed above, the Company maintains a hedge program that increases the effective conversion price for the 2029 Convertible Notes to $82.69.

(3)Represents the premium the Company would have to pay assuming the Convertible Notes were converted on March 31, 2024 using a hypothetical share price based on the closing stock price on March 28, 2024, the last trading day for the three months ended March 31, 2024.

In the event of conversion, the Convertible Notes are convertible into cash up to the aggregate principal amount of the notes and the excess conversion premium, if any, may be settled in cash or shares of the Company’s common stock at the Company’s election and subject to certain restrictions contained in each of the indentures governing the Convertible Notes.

Interest expense related to the Convertible Notes was $3.1 million and $2.9 million during the three months ended March 31, 2024 and 2023, respectively.

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Cabot Securitisation Senior Facility

Cabot Securitisation UK Ltd (“Cabot Securitisation”), an indirect subsidiary of Encore, has a senior facility for a committed amount of £255.0 million (as amended, the “Cabot Securitisation Senior Facility”). Funds drawn under the Cabot Securitisation Senior Facility bear interest at a rate per annum equal to SONIA plus a margin of 3.20% plus, for periods after September 18, 2026, a step up margin ranging from 0% to 1.00%. The Cabot Securitisation Senior Facility matures in September 2028.

As of March 31, 2024, the outstanding borrowings under the Cabot Securitisation Senior Facility were £255.0 million (approximately $322.1 million based on an exchange rate of $1.00 to £0.79, the exchange rate as of March 31, 2024). The obligations of Cabot Securitisation under the Cabot Securitisation Senior Facility are secured by first ranking security interests over all of Cabot Securitisation’s property, assets and rights (including receivables purchased from Cabot Financial UK from time to time), the book value of which was approximately £329.2 million (approximately $415.8 million based on an exchange rate of $1.00 to £0.79, the exchange rate as of March 31, 2024) as of March 31, 2024. The weighted average interest rate of the Cabot Securitisation Senior Facility was 8.40% and 6.87% for the three months ended March 31, 2024 and 2023, respectively. As discussed in “Note 4, Derivatives and Hedging Instruments,” the Company uses interest rate cap contracts to manage its risk related to the interest rate fluctuations in its variable interest rate bearing debt. The weighted average interest rate of the Cabot Securitisation Senior Facility including the effect of the hedging instruments was 5.51% and 5.25% for the three months ended March 31, 2024 and 2023, respectively.

Cabot Securitisation is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 8: Variable Interest Entities” for further details.

U.S. Facility

In October 2023, an indirect subsidiary of Encore (“U.S. Financing Subsidiary”), entered into a facility for a committed amount of $175.0 million (the “U.S. Facility”). The U.S. Facility matures in October 2026. Funds drawn under the U.S. Facility bear interest at a rate per annum equal to Term SOFR plus a margin of 3.5%.

As of March 31, 2024, the outstanding borrowings under the U.S. Facility were $175.0 million. The obligations under the U.S. Facility are secured by first ranking security interests over all of U.S. Financing Subsidiary’s assets and rights. As of March 31, 2024, this included receivables acquired from MCM, the book value of which was approximately $319.8 million. The weighted average interest rate of the U.S. Facility was 8.93% for the three months ended March 31, 2024. As discussed in “Note 4: Derivatives and Hedging Instruments,” the Company uses interest rate derivative contracts to manage its risk related to the interest rate fluctuation in its variable interest rate bearing debt. The weighted average interest rate of the U.S. Facility including the effect of the hedging instruments was 8.08% for the three months ended March 31, 2024.

The U.S. Facility is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 8: Variable Interest Entities” for further details.

Note 8: Variable Interest Entities

A VIE is defined as a legal entity whose equity owners do not have sufficient equity at risk, or, as a group, the holders of the equity investment at risk lack any of the following three characteristics: decision-making rights, the obligation to absorb expected losses, or the right to receive expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and the obligation to absorb expected losses or the right to receive residual returns from the entity that could potentially be significant to the VIE. The Company consolidates VIEs when it is the primary beneficiary.

As of March 31, 2024, the Company’s VIEs include certain securitized financing vehicles and other immaterial special purpose entities that were created to purchase receivable portfolios in certain geographies. The Company is the primary beneficiary of these VIEs. The Company has the power to direct the activities of the VIEs including the ability to exercise discretion in the servicing of the financial assets and has the right to receive residual returns that could potentially be significant to the VIEs. The Company’s exposure to loss is limited to the total of the carrying value of the VIEs. The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary.

Most assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the VIE.

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Note 9: Accumulated Other Comprehensive Loss

A summary of the Company’s changes in accumulated other comprehensive loss by component is presented below (in thousands):

	Three Months Ended March 31, 2024
	Derivatives		Currency Translation Adjustments		Accumulated Other Comprehensive Loss
Balance at beginning of period	$	(3,093)	$	(120,827)	$	(123,920)
Other comprehensive loss before reclassification	(7,987)		(6,146)		(14,133)
Reclassification	13,462		—		13,462
Tax effect	(2,685)		(160)		(2,845)
Balance at end of period	$	(303)	$	(127,133)	$	(127,436)

	Three Months Ended March 31, 2023
	Derivatives		Currency Translation Adjustments		Accumulated Other Comprehensive Loss
Balance at beginning of period	$	36,494	$	(135,310)	$	(98,816)
Other comprehensive (loss) income before reclassification	(4,858)		16,008		11,150
Reclassification	(3,195)		—		(3,195)
Tax effect	876		(383)		493
Balance at end of period	$	29,317	$	(119,685)	$	(90,368)

Note 10: Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2024 was 23.8%. For the three months ended March 31, 2023, the Company’s effective tax rate was 25.6%. For the three months ended March 31, 2024, the difference between the effective tax rate and the federal statutory rate was primarily due to state income taxes offset by other foreign adjustments. For the three months ended March 31, 2023, the difference between the effective tax rate and the federal statutory rate was primarily due to state income taxes offset by other foreign adjustments.

Each interim period is considered an integral part of the annual period and tax expense or benefit is measured using an estimated annual effective income tax rate. The estimated annual effective tax rate for the full year is applied to the respective interim period, taking into account year-to-date amounts and projected amounts for the year. Since the Company operates in foreign countries with varying tax rates, the Company’s quarterly effective tax rate is dependent on the level of income or loss from international operations in the reporting period.

The Company’s subsidiary in Costa Rica is operating under a 100% tax holiday through December 31, 2026. The impact of the tax holiday in Costa Rica for the three months ended March 31, 2024 and 2023, was immaterial.

The Company is subject to income taxes in the U.S. and foreign jurisdictions. Significant judgement is required in evaluating uncertain tax positions and determining the provision for income taxes.

In December 2021, the Organization for Economic Cooperation and Development (“OECD”) enacted model rules for a new global minimum tax framework (“Pillar Two”). Under the Pillar Two rules, a company is required to determine a combined effective tax rate for each jurisdiction. If the jurisdictional effective tax rate determined under the Pillar Two rules is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. In December 2022, European Union Member States adopted a directive implementing the Pillar Two rules requiring Member States to enact the directive into their national laws and these began to go into effect from January 1, 2024. The Company has estimated the applicable top-up tax and recorded this in tax expense for the three months ended March 31, 2024. The estimated impact of top-up tax for the quarter was immaterial.

Note 11: Commitments and Contingencies

Litigation and Regulatory

The Company is involved in disputes, legal actions, regulatory investigations, inquiries, and other actions from time to time in the ordinary course of business. The Company, along with others in its industry, is routinely subject to legal actions asserting various claims, including those based on the Fair Debt Collection Practices Act (“FDCPA”), the Fair Credit Reporting

20

Act (“FCRA”), the Telephone Consumer Protection Act (“TCPA”), comparable state statutes, state and federal unfair competition statutes, and common law causes of action. The violations of law investigated or alleged in these actions often include claims that the Company lacks specified licenses to conduct its business, attempts to collect debts on which the statute of limitations has run, has made inaccurate or unsupported assertions of fact in support of its collection actions and/or has acted improperly in connection with its efforts to contact consumers. Such litigation and regulatory actions could involve potential compensatory or punitive damage claims, fines, sanctions, injunctive relief, or changes in business practices. Many continue on for some length of time and involve substantial investigation, litigation, negotiation, and other expense and effort before a result is achieved, and during the process the Company often cannot determine the substance or timing of any eventual outcome.

As of March 31, 2024, there were no material developments in any of the legal proceedings disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 or any new material legal proceedings during the three months ended March 31, 2024.

In certain legal proceedings, the Company may have recourse to insurance or third-party contractual indemnities to cover all or portions of its litigation expenses, judgments, or settlements. The Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. The Company continuously assesses the potential liability related to its pending litigation and regulatory matters and revises its estimates when additional information becomes available. The Company’s legal costs are recorded to expense as incurred. As of March 31, 2024, the Company has no material reserves for legal matters.

Purchase Commitments

In the normal course of business, the Company enters into forward flow purchase agreements. A forward flow purchase agreement is a commitment to purchase receivables over a duration that is typically three to twelve months, but can be longer, generally with a specifically defined volume range, frequency, and pricing. Typically, these forward flow contracts have provisions that allow for early termination or price re-negotiation should the underlying quality of the portfolio deteriorate over time or if any particular month’s delivery is materially different than the original portfolio used to price the forward flow contract. Certain of these forward flow purchase agreements may also have termination clauses, whereby the agreements can be canceled by either party upon providing a certain specified amount of notice.

As of March 31, 2024, the Company had entered into forward flow purchase agreements for the purchase of nonperforming loans with an estimated minimum aggregate purchase price of approximately $598.9 million. The Company expects actual purchases under these forward flow purchase agreements to be significantly greater than the estimated minimum aggregate purchase price.

Note 12: Segment and Geographic Information

The Company conducts business through several operating segments. The Company’s Chief Operating Decision Maker relies on internal management reporting processes that provide segment revenue, segment operating income, and segment asset information in order to make financial decisions and allocate resources. The Company determined its operating segments meet the aggregation criteria, and therefore, it has one reportable segment, portfolio purchasing and recovery, based on similarities among the operating units including economic characteristics, the nature of the services, the nature of the production process, customer types for their services, the methods used to provide their services and the nature of the regulatory environment.

21

The following table presents information about geographic areas in which the Company operates (in thousands):

	Three Months Ended March 31,
	2024		2023
Total revenues:
United States	$	219,136	$	200,218
Europe
United Kingdom	72,427		77,985
Other European countries(1)	36,104		34,238
Total Europe	108,531		112,223
Other geographies(1)	719		189
Total	$	328,386	$	312,630

________________________

(1)None of these countries comprise greater than 10% of the Company's consolidated revenues.

Note 13: Goodwill and Identifiable Intangible Assets

The Company’s goodwill is tested for impairment at the reporting unit level annually and in interim periods if certain events occur that indicate that the fair value of a reporting unit may be below its carrying value. Determining the number of reporting units and the fair value of a reporting unit requires the Company to make judgments and involves the use of significant estimates and assumptions.

The annual goodwill testing date for the reporting units that are included in the portfolio purchasing and recovery reportable segment is October 1st. There have been no events or circumstances during the three months ended March 31, 2024, that have required the Company to perform an interim assessment of goodwill carried at these reporting units. Management continues to evaluate and monitor all key factors impacting the carrying value of the Company’s recorded goodwill and intangible assets. Adverse changes in the Company’s actual or expected operating results, market capitalization, business climate, economic factors or other negative events that may be outside the control of management could result in a material non-cash impairment charge in the future.

The Company’s goodwill is attributable to the MCM and Cabot reporting units included in its portfolio purchasing and recovery segment. The following table summarizes the activity in the Company’s goodwill balance (in thousands):

	MCM		Cabot(1)		Total
Balance as of December 31, 2023	$	148,936	$	457,539	$	606,475
Effect of foreign currency translation	—		(4,075)		(4,075)
Balance as of March 31, 2024	$	148,936	$	453,464	$	602,400

______________________

(1)The amount is net of accumulated goodwill impairment loss of $238.2 million as of March 31, 2024 and December 31, 2023, related to the Cabot reporting unit.

	MCM		Cabot		Total
Balance as of December 31, 2022	$	148,936	$	672,278	$	821,214
Effect of foreign currency translation	—		12,960		12,960
Balance as of March 31, 2023	$	148,936	$	685,238	$	834,174

There was no accumulated goodwill impairment loss as of March 31, 2023 and December 31, 2022.

22

The Company’s acquired intangible assets are summarized as follows (in thousands):

	As of March 31, 2024						As of December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade name and other	$	918	$	(918)	$	—	$	918	$	(870)	$	48
Total intangible assets	$	918	$	(918)	$	—	$	918	$	(870)	$	48

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Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains “forward-looking statements” relating to Encore Capital Group, Inc. (“Encore”) and its subsidiaries (which we may collectively refer to as the “Company,” “we,” “our” or “us”) within the meaning of the securities laws. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” “plan,” “will,” “may,” and similar expressions often characterize forward-looking statements. These statements may include, but are not limited to, projections of collections, revenues, income or loss, estimates of capital expenditures, plans for future operations, products or services, and financing needs or plans, as well as assumptions relating to these matters. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we caution that these expectations or predictions may not prove to be correct or we may not achieve the financial results, savings, or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control or cannot be predicted or quantified, that could cause actual results to differ materially from those suggested by the forward-looking statements. Many factors including, but not limited to, those set forth in our Annual Report on Form 10-K under “Part I, Item 1A—Risk Factors” could cause our actual results, performance, achievements, or industry results to be very different from the results, performance, achievements or industry results expressed or implied by these forward-looking statements. Our business, financial condition, or results of operations could also be materially and adversely affected by other factors besides those listed. Forward-looking statements speak only as of the date the statements were made. We do not undertake any obligation to update or revise any forward-looking statements to reflect new information or future events, or for any other reason, even if experience or future events make it clear that any expected results expressed or implied by these forward-looking statements will not be realized. In addition, it is generally our policy not to make any specific projections as to future earnings, and we do not endorse projections regarding future performance that may be made by third parties.

Our Business

We are an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. We purchase portfolios of defaulted consumer receivables at deep discounts to face value and manage them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial commitments to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. We also provide debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.

Encore Capital Group, Inc. (“Encore”) has three business units: MCM, which consists of Midland Credit Management, Inc. and its subsidiaries and domestic affiliates; Cabot, which consists of Cabot Credit Management Limited (“CCM”) and its subsidiaries and European affiliates, and LAAP, which is comprised of our investments and operations in Latin America and Asia-Pacific.

MCM (United States)

Through MCM, we are a market leader in portfolio purchasing and recovery in the United States.

Cabot (Europe)

Through Cabot, we are one of the largest credit management services providers in Europe and the United Kingdom. Cabot, in addition to its primary business of portfolio purchasing and recovery, also provides a range of debt servicing offerings such as early stage collections, business process outsourcing (“BPO”), and contingent collections, including through Wescot Credit Services Limited (“Wescot”), a leading UK contingency debt collection and BPO services company.

LAAP (Latin America and Asia-Pacific)

We have purchased non-performing loans in Mexico. Additionally, we have invested in Encore Asset Reconstruction Company (“EARC”) in India.

To date, operating results from LAAP have not been significant to our total consolidated operating results. Our long-term growth strategy is focused on continuing to invest in our core portfolio purchasing and recovery business in the United States and United Kingdom and strengthening and developing our business in the rest of Europe.

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Government Regulation

MCM (United States)

As discussed in more detail under “Part I - Item 1 - Business - Government Regulation” contained in our Annual Report on Form 10-K, our operations in the United States are subject to federal, state and municipal statutes, rules, regulations and ordinances that establish specific guidelines and procedures that debt purchasers and collectors must follow when collecting consumer accounts, including among others, specific guidelines and procedures for communicating with consumers and prohibitions on unfair, deceptive or abusive debt collection practices.

Cabot (Europe)

As discussed in more detail under “Part I - Item 1 - Business - Government Regulation” contained in our Annual Report on Form 10-K, our operations in Europe are affected by foreign statutes, rules and regulations regarding debt collection and debt purchase activities. These statutes, rules, regulations, ordinances, guidelines and procedures are modified from time to time by the relevant authorities charged with their administration, which could affect the way we conduct our business.

Portfolio Purchasing and Recovery

MCM (United States)

In the United States, the defaulted consumer receivable portfolios we purchase are primarily charged-off credit card debt portfolios. A small percentage of our capital deployment in the United States is comprised of receivable portfolios subject to Chapter 13 and Chapter 7 bankruptcy proceedings.

We purchase receivables based on robust, account-level valuation methods and employ proprietary statistical and behavioral models across our U.S. operations. These methods and models generally allow us to value portfolios accurately (limiting the risk of overpaying), avoid buying portfolios that are incompatible with our methods or strategies and align the accounts we purchase with our business channels to maximize future collections. As a result, we have been able to realize significant returns from the receivables we acquire. We maintain strong relationships with many of the largest financial service providers in the United States.

Cabot (Europe)

In Europe, our purchased defaulted debt portfolios primarily consist of paying and non-paying consumer loan accounts. We also purchase: (1) portfolios that are in insolvency status, in particular, individual voluntary arrangements; and (2) non-performing secured mortgage portfolios and real estate assets previously securing mortgage portfolios. When we take possession of the underlying real estate assets or purchase real estate assets, we refer to those as real estate-owned assets, or REO assets.

We purchase paying and non-paying receivable portfolios using a proprietary pricing model that utilizes account-level statistical and behavioral data. This model generally allows us to value portfolios accurately and quantify portfolio performance in order to maximize future collections. As a result, we have been able to realize significant returns from the assets we have acquired. We maintain strong relationships with many of the largest financial services providers in the United Kingdom and Europe.

Purchases and Collections

Portfolio Pricing, Supply and Demand

MCM (United States)

With lending surpassing pre-pandemic levels and with rising delinquency rates, we have seen an increase in supply. Issuers have continued to sell predominantly fresh portfolios. Fresh portfolios are portfolios that are generally sold within six months of the consumer’s account being charged-off by the financial institution. Pricing in the first quarter remained at favorable levels as a result of elevated market supply. Issuers continue to sell their volume in mostly forward flow arrangements that are often committed early in the calendar year. We believe growth in lending and rising delinquency rates will drive continued growth in supply.

We believe that smaller competitors continue to face difficulties in the portfolio purchasing market because of the high cost to operate due to regulatory pressure and increasing cost of capital. We believe this favors larger participants, like MCM, because the larger market participants are better able to adapt to these pressures and commit to larger forward flow agreements and fluctuating volumes.

25

Cabot (Europe)

The UK market for charged-off portfolios prior to the COVID-19 pandemic generally provided a relatively consistent pipeline of opportunities, despite a historically low level of charge-off rates, as creditors had embedded debt sales as an integral part of their business models. The percentage of volume that is sold in multi-year forward flow arrangements is increasing.

The Spain and France debt markets continue to be two of the largest in Europe with significant debt sales and an expectation of a significant amount of debt to be sold in the future. Financial institutions continue to look to dispose of non-performing loans in these markets.

Banks decreased portfolio sales at the beginning of the COVID-19 pandemic in order to focus on customers’ needs. While we have seen a resumption of sales activity across all of our European markets, underlying default rates are generally low by historic levels, and sales levels are expected to fluctuate from quarter to quarter. In general, supply remains slightly below pre-pandemic levels while portfolio pricing remains competitive across our European footprint.

Purchases by Geographic Location

The following table summarizes purchases of receivable portfolios by geographic location during the periods presented (in thousands):

	Three Months Ended March 31,
	2024		2023
MCM (United States)	$	236,509	$	213,452
Cabot (Europe)	59,205		62,979
Total purchases of receivable portfolios	$	295,714	$	276,431

In the United States, capital deployment increased during the three months ended March 31, 2024, as compared to the corresponding period in the prior year. The majority of our deployments in the U.S. come from forward flow agreements, and the timing, contract duration, and volumes for each contract can fluctuate leading to variation when comparing to prior periods. Portfolio purchases in the U.S. were robust as supply increased and pricing improved.

In Europe, capital deployment decreased during the three months ended March 31, 2024, as compared to the corresponding period in the prior year, primarily driven by continued competitive pricing environment in Europe. The decrease was partially offset by the favorable impact from foreign currency translation driven by the weakening of the U.S. dollar against the British Pound.

During the three months ended March 31, 2024 and 2023, we invested $0.2 million and $22.6 million in REO assets, respectively.

Collections from Purchased Receivables by Channel and Geographic Location

We utilize three channels for the collection of our purchased receivables: call center and digital collections; legal collections; and collection agencies. The call center and digital collections channel consists of collections that result from our call centers, direct mail program and online collections. The legal collections channel consists of collections that result from our internal legal channel or from our network of retained law firms. The collection agencies channel consists of collections from third-party collections agencies to whom we pay a fee or commission. We utilize this channel to supplement capacity in our internal call centers, to service accounts in regions where we do not have collections operations or for accounts purchased where we maintain the collection agency servicing relationship. The following table summarizes the total collections by collection channel and geographic area during the periods presented (in thousands):

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	Three Months Ended March 31,
	2024		2023
MCM (United States):
Call center and digital collections	$	235,091	$	191,105
Legal collections	128,903		137,511
Collection agencies	5,484		54
Subtotal	369,478		328,670
Cabot (Europe):
Call center and digital collections	56,647		56,998
Legal collections	48,694		43,709
Collection agencies	35,356		32,081
Subtotal	140,697		132,788
Other geographies:	712		898
Total collections from purchased receivables	$	510,887	$	462,356

Gross collections from purchased receivables increased by $48.5 million, or 10.5%, to $510.9 million during the three months ended March 31, 2024, as compared to $462.4 million during the three months ended March 31, 2023. The increase in collections in the United States was primarily a result of consistent increases in capital deployments in the United States in recent quarters. Collections in Europe was favorably impacted by foreign currency translation by approximately $4.5 million, primarily as a result of the weakening of the U.S. dollar against the British Pound for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

27

Results of Operations

Results of operations, in dollars and as a percentage of total revenues, were as follows for the periods presented (in thousands, except percentages):

	Three Months Ended March 31,
	2024				2023
Revenues
Revenue from receivable portfolios	$	315,852	96.2	%	$	295,674	94.6	%
Changes in recoveries	(12,409)		(3.8)	%	(9,501)		(3.1)	%
Total debt purchasing revenue	303,443		92.4	%	286,173		91.5	%
Servicing revenue	20,379		6.2	%	22,585		7.2	%
Other revenues	4,564		1.4	%	3,872		1.3	%
Total revenues	328,386		100.0	%	312,630		100.0	%
Operating expenses
Salaries and employee benefits	104,184		31.7	%	103,850		33.2	%
Cost of legal collections	58,721		17.9	%	54,101		17.4	%
General and administrative expenses	36,241		11.0	%	37,965		12.1	%
Other operating expenses	30,367		9.2	%	27,556		8.8	%
Collection agency commissions	7,434		2.3	%	8,150		2.6	%
Depreciation and amortization	7,848		2.4	%	10,870		3.5	%
Total operating expenses	244,795		74.5	%	242,492		77.6	%
Income from operations	83,591		25.5	%	70,138		22.4	%
Other expense
Interest expense	(55,765)		(17.0)	%	(46,835)		(15.0)	%
Other income, net	2,666		0.8	%	1,732		0.6	%
Total other expense	(53,099)		(16.2)	%	(45,103)		(14.4)	%
Income before income taxes	30,492		9.3	%	25,035		8.0	%
Provision for income taxes	(7,253)		(2.2)	%	(6,409)		(2.0)	%
Net income	$	23,239	7.1	%	$	18,626	6.0	%

Comparison of Results of Operations

Revenues

Our revenues primarily include debt purchasing revenue, which is revenue recognized from engaging in debt purchasing and recovery activities. We apply our charge-off policy and fully write-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables we acquire immediately after purchasing the portfolio. We then record a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which is presented as “Investment in receivable portfolios, net” in our condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) established based on the purchase price of the portfolio and the expected future cash flows at the time of purchase.

Debt purchasing revenue includes two components:

(1)     Revenue from receivable portfolios, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR), and also includes all revenue from zero basis portfolio (“ZBA”) collections, and

(2)     Changes in recoveries, which includes

(a)     Recoveries above or below forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and

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(b)     Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases).

Certain pools already fully recovered their cost basis and became zero basis portfolios (“ZBA”) prior to our adoption of the accounting standard for Financial Instruments - Credit Losses (“CECL”) in January 2020. We did not establish a negative allowance for these pools as we elected the Transition Resource Group for Credit Losses’ practical expedient to retain the integrity of these legacy pools. Similar to how we treated ZBA collections prior to the adoption of CECL, all subsequent collections to the ZBA pools are recognized as ZBA revenue, which is included in revenue from receivable portfolios in our condensed consolidated statements of income.

Servicing revenue consists primarily of fee-based income earned on accounts collected on behalf of others, primarily credit originators. We earn fee-based income by providing debt servicing (such as early stage collections, BPO, contingent collections, trace services and litigation activities) to credit originators for non-performing loans in Europe.

Other revenues primarily include revenues recognized from the sale of real estate assets that are acquired as a result of our investments in non-performing secured residential mortgage portfolios as well as direct acquisition of real estate assets in Europe and LAAP.

The following table summarizes revenues for the periods presented (in thousands, except percentages):

	Three Months Ended March 31,
	2024		2023		$ Change		% Change
Revenue recognized from portfolio basis	$	309,748	$	288,390	$	21,358	7.4	%
ZBA revenue	6,104		7,284		(1,180)		(16.2)	%
Revenue from receivable portfolios	315,852		295,674		20,178		6.8	%
Recoveries above (below) forecast	853		(15,358)		16,211
Changes in expected future recoveries	(13,262)		5,857		(19,119)
Changes in recoveries	(12,409)		(9,501)		(2,908)		30.6	%
Debt purchasing revenue	303,443		286,173		17,270		6.0	%
Servicing revenue	20,379		22,585		(2,206)		(9.8)	%
Other revenues	4,564		3,872		692		17.9	%
Total revenues	$	328,386	$	312,630	$	15,756	5.0	%

Our operating results are impacted by foreign currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The strengthening of the U.S. dollar relative to other foreign currencies has an unfavorable impact on our international revenues, and the weakening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international revenues. Our revenues were favorably impacted by foreign currency translation by approximately $4.4 million, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 4.2% for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

The increase in revenue recognized from portfolio basis during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to a higher portfolio basis (i.e. a higher investment in receivable balance) in the U.S. driven by a consistent higher volume of purchases in the past several quarters. The increase was also attributable to the favorable impact from foreign currency translation as discussed above.

As discussed above, ZBA revenue represents collections from our legacy ZBA pools. We expect our ZBA revenue to continue to decline as we collect on these legacy pools. We do not expect to have new ZBA pools in the future.

Recoveries above or below forecast represent over and under-performance in the reporting period, respectively. Collections during the three months ended March 31, 2024, were slightly above the forecasted collections. Collections during the three months ended March 31, 2023, under-performed the forecasted collections by approximately $15.4 million.

29

When reassessing the forecasts of expected lifetime recoveries during the three months ended March 31, 2024, management considered, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment. The updated forecast resulted in changes in timing and amount of total estimated remaining collections which in turn, when discounted to present value, resulted in a net negative change in expected future recoveries of approximately $13.3 million during the three months ended March 31, 2024. During the three months ended March 31, 2023, we recorded approximately $5.9 million in net positive change in expected future period recoveries.

The following tables summarize collections from purchased receivables, revenue from receivable portfolios, end of period receivable balance and other related supplemental data, by year of purchase (in thousands, except percentages):

	Three Months Ended March 31, 2024						As of March 31, 2024
	Collections		Revenue from Receivable Portfolios		Changes in Recoveries		Investment in Receivable Portfolios		Monthly EIR
United States:
ZBA	$	6,103	$	6,103	$	—	$	—	—	%
2011	2,537		2,561		(135)		893		88.6	%
2012	3,005		3,016		(254)		2,237		42.0	%
2013	6,862		6,591		(239)		5,091		40.5	%
2014	4,270		3,190		(338)		14,853		6.7	%
2015	4,087		2,175		868		17,997		3.9	%
2016	7,072		4,041		832		31,303		4.2	%
2017	10,514		6,915		(226)		38,986		5.5	%
2018	17,787		9,812		136		75,984		4.0	%
2019	31,241		17,841		(1,666)		145,804		3.8	%
2020	36,725		20,177		(1,779)		168,902		3.7	%
2021	38,179		20,035		135		157,792		3.9	%
2022	71,316		35,683		(2,728)		360,126		3.1	%
2023	120,713		76,539		1,036		747,765		3.3	%
2024	9,067		8,919		(105)		236,192		3.6	%
Subtotal	369,478		223,598		(4,463)		2,003,925		3.7	%
Europe:
ZBA	1		1		—		—		—	%
2013	13,638		12,018		(1,727)		121,115		3.2	%
2014	12,267		10,572		(1,507)		114,907		3.0	%
2015	8,316		6,505		(1,040)		85,297		2.5	%
2016(1)	8,052		5,915		(359)		72,667		2.8	%
2017	10,083		6,680		(1,231)		114,382		1.9	%
2018	11,405		7,211		(3,683)		147,508		1.6	%
2019	12,181		7,338		(629)		126,348		1.9	%
2020	8,252		5,442		(303)		79,466		2.2	%
2021	13,898		9,177		(41)		158,910		1.9	%
2022	16,913		9,112		(117)		187,886		1.6	%
2023	22,424		10,725		1,268		234,198		1.5	%
2024	3,267		1,558		741		57,959		2.2	%
Subtotal	140,697		92,254		(8,628)		1,500,643		2.0	%
Other geographies:(2)
All vintages	712		—		682		26,819		—	%
Subtotal	712		—		682		26,819		—	%
Total	$	510,887	$	315,852	$	(12,409)	$	3,531,387	3.0	%

_______________________

(1)Portfolio balance includes non-accrual pool groups. The EIR presented is only for pool groups that accrete portfolio revenue.

(2)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.

30

	Three Months Ended March 31, 2023						As of March 31, 2023
	Collections		Revenue from Receivable Portfolios		Changes in Recoveries		Investment in Receivable Portfolios		Monthly EIR
United States:
ZBA	$	7,282	$	7,282	$	—	$	—	—	%
2011	3,369		3,456		(270)		1,142		88.6	%
2012	4,268		3,788		236		2,846		42.0	%
2013	9,091		8,958		(232)		7,036		40.5	%
2014	5,068		3,807		223		18,309		6.7	%
2015	5,391		3,019		307		24,302		3.9	%
2016	9,909		5,628		388		42,713		4.1	%
2017	17,050		10,094		1,523		57,095		5.5	%
2018	26,778		14,792		(1,590)		115,323		4.0	%
2019	49,207		26,266		1,932		215,788		3.8	%
2020	58,497		30,246		1,290		254,268		3.7	%
2021	54,488		31,920		(3,395)		254,059		3.9	%
2022	70,880		49,136		(8,799)		510,213		3.1	%
2023	7,392		6,182		4,031		216,193		2.9	%
Subtotal	328,670		204,574		(4,356)		1,719,287		3.9	%
Europe:
ZBA	2		2		—		—		—	%
2013	15,407		13,229		(896)		136,996		3.2	%
2014	13,830		11,400		(430)		127,413		3.0	%
2015	8,701		6,980		(721)		94,781		2.5	%
2016(1)	9,347		6,548		(314)		79,759		2.8	%
2017	13,114		7,757		(693)		134,957		1.9	%
2018	11,960		8,320		(2,564)		176,504		1.6	%
2019	13,885		8,258		(1,317)		144,718		1.9	%
2020	10,359		6,215		272		91,109		2.2	%
2021	16,079		10,495		(344)		186,092		1.9	%
2022	17,432		10,582		621		225,140		1.6	%
2023	2,672		1,314		1,241		64,047		1.2	%
Subtotal	132,788		91,100		(5,145)		1,461,516		2.1	%
Other geographies:(2)
All vintages	898		—		—		33,989		—	%
Subtotal	898		—		—		33,989		—	%
Total	$	462,356	$	295,674	$	(9,501)	$	3,214,792	3.0	%

______________________

(1)Portfolio balance includes non-accrual pool groups. The EIR presented is only for pool groups that accrete portfolio revenue.

(2)Annual pool groups for other geographies have been aggregated for disclosure purposes.

Servicing revenues during the three months ended March 31, 2024 decreased as compared to servicing revenues during the three months ended March 31, 2023. The decrease was primarily attributable to reduced demand from BPO clients.

Other revenues increased during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily driven by increase of gains recognized on the sale of real estate assets.

31

Operating Expenses

The following table summarizes operating expenses for the periods presented (in thousands, except percentages):

	Three Months Ended March 31,
	2024		2023		$ Change		% Change
Salaries and employee benefits	$	104,184	$	103,850	$	334	0.3	%
Cost of legal collections	58,721		54,101		4,620		8.5	%
General and administrative expenses	36,241		37,965		(1,724)		(4.5)	%
Other operating expenses	30,367		27,556		2,811		10.2	%
Collection agency commissions	7,434		8,150		(716)		(8.8)	%
Depreciation and amortization	7,848		10,870		(3,022)		(27.8)	%
Total operating expenses	$	244,795	$	242,492	$	2,303	0.9	%

Our operating results are impacted by foreign currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The strengthening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international operating expenses, and the weakening of the U.S. dollar relative to other foreign currencies has an unfavorable impact on our international operating expenses. Our operating expenses were unfavorably impacted by foreign currency translation, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 4.2% for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

Operating expenses are explained in more detail as follows:

Salaries and Employee Benefits

The increase in salaries and employee benefits during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to the following reasons:

•Increase in employee benefits of approximately $1.6 million;

•An unfavorable impact of foreign currency translation of approximately $1.8 million driven by the weakening of the U.S. dollar against the British Pound; and

•The increase was partially offset by a decrease in costs relating to headcount reductions in Europe of approximately $2.5 million.

Cost of Legal Collections

Cost of legal collections primarily includes contingent fees paid to our external network of attorneys and the cost of litigation. We pursue legal collections using a network of attorneys that specialize in collection matters and through our internal legal channel. Under the agreements with our contracted attorneys, we advance certain out-of-pocket court costs. Cost of legal collections does not include internal legal channel employee costs, which are included in salaries and employee benefits in our condensed consolidated statements of income.

The following table summarizes our cost of legal collections during the periods presented (in thousands, except percentages):

	Three Months Ended March 31,
	2024		2023		$ Change		% Change
Court costs	$	38,087	$	30,017	$	8,070	26.9	%
Legal collection fees	20,634		24,084		(3,450)		(14.3)	%
Total cost of legal collections	$	58,721	$	54,101	$	4,620	8.5	%

The increase of cost of legal collections during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to increased legal placement in this channel. The increase was also due to the unfavorable impact of foreign currency translation of approximately $0.5 million driven by the weakening of the U.S. dollar against the British Pound.

32

General and Administrative Expenses

The decrease in general and administrative expense during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, was primarily due to the following reasons:

•Decrease in costs associated with legal expenses of approximately $2.2 million;

•Decrease in consulting fees of approximately $1.6 million; and

•The decrease was partially offset by an increase in information technology expenses of $2.0 million and the unfavorable impact of foreign currency translation of approximately $0.5 million driven by the weakening of the U.S. dollar against the British Pound.

Other Operating Expenses

The increase in other operating expenses during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to an increase in postage and printing expenses of approximately $2.1 million.

Collection Agency Commissions

Collection agency commissions are commissions paid to third-party collection agencies. Collections through the collections agencies channel are predominately in Europe and vary from period to period depending on, among other things, the number of accounts placed with an agency versus accounts collected internally. Commission rates vary depending on, among other things, the amount of time that has passed since the charge-off of the accounts placed with an agency, the asset class, and the geographic location of the receivables. Generally, freshly charged-off accounts have a lower commission rate than accounts that have been charged off for a longer period of time, and commission rates for purchased bankruptcy portfolios are lower than the commission rates for charged-off credit card accounts. Collection agency commissions were consistent during the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

Depreciation and Amortization

The decrease in depreciation and amortization expenses during the three months ended March 31, 2024, as compared to three months ended March 31, 2023, was primarily due to a decrease in depreciation expenses of approximately $1.8 million and a decrease in amortizable expenses of approximately $1.2 million as a result of smaller depreciable and amortizable asset balances during the three months ended March 31, 2024, as compared to three months ended March 31, 2023. The intangible assets balance subject to amortization for the three months ended March 31, 2024 was negligible.

Interest Expense

The following table summarizes our interest expense for the periods presented (in thousands, except percentages):

	Three Months Ended March 31,
	2024		2023		$ Change		% Change
Stated interest on debt obligations	$	52,038	$	42,241	$	9,797	23.2	%
Amortization of debt issuance costs	3,300		4,244		(944)		(22.2)	%
Amortization of debt discount	427		350		77		22.0	%
Total interest expense	$	55,765	$	46,835	$	8,930	19.1	%

The increase in interest expense during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to the following reasons:

•The effect resulting from increased average debt balance of approximately $6.3 million;

•The effect resulting from rising interest rates of approximately $2.1 million; and

•An unfavorable impact of foreign currency translation of approximately $0.6 million driven by the weakening of the U.S. dollar against the British Pound.

Other Income, net of Other Expense

Other income or expense consists primarily of foreign currency exchange gains or losses, interest income, and gains or losses recognized on certain transactions outside of our normal course of business. Other income, net, was $2.7 million and $1.7 million during the three months ended March 31, 2024 and 2023, respectively. The increase in other income, net, during the three months ended three months ended March 31, 2024 was primarily due to an increase in interest income of approximately $0.4 million and an increase in gain on derivative instruments of approximately $0.2 million.

33

Provision for Income Taxes

Provision for income taxes and effective tax rate are as follows for the periods presented ($ in thousands):

	Three Months Ended March 31,
	2024			2023
Provision for income taxes	$	7,253		$	6,409
Effective tax rate	23.8		%	25.6		%

For the three months ended March 31, 2024 and 2023, the differences between our effective tax rate and the federal statutory rate were primarily due to state income taxes offset by other foreign adjustments.

Non-GAAP Disclosure

In addition to the financial information prepared in conformity with Generally Accepted Accounting Principles (“GAAP”), we provide historical non-GAAP financial information. Management believes that the presentation of such non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of our operations. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of our business that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business.

Management believes that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments, and amortization methods, which provide a more complete understanding of our financial performance, competitive position, and prospects for the future. Readers should consider the information in addition to, but not instead of, our financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of these measures for comparative purposes.

Adjusted EBITDA. Management utilizes adjusted EBITDA (defined as net income before interest income and expense, taxes, depreciation and amortization, stock-based compensation expenses, acquisition, integration and restructuring related expenses, and other charges or gains that are not indicative of ongoing operations), in the evaluation of our operating performance. Adjusted EBITDA for the periods presented is as follows (in thousands):

	Three Months Ended March 31,
	2024		2023
GAAP net income, as reported	$	23,239	$	18,626
Adjustments:
Interest expense	55,765		46,835
Interest income	(1,368)		(944)
Provision for income taxes	7,253		6,409
Depreciation and amortization	7,848		10,870
Net gain on derivative instruments(1)	(195)		—
Stock-based compensation expense	3,357		4,052
Acquisition, integration and restructuring related expenses(2)	2,319		5,526
Adjusted EBITDA	$	98,218	$	91,374
Collections applied to principal balance(3)	$	214,551	$	182,981

________________________

(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.

34

(3)Collections applied to principal balance is calculated in the table below:

	Three Months Ended March 31,
	2024		2023
Collections applied to investment in receivable portfolios, net	$	195,035	$	166,682
Changes in recoveries	12,409		9,501
REO proceeds applied to basis	7,107		6,798
Collections applied to principal balance	$	214,551	$	182,981

35

Supplemental Performance Data

The tables included in this supplemental performance data section include detail for purchases, collections and ERC by year of purchase.

Our collection expectations are based on account characteristics and economic variables. Additional adjustments are made to account for qualitative factors that may affect the payment behavior of our consumers and servicing related adjustments to ensure our collection expectations are aligned with our operations. We continue to refine our process of forecasting collections both domestically and internationally with a focus on operational enhancements. Our collection expectations vary between types of portfolio and geographic location. As a result, past performance of pools in certain geographic locations or of certain types of portfolio are not necessarily a suitable indicator of future results in other locations or for other types of portfolio.

The supplemental performance data presented in this section is impacted by foreign currency translation, which represents the effect of translating financial results where the functional currency of our foreign subsidiary is different than our U.S. dollar reporting currency. For example, the strengthening of the U.S. dollar relative to other foreign currencies has an unfavorable reporting impact on our international purchases, collections, and ERC, and the weakening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international purchases, collections, and ERC.

We utilize proprietary forecasting models to continuously evaluate the economic life of each pool.

36

Cumulative Collections Money Multiple - Cumulative Collections from Purchased Receivables to Purchase Price Multiple

The following table summarizes our receivable purchases, related gross collections, and cumulative collections money multiples (in thousands, except multiples):

Year of Purchase	Purchase Price(1)		Cumulative Collections through March 31, 2024
			<2015		2015		2016		2017		2018		2019		2020		2021		2022		2023		2024		Total(2)		CCMM(3)
United States:
<2015	$	3,762,057	$	7,258,767	$	1,076,324	$	739,743	$	519,613	$	372,705	$	290,351	$	216,962	$	186,927	$	140,814	$	112,180	$	22,776	$	10,937,162	2.9
2015	499,035		—		105,610		231,102		186,391		125,673		85,042		64,133		42,774		25,655		19,518		4,087		889,985		1.8
2016	552,972		—		—		110,875		283,035		234,690		159,279		116,452		87,717		51,650		35,130		7,072		1,085,900		2.0
2017	527,471		—		—		—		111,902		315,853		255,048		193,328		144,243		85,348		57,985		10,514		1,174,221		2.2
2018	629,302		—		—		—		—		175,042		351,696		308,302		228,919		144,566		89,548		17,787		1,315,860		2.1
2019	675,269		—		—		—		—		—		174,693		416,315		400,250		256,444		164,106		31,241		1,443,049		2.1
2020	537,903		—		—		—		—		—		—		213,450		430,514		311,573		194,522		36,725		1,186,784		2.2
2021	403,981		—		—		—		—		—		—		—		120,354		240,605		188,895		38,179		588,033		1.5
2022	550,254		—		—		—		—		—		—		—		—		98,277		268,516		71,316		438,109		0.8
2023	809,483		—		—		—		—		—		—		—		—		—		184,182		120,713		304,895		0.4
2024	236,452		—		—		—		—		—		—		—		—		—		—		9,068		9,068		—
Subtotal	9,184,179		7,258,767		1,181,934		1,081,720		1,100,941		1,223,963		1,316,109		1,528,942		1,641,698		1,354,932		1,314,582		369,478		19,373,066		2.1
Europe:
<2015	1,242,208		519,115		410,256		322,275		284,799		261,696		218,565		177,458		178,076		134,094		112,284		25,905		2,644,523		2.1
2015	419,941		—		65,870		127,084		103,823		88,065		72,277		55,261		57,817		42,660		36,249		8,317		657,423		1.6
2016	258,218		—		—		44,641		97,587		83,107		63,198		51,609		51,017		40,214		35,278		8,052		474,703		1.8
2017	461,571		—		—		—		68,111		152,926		118,794		87,549		86,107		61,762		48,763		10,083		634,095		1.4
2018	432,258		—		—		—		—		49,383		118,266		78,846		80,629		61,691		49,675		11,405		449,895		1.0
2019	273,354		—		—		—		—		—		44,118		80,502		88,448		63,607		54,544		12,181		343,400		1.3
2020	116,227		—		—		—		—		—		—		22,721		59,803		45,757		37,363		8,252		173,896		1.5
2021	255,788		—		—		—		—		—		—		—		43,082		66,529		58,515		13,898		182,024		0.7
2022	244,508		—		—		—		—		—		—		—		—		36,957		70,385		16,913		124,255		0.5
2023	259,255		—		—		—		—		—		—		—		—		—		40,975		22,424		63,399		0.2
2024	59,205		—		—		—		—		—		—		—		—		—		—		3,267		3,267		0.1
Subtotal	4,022,533		519,115		476,126		494,000		554,320		635,177		635,218		553,946		644,979		553,271		544,031		140,697		5,750,880		1.4
Other geographies(4):
All vintages	340,283		40,293		42,665		109,884		112,383		108,480		75,601		28,960		20,682		3,334		3,954		712		546,948		1.6
Subtotal	340,283		40,293		42,665		109,884		112,383		108,480		75,601		28,960		20,682		3,334		3,954		712		546,948		1.6
Total	$	13,546,995	$	7,818,175	$	1,700,725	$	1,685,604	$	1,767,644	$	1,967,620	$	2,026,928	$	2,111,848	$	2,307,359	$	1,911,537	$	1,862,567	$	510,887	$	25,670,894	1.9

________________________

(1)Adjusted for Put-Backs and Recalls. Put-Backs (“Put-Backs”) and recalls (“Recalls”) represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreement.

(2)Cumulative collections from inception through March 31, 2024, excluding collections on behalf of others.

(3)Cumulative Collections Money Multiple (“CCMM”) through March 31, 2024 refers to cumulative collections as a multiple of purchase price.

(4)Annual pool groups for other geographies have been aggregated for disclosure purposes.

37

Purchase Price Multiple - Total Estimated Collections from Purchased Receivables to Purchase Price Multiple

The following table summarizes our purchases, resulting historical gross collections, estimated remaining gross collections from purchased receivables, and purchase price multiple (in thousands, except multiples):

	Purchase Price(1)		Historical Collections(2)		Estimated Remaining Collections		Total Estimated Gross Collections		Purchase Price Multiple(3)
United States:
<2015(4)	$	3,762,057	$	10,937,162	$	221,463	$	11,158,625	3.0
2015	499,035		889,985		39,490		929,475		1.9
2016	552,972		1,085,900		70,405		1,156,305		2.1
2017	527,471		1,174,221		107,919		1,282,140		2.4
2018	629,302		1,315,860		174,719		1,490,579		2.4
2019	675,269		1,443,049		318,311		1,761,360		2.6
2020	537,903		1,186,784		368,014		1,554,798		2.9
2021	403,981		588,033		357,435		945,468		2.3
2022	550,254		438,109		695,606		1,133,715		2.1
2023	809,483		304,895		1,594,252		1,899,147		2.3
2024	236,452		9,068		553,847		562,915		2.4
Subtotal	9,184,179		19,373,066		4,501,461		23,874,527		2.6
Europe:
<2015(4)	1,242,208		2,644,523		907,408		3,551,931		2.9
2015(4)	419,941		657,423		254,784		912,207		2.2
2016	258,218		474,703		208,976		683,679		2.6
2017	461,571		634,095		264,459		898,554		1.9
2018	432,258		449,895		308,994		758,889		1.8
2019	273,354		343,400		284,781		628,181		2.3
2020	116,227		173,896		184,952		358,848		3.1
2021	255,788		182,024		348,657		530,681		2.1
2022	244,508		124,255		354,251		478,506		2.0
2023	259,255		63,399		415,699		479,098		1.8
2024	59,205		3,267		117,814		121,081		2.0
Subtotal	4,022,533		5,750,880		3,650,775		9,401,655		2.3
Other geographies(5):
All vintages	340,283		546,948		43,103		590,051		1.7
Subtotal	340,283		546,948		43,103		590,051		1.7
Total	$	13,546,995	$	25,670,894	$	8,195,339	$	33,866,233	2.5

________________________

(1)Purchase price refers to the cash paid to a seller to acquire a portfolio less Put-backs, Recalls, and other adjustments. Put-Backs and Recalls represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreement.

(2)Cumulative collections from inception through March 31, 2024, excluding collections on behalf of others.

(3)Purchase Price Multiple represents total estimated gross collections divided by the purchase price.

(4)Includes portfolios acquired in connection with certain business combinations.

(5)Annual pool groups for other geographies have been aggregated for disclosure purposes.

38

Estimated Remaining Gross Collections by Year of Purchase

The following table summarizes our estimated remaining gross collections from purchased receivable portfolios and estimated future cash flows from real estate-owned assets (in thousands):

	Estimated Remaining Gross Collections by Year of Purchase(1)
	2024(3)		2025		2026		2027		2028		2029		2030		2031		2032		>2032		Total(2)
United States:
<2015(4)	$	57,945	$	56,070	$	36,948	$	25,489	$	17,367	$	11,540	$	7,477	$	4,597	$	2,623	$	1,407	$	221,463
2015	10,384		9,917		5,898		4,107		2,895		2,043		1,444		1,024		727		1,051		39,490
2016	18,545		18,025		10,583		7,097		4,990		3,515		2,481		1,754		1,244		2,171		70,405
2017	26,766		26,290		17,393		11,461		7,886		5,560		3,930		2,786		1,980		3,867		107,919
2018	42,639		41,874		28,664		19,501		12,869		8,860		6,255		4,429		3,146		6,482		174,719
2019	82,006		76,490		51,099		34,584		23,530		15,622		10,805		7,611		5,375		11,189		318,311
2020	90,770		89,150		60,147		40,788		27,821		18,927		12,644		8,799		6,206		12,762		368,014
2021	87,530		84,633		59,634		39,528		26,912		18,603		12,845		8,783		6,114		12,853		357,435
2022	188,396		165,431		106,768		73,089		49,315		34,393		24,376		17,385		12,171		24,282		695,606
2023	305,239		423,358		301,016		180,714		121,199		81,781		56,503		39,703		28,057		56,682		1,594,252
2024	105,092		131,837		109,075		65,871		43,466		30,279		21,007		14,843		10,407		21,970		553,847
Subtotal	1,015,312		1,123,075		787,225		502,229		338,250		231,123		159,767		111,714		78,050		154,716		4,501,461
Europe:
<2015(4)	79,011		97,628		89,272		81,307		75,441		69,471		63,385		58,352		53,194		240,347		907,408
2015(4)	24,697		30,118		26,519		24,177		21,268		19,572		17,353		15,851		14,551		60,678		254,784
2016	26,332		26,771		24,404		21,565		17,702		15,679		13,608		11,906		9,981		41,028		208,976
2017	29,850		35,135		30,384		27,424		22,809		19,864		17,308		15,006		13,082		53,597		264,459
2018	34,311		40,241		35,662		31,530		27,295		23,618		20,386		17,793		15,904		62,254		308,994
2019	35,095		41,008		33,458		27,879		23,421		20,652		17,957		15,474		13,590		56,247		284,781
2020	26,634		28,548		24,541		19,290		14,594		11,862		10,439		8,444		7,407		33,193		184,952
2021	42,096		50,399		44,686		38,836		33,133		27,058		21,624		18,072		15,530		57,223		348,657
2022	49,319		56,895		47,709		39,765		32,127		26,402		21,528		17,187		14,297		49,022		354,251
2023	60,127		70,479		58,164		48,258		38,913		30,919		24,469		19,802		16,025		48,543		415,699
2024	19,453		22,896		16,658		12,726		9,942		7,760		6,178		4,970		4,050		13,181		117,814
Subtotal	426,925		500,118		431,457		372,757		316,645		272,857		234,235		202,857		177,611		715,313		3,650,775
Other geographies(5):
All vintages	5,417		6,120		5,086		4,415		3,844		3,471		3,106		2,735		2,312		6,597		43,103
Subtotal	5,417		6,120		5,086		4,415		3,844		3,471		3,106		2,735		2,312		6,597		43,103
Portfolio ERC	1,447,654		1,629,313		1,223,768		879,401		658,739		507,451		397,108		317,306		257,973		876,626		8,195,339
REO ERC(6)	22,814		24,127		25,228		17,867		12,819		4,817		3,285		998		—		—		111,955
Total ERC	$	1,470,468	$	1,653,440	$	1,248,996	$	897,268	$	671,558	$	512,268	$	400,393	$	318,304	$	257,973	$	876,626	$	8,307,294

________________________

(1)As of March 31, 2024, ERC for Zero Basis Portfolios include approximately $46.6 million for purchased consumer and bankruptcy receivables in the United States. ERC for Zero Basis Portfolios in Europe and other geographies was immaterial. ERC also includes approximately $47.7 million from cost recovery portfolios, primarily in other geographies.

(2)Represents the expected remaining gross cash collections over a 180-month period. As of March 31, 2024, ERC for 84-month and 120-month periods were:

	84-Month ERC		120-Month ERC
United States	$	4,188,706	$	4,411,612
Europe	2,608,353		3,127,674
Other geographies	32,181		38,782
Portfolio ERC	6,829,240		7,578,068
REO ERC	111,330		111,955
Total ERC	$	6,940,570	$	7,690,023

(3)Amount for 2024 consists of nine months data from April 1, 2024 to December 31, 2024.

(4)Includes portfolios acquired in connection with certain business combinations.

39

(5)Annual pool groups for other geographies have been aggregated for disclosure purposes.

(6)Real estate-owned assets ERC includes approximately $110.9 million and $1.0 million of estimated future cash flows for Europe and Other Geographies, respectively.

Estimated Future Collections Applied to Investment in Receivable Portfolios

As of March 31, 2024, we had $3.5 billion in investment in receivable portfolios. The estimated future collections applied to the investment in receivable portfolios net balance is as follows (in thousands):

Years Ending December 31,	United States		Europe		Other Geographies		Total
2024(1)	$	400,736	$	164,810	$	4,315	$	569,861
2025	506,973		193,264		4,894		705,131
2026	379,369		166,672		4,051		550,092
2027	229,427		143,356		3,511		376,294
2028	151,090		119,332		3,043		273,465
2029	101,748		102,079		2,712		206,539
2030	69,856		86,681		2,411		158,948
2031	49,335		75,074		1,882		126,291
2032	35,047		67,383		—		102,430
2033	25,058		62,197		—		87,255
2034	18,087		59,020		—		77,107
2035	13,490		57,604		—		71,094
2036	10,614		58,436		—		69,050
2037	8,116		60,662		—		68,778
2038	4,492		67,112		—		71,604
2039	487		16,961		—		17,448
Total	$	2,003,925	$	1,500,643	$	26,819	$	3,531,387

________________________

(1)Amount for 2024 consists of nine months data from April 1, 2024 to December 31, 2024.

Liquidity and Capital Resources

Liquidity

The following table summarizes our cash flow activities for the periods presented (in thousands):

	Three Months Ended March 31,
	2024		2023
	(Unaudited)
Net cash provided by operating activities	$	50,984	$	35,913
Net cash used in investing activities	(90,882)		(130,715)
Net cash provided by financing activities	55,790		110,374

Operating Cash Flows

Cash flows from operating activities represent the cash receipts and disbursements related to all of our activities other than investing and financing activities.

Net cash provided by operating activities was $51.0 million and $35.9 million during the three months ended March 31, 2024 and 2023, respectively. Operating cash flows are derived by adjusting net income for non-cash operating items such as depreciation and amortization, changes in recoveries, stock-based compensation charges, and changes in operating assets and liabilities which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations. Changes in recoveries increased the operating cash flows by $12.4 million and $9.5 million during the three months ended March 31, 2024 and 2023, respectively. Refer to “Note 5: Investment in Receivable Portfolios, Net” in the notes to our consolidated financial statements for discussion relating to changes in recoveries.

40

Investing Cash Flows

Net cash used in investing activities was $90.9 million and $130.7 million during the three months ended March 31, 2024 and 2023, respectively. Cash provided by or used in investing activities is primarily affected by receivable portfolio purchases offset by collection proceeds applied to the principal of our receivable portfolios. Receivable portfolio purchases, net of put-backs, were $291.4 million and $274.6 million during the three months ended March 31, 2024 and 2023, respectively. Collection proceeds applied to the investment in receivable portfolios, were $195.0 million and $166.7 million during the three months ended March 31, 2024 and 2023, respectively. Refer to Purchases and Collections within “Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion relating to purchases and collections.

Financing Cash Flows

Net cash provided by financing activities was $55.8 million and $110.4 million during the three months ended March 31, 2024 and 2023, respectively. Financing cash flows are generally affected by borrowings under our credit facilities and proceeds from various debt offerings, offset by repayments of amounts outstanding under our credit facilities and repayments of various notes. Borrowings under our credit facilities were $248.5 million and $229.1 million during the three months ended March 31, 2024 and 2023, respectively. Repayments of amounts outstanding under our credit facilities were $696.4 million and $140.0 million during the three months ended March 31, 2024 and 2023, respectively. During the three months ended March 31, 2024, we issued $500.0 million 9.25% senior secured notes that mature in 2029, and used the proceeds from the senior secured notes to repay drawings under our Global Senior Facility. During the three months ended March 31, 2023, we issued $230.0 million 4.00% convertible senior notes that mature in 2029, and used $192.5 million of the proceeds from the convertible senior notes to partially repurchase our exchangeable senior notes due 2023.

Capital Resources

Our primary sources of capital are cash collections from our investment in receivable portfolios, bank borrowings, debt offerings, and equity offerings. Depending on the capital markets, we consider additional financings to fund our operations and any potential acquisitions. From time to time, we may repurchase outstanding debt or equity and/or restructure or refinance debt obligations. Our primary cash requirements include funding the purchase of receivable portfolios, operating expenses, the payment of interest and principal on borrowings, the payment of income taxes, funding any entity acquisitions and share repurchases.

We are in material compliance with all covenants under our financing arrangements. See “Note 7: Borrowings” in the notes to our condensed consolidated financial statements for a further discussion of our debt. Available capacity under our Global Senior Facility, was $827.3 million as of March 31, 2024.

In March 2024, we issued $500.0 million in aggregate principal amount of 9.250% Senior Secured Notes due 2029 at an issue price of 100.000% through a private placement offering.

Our Board of Directors has approved a $300.0 million share repurchase program. Repurchases under this program are expected to be made from cash on hand and/or a drawing from our Global Senior Facility and may be made from time to time, subject to market conditions and other factors, in the open market, through private transactions, block transactions, or other methods as determined by our management and Board of Directors, and in accordance with market conditions, other corporate considerations, and applicable regulatory requirements. The program does not obligate us to acquire any particular amount of common stock, and it may be modified or suspended at our discretion. During the three months ended March 31, 2024 and 2023, the Company did not make any repurchases under the share repurchase program. Our practice is to retire the shares repurchased. As of March 31, 2024, authorization for $91.9 million of share repurchases remained under the share repurchase program.

Our cash and cash equivalents as of March 31, 2024, consisted of $43.6 million held by U.S.-based entities and $129.4 million held by foreign entities. Most of our cash and cash equivalents held by foreign entities is indefinitely reinvested and may be subject to material tax effects if repatriated. However, we believe that our sources of cash and liquidity are sufficient to meet our business needs in the United States and do not expect that we will need to repatriate the funds.

Included in cash and cash equivalents is cash that was collected on behalf of, and remains payable to, third-party clients. The balance of cash held for clients was $19.6 million as of March 31, 2024.

Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, timing of cash collections from our consumers, and other risks detailed in our Risk Factors. However, we believe that we have sufficient liquidity to fund our operations for at least the next twelve months, given our expectation of continued positive cash flows from operations, our cash and cash equivalents, our access to capital markets, and availability under our credit facilities. Our future cash needs will depend on our acquisitions of portfolios and businesses.

41

Critical Accounting Estimates

Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions based on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Our actual results could differ from these estimates under different assumptions or conditions. Refer to “Critical Accounting Estimates” contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, for a complete discussion of our critical accounting estimates. Other than the ongoing reassessment of expected future recoveries of our investment in receivable portfolios during each reporting period under our CECL accounting policy as discussed in “Note 5: Investment in Receivable Portfolios, Net” to our condensed consolidated financial statements, there have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2023.

42

Item 3 – Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Rates. As of March 31, 2024, there had not been a material change in any of the foreign currency risk information disclosed in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Interest Rates. As of March 31, 2024, there had not been a material change in the interest rate risk information disclosed in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Item 4 – Controls and Procedures

Attached as exhibits to this Form 10-Q are the certifications required by Rule 13a-14 of the Securities Exchange Act of 1934, as amended. This section includes information concerning the controls and controls evaluation referred to in the certifications.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”) and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and accordingly, management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on their most recent evaluation, as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act are effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1 – Legal Proceedings

Information with respect to this item may be found in “Note 11: Commitments and Contingencies,” to the condensed consolidated financial statements.

Item 1A – Risk Factors

There is no material change in the information reported under “Part I-Item 1A-Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 5 - Other Information

On March 18, 2024, Andrew Asch, Senior Vice President and General Counsel, adopted a trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) to sell up to 2,025 shares of Encore Capital Group, Inc. common stock between June 17, 2024, and June 18, 2025, subject to certain conditions.

44

Item 6 – Exhibits

Number	Description
3.1.1	Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-1/A filed on June 14, 1999, File No. 333-77483)
3.1.2	Certificate of Amendment to the Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 4, 2002, File No. 000-26489)
3.1.3	Second Certificate of Amendment to the Certificate of Incorporation (incorporated by reference to Exhibit 3.1.3 to the Company’s Quarterly Report on Form 10-Q filed on August 7, 2019)
3.2	Amended and Restated Bylaws, as amended through December 13, 2022 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December 16, 2022)
4.1	Indenture dated March 20, 2024 between Encore Capital Group, Inc., the subsidiary guarantors party thereto, GLAS Trust Company LLC as trustee and Truist Bank as security agent for 2029 Notes (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 21, 2024)
31.1	Certification of the Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2	Certification of the Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101.INS	Inline XBRL Instance Document - The instance document does not appear in the interactive data file because XBRL tags are embedded within the inline XBRL document. (filed herewith)
101.SCH	Inline XBRL Taxonomy Extension Schema Document (filed herewith)
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith)
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101

45

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

ENCORE CAPITAL GROUP, INC.
By:	/s/ Jonathan C. Clark
	Jonathan C. Clark
	Executive Vice President,
	Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

Date: May 8, 2024

46

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Ashish Masih, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Encore Capital Group, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/S/ ASHISH MASIH
	Ashish Masih President and Chief Executive Officer

Date: May 8, 2024

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Jonathan C. Clark, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Encore Capital Group, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/S/ JONATHAN C. CLARK
	Jonathan C. Clark Executive Vice President, Chief Financial Officer and Treasurer

Date: May 8, 2024

EX-32.1

Exhibit 32.1

ENCORE CAPITAL GROUP, INC.

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Encore Capital Group, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company.

/s/ ASHISH MASIH

Ashish Masih

President and Chief Executive Officer

May 8, 2024

/s/ JONATHAN C. CLARK

Jonathan C. Clark

Executive Vice President,
Chief Financial Officer and Treasurer

May 8, 2024

This certification accompanies the above described Report and is being furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed as part of the Report.

XML

Cover Page - shares	3 Months Ended
	Mar. 31, 2024	May 01, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2024
Document Transition Report	false
Entity File Number	000-26489
Entity Registrant Name	ENCORE CAPITAL GROUP, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	48-1090909
Entity Address, Address Line One	350 Camino De La Reina
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	San Diego
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92108
City Area Code	877
Local Phone Number	445 - 4581
Title of 12(b) Security	Common Stock, $0.01 Par Value Per Share
Trading Symbol	ECPG
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		23,686,865
Amendment Flag	false
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001084961
Current Fiscal Year End Date	--12-31

XML

Condensed Consolidated Statements of Financial Condition - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Assets
Cash and cash equivalents	$ 172,990	$ 158,364
Investment in receivable portfolios, net	3,531,387	3,468,432
Property and equipment, net	102,776	103,959
Other assets	277,622	293,256
Goodwill	602,400	606,475
Total assets	4,687,175	4,630,486
Liabilities:
Accounts payable and accrued liabilities	180,206	189,928
Borrowings	3,364,029	3,318,031
Other liabilities	189,081	185,989
Total liabilities	3,733,316	3,693,948
Commitments and contingencies (Note 11)
Equity:
Convertible preferred stock, $0.01 par value, 5,000 shares authorized, no shares issued and outstanding	0	0
Common stock, $0.01 par value, 75,000 shares authorized, 23,687 and 23,545 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively	237	235
Additional paid-in capital	8,648	11,052
Accumulated earnings	1,072,410	1,049,171
Accumulated other comprehensive loss	(127,436)	(123,920)
Total stockholders’ equity	953,859	936,538
Total liabilities and stockholders’ equity	4,687,175	4,630,486
Variable Interest Entity
Assets
Cash and cash equivalents	26,879	24,472
Investment in receivable portfolios, net	736,226	717,556
Other assets	11,280	19,358
Liabilities:
Accounts payable and accrued liabilities	1,005	1,854
Borrowings	492,027	494,925
Other liabilities	$ 253	$ 2,452

XML

Condensed Consolidated Statements of Financial Condition (Parenthetical) - $ / shares	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Convertible preferred stock, par value (usd per share)	$ 0.01	$ 0.01
Convertible preferred stock authorized (shares)	5,000,000	5,000,000
Convertible preferred stock issued (shares)	0	0
Convertible preferred stock outstanding (shares)	0	0
Common stock, par value (usd per share)	$ 0.01	$ 0.01
Common stock authorized (shares)	75,000,000	75,000,000
Common stock issued (shares)	23,687,000	23,545,000
Common stock outstanding (shares)	23,687,000	23,545,000

XML

Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Revenues
Revenue from receivable portfolios	$ 315,852	$ 295,674
Changes in recoveries	(12,409)	(9,501)
Total debt purchasing revenue	303,443	286,173
Servicing revenue	20,379	22,585
Other revenues	4,564	3,872
Total revenues	328,386	312,630
Operating expenses
Salaries and employee benefits	104,184	103,850
Cost of legal collections	58,721	54,101
General and administrative expenses	36,241	37,965
Other operating expenses	30,367	27,556
Collection agency commissions	7,434	8,150
Depreciation and amortization	7,848	10,870
Total operating expenses	244,795	242,492
Income from operations	83,591	70,138
Other expense
Interest expense	(55,765)	(46,835)
Other income, net	2,666	1,732
Total other expense	(53,099)	(45,103)
Income before income taxes	30,492	25,035
Provision for income taxes	(7,253)	(6,409)
Net income	$ 23,239	$ 18,626
Earnings per share:
Basic (USD per share)	$ 0.98	$ 0.79
Diluted (USD per share)	$ 0.95	$ 0.75
Weighted average shares outstanding:
Basic (shares)	23,784	23,548
Diluted (shares)	24,468	24,942

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Statement of Comprehensive Income [Abstract]
Net income	$ 23,239	$ 18,626
Change in unrealized gain (loss) on derivative instruments:
Unrealized gain (loss) on derivative instruments	5,475	(8,053)
Income tax effect	(2,685)	876
Unrealized gain (loss) on derivative instruments, net of tax	2,790	(7,177)
Change in foreign currency translation:
Unrealized (loss) gain on foreign currency translation	(6,146)	16,008
Income tax effect	(160)	(383)
Unrealized (loss) gain on foreign currency translation, net of tax	(6,306)	15,625
Other comprehensive (loss) income, net of tax:	(3,516)	8,448
Total comprehensive income	$ 19,723	$ 27,074

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Condensed Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Earnings	Accumulated Other Comprehensive Loss
Balance at beginning of period (shares) at Dec. 31, 2022		23,323
Balance at Beginning of period at Dec. 31, 2022	$ 1,179,627	$ 233	$ 0	$ 1,278,210	$ (98,816)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	18,626			18,626
Other comprehensive income (loss), net of tax	8,448				8,448
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes (shares)		159
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes	(6,353)	$ 2	(6,355)
Stock-based compensation	4,052		4,052
Purchase of capped call options, net of tax effect	(13,865)		(13,865)
Unwind of the existing capped call options	28,542		28,542
Settlement of convertible notes	(34,921)		(12,374)	(22,547)
Balance at end of period (shares) at Mar. 31, 2023		23,482
Balance at end of period at Mar. 31, 2023	1,184,156	$ 235	0	1,274,289	(90,368)
Balance at beginning of period (shares) at Dec. 31, 2023		23,545
Balance at Beginning of period at Dec. 31, 2023	936,538	$ 235	11,052	1,049,171	(123,920)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	23,239			23,239
Other comprehensive income (loss), net of tax	(3,516)				(3,516)
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes (shares)		142
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes	(5,759)	$ 2	(5,761)
Stock-based compensation	3,357		3,357
Balance at end of period (shares) at Mar. 31, 2024		23,687
Balance at end of period at Mar. 31, 2024	$ 953,859	$ 237	$ 8,648	$ 1,072,410	$ (127,436)

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Operating activities:
Net income	$ 23,239	$ 18,626
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,848	10,870
Other non-cash interest expense, net	3,727	4,594
Stock-based compensation expense	3,357	4,052
Deferred income taxes	170	1,369
Changes in recoveries	12,409	9,501
Other, net	717	(1,843)
Changes in operating assets and liabilities
Other assets	(6,223)	(3,139)
Accounts payable, accrued liabilities and other liabilities	5,740	(8,117)
Net cash provided by operating activities	50,984	35,913
Investing activities:
Purchases of receivable portfolios, net of put-backs	(291,367)	(274,625)
Collections applied to investment in receivable portfolios	195,035	166,682
Purchases of asset held for sale	(212)	(22,596)
Purchases of property and equipment	(6,861)	(4,885)
Other, net	12,523	4,709
Net cash used in investing activities	(90,882)	(130,715)
Financing activities:
Payment of loan and debt refinancing costs	(10,202)	(5,850)
Proceeds from credit facilities	248,549	229,128
Repayment of credit facilities	(696,351)	(140,043)
Proceeds from senior secured notes	500,000	0
Repayment of senior secured notes	(9,770)	(9,770)
Proceeds from issuance of convertible senior notes	0	230,000
Repayment of exchangeable senior notes	0	(192,457)
Proceeds from convertible hedge instruments, net	0	10,050
Other, net	23,564	(10,684)
Net cash provided by financing activities	55,790	110,374
Net increase in cash and cash equivalents	15,892	15,572
Effect of exchange rate changes on cash and cash equivalents	(1,266)	(710)
Cash and cash equivalents, beginning of period	158,364	143,912
Cash and cash equivalents, end of period	172,990	158,774
Supplemental disclosure of cash information:
Cash paid for interest	46,469	38,072
Cash paid for taxes, net of refunds	1,542	908
Supplemental schedule of non-cash investing activities:
Investment in receivable portfolios transferred to real estate owned	$ 2,045	$ 1,105

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Ownership, Description of Business, and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Ownership, Description of Business, and Summary of Significant Accounting Policies

Ownership, Description of Business, and Summary of Significant Accounting Policies

Encore Capital Group, Inc. (“Encore”), through its subsidiaries (collectively with Encore, the “Company”), is an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. The Company purchases portfolios of defaulted consumer receivables at deep discounts to face value and manages them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial obligations to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. The Company also provides debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.

Through Midland Credit Management, Inc. and its domestic affiliates (collectively, “MCM”), the Company is a market leader in portfolio purchasing and recovery in the United States. Through Cabot Credit Management Limited (“CCM”) and its subsidiaries and European affiliates (collectively, “Cabot”), the Company is one of the largest credit management services providers in Europe and the United Kingdom. These are the Company’s primary operations.

The Company also has investments and operations in Latin America and Asia-Pacific, which the Company refers to as “LAAP.”

Financial Statement Preparation and Presentation

The accompanying interim condensed consolidated financial statements have been prepared by the Company, without audit, in accordance with the instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”) and, therefore, do not include all information and footnotes necessary for a fair presentation of its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).

In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of the Company’s condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.

The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in the Company’s condensed financial statements and the accompanying notes. Actual results could materially differ from those estimates.

Basis of Consolidation

The condensed consolidated financial statements have been prepared in conformity with GAAP and reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. The Company also consolidates variable interest entities (“VIEs”) for which it is the primary beneficiary. The primary beneficiary has both (a) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance, and (b) either the obligation to absorb losses or the right to receive benefits. Refer to “Note 8: Variable Interest Entities” for further details. All intercompany transactions and balances have been eliminated in consolidation.

Translation of Foreign Currencies

The condensed financial statements of certain of the Company’s foreign subsidiaries are measured using their local currency as the functional currency. Assets and liabilities of foreign operations are translated into U.S. dollars using period-end exchange rates, and revenues and expenses are translated into U.S. dollars using average exchange rates in effect during each period. The resulting translation adjustments are recorded as a component of other comprehensive income or loss. Equity accounts are translated at historical rates, except for the change in retained earnings during the year which is the result of the income statement translation process. Intercompany transaction gains or losses at each period end arising from subsequent measurement of balances for which settlement is not planned or anticipated in the foreseeable future are included as translation adjustments and recorded within other comprehensive income or loss. Translation gains or losses are the material components of accumulated other comprehensive income or loss and are reclassified to earnings upon the substantial sale or liquidation of investments in foreign operations.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within the segment measure of profit or loss. This guidance will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024. This ASU will likely result in additional required disclosure when adopted. The Company is currently evaluating the provisions of this ASU and the impact on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The new standard is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

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Earnings Per Share

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period.

The number of shares used to calculate the diluted earnings per share is computed by using the basic weighted-average number of common shares outstanding plus any dilutive potential common shares outstanding during the period, except when their effect is anti-dilutive. Dilutive potential common shares include outstanding stock based awards, and the dilutive effect of the convertible and exchangeable senior notes, if applicable.

A reconciliation of shares used in calculating earnings per basic and diluted shares follows (in thousands, except per share amounts):

	Three Months Ended March 31,
	2024		2023
Net income	$	23,239	$	18,626
Shares:
Total weighted-average basic shares outstanding	23,784		23,548
Dilutive effect of stock-based awards	200		291
Dilutive effect of convertible and exchangeable senior notes	484		1,103
Total weighted-average dilutive shares outstanding	24,468		24,942
Basic earnings per share	$	0.98	$	0.79
Diluted earnings per share	$	0.95	$	0.75

There were no anti-dilutive employee stock options outstanding during the three months ended March 31, 2024 and 2023.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received upon sale of an asset or the price paid to transfer a liability, in an orderly transaction between market participants at the measurement date (i.e., the “exit price”). The Company uses a fair value hierarchy that prioritizes the inputs used in valuation techniques to measure fair value into three broad levels. The following is a brief description of each level:

•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•Level 3: Unobservable inputs, including inputs that reflect the reporting entity’s own assumptions.

The Company’s cash and cash equivalents, certain other assets, accounts payable and accrued liabilities, and other liabilities approximate their fair values due to their short-term nature, which are determined to be a Level 1 measurement.

Financial Instruments Required To Be Carried At Fair Value

Financial assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

	Fair Value Measurements as of March 31, 2024
	Level 1		Level 2		Level 3		Total
Assets
Interest rate cap contracts	$	—	$	10,039	$	—	$	10,039
Liabilities
Interest rate swap agreements	—		(11,976)		—		(11,976)
Cross-currency swap agreements	—		(39,004)		—		(39,004)

	Fair Value Measurements as of December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets
Interest rate cap contracts	$	—	$	16,950	$	—	$	16,950
Cross-currency swap agreements	—		361		—		361
Liabilities
Interest rate swap agreements	—		(22,510)		—		(22,510)
Cross-currency swap agreements	—		(28,039)		—		(28,039)

Derivative Contracts:

The Company uses derivative instruments to manage its exposure to fluctuations in interest rates and foreign currency exchange rates. Fair values of these derivative instruments are estimated using industry standard valuation models. These models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign currency exchange rates, and forward and spot prices for currencies. The Company’s derivative agreements are subject to underlying agreements with master netting arrangements, which provide for the right of offset in the event of default or in the event of bankruptcy of either party to the transactions. The Company reports its assets and liabilities subject to these arrangements on a gross basis for certain derivative agreements.

Non-Recurring Fair Value Measurement:

Certain assets are measured at fair value on a nonrecurring basis. These assets include real estate-owned assets classified as held for sale at the lower of their carrying value or fair value less cost to sell. The fair value of the assets held for sale and estimated selling expenses were determined at the time of initial recognition and in each reporting period using Level 3 measurements based on appraised values using market comparables. The fair value estimate of the assets held for sale was approximately $64.0 million and $70.6 million as of March 31, 2024 and December 31, 2023, respectively.

Financial Instruments Not Required To Be Carried At Fair Value

The table below summarizes fair value estimates for the Company's financial instruments that are not required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.

The carrying amounts in the following table are included in the condensed consolidated statements of financial condition as of March 31, 2024 and December 31, 2023 (in thousands):

	March 31, 2024				December 31, 2023
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets
Investment in receivable portfolios, net	$	3,531,387	$	3,582,622	$	3,468,432	$	3,515,651
Financial Liabilities
Global senior secured revolving credit facility	367,739		367,739		816,880		816,880
Encore private placement notes	19,540		19,409		29,310		28,922
Senior secured notes(1)	2,123,535		2,084,677		1,649,621		1,598,636
Convertible senior notes due October 2025	100,000		125,369		100,000		136,403
Convertible senior notes due March 2029	230,000		215,540		230,000		226,794
Cabot securitisation senior facility	322,110		322,110		324,646		324,646
U.S. facility	175,000		175,000		175,000		175,000
Other borrowings	65,902		65,902		24,904		24,904

_______________________

(1)Carrying amount represents historical cost, adjusted for any related debt discount.

Investment in Receivable Portfolios:

The fair value of investment in receivable portfolios is measured using Level 3 inputs by discounting the estimated future cash flows generated by the Company’s proprietary forecasting models. The key inputs include the estimated future gross cash flow, average cost to collect, and discount rate. The determination of such inputs requires significant judgment, including assessing the assumed market participant’s cost structure, its determination of whether to include fixed costs in its valuation, its collection strategies, and determining the appropriate weighted average cost of capital. The Company evaluates the use of these key inputs on an ongoing basis and refines the data as it continues to obtain better information from market participants in the debt recovery and purchasing business.

Borrowings:

The Company’s convertible notes, senior secured notes and private placement notes are carried at historical cost, adjusted for the applicable debt discount. The fair value estimate for the convertible notes incorporates quoted market prices using Level 2 inputs. The fair value of the senior secured notes and private placement notes is estimated using widely accepted valuation techniques, including discounted cash flow analyses using available market information on discount and borrowing rates with similar terms, maturities, and credit ratings. Accordingly, the Company used Level 2 inputs for these debt instrument fair value estimates.

The carrying value of the Company’s senior secured revolving credit facility, securitisation senior facility, U.S. facility, and other borrowings approximates fair value due to the use of current market rates that are repriced frequently, which are determined to be a Level 2 measurement.

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Derivatives and Hedging Instruments

3 Months Ended

Mar. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Instruments

Derivatives and Hedging Instruments

The Company may periodically enter into derivative financial instruments to manage risks related to interest rates and foreign currency. Certain of the Company’s derivative financial instruments qualify for hedge accounting treatment.

The following table summarizes the fair value of derivative instruments as recorded in the Company’s condensed consolidated statements of financial condition (in thousands):

	March 31, 2024			December 31, 2023
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Interest rate cap contracts	Other assets	$	8,405	Other assets	$	14,564
Interest rate swap agreements	Other liabilities	(11,976)		Other liabilities	(22,510)
Cross-currency swap agreements	Other assets	—		Other assets	361
Cross-currency swap agreements	Other liabilities	(39,004)		Other liabilities	(28,039)
Derivatives not designated as hedging instruments:
Interest rate cap contracts	Other assets	1,634		Other assets	2,386

Derivatives Designated as Hedging Instruments

The Company may periodically enter into interest rate swap agreements and interest rate cap contracts to reduce its exposure to fluctuations in interest rates on variable interest rate debt and their impact on earnings and cash flows. Under the swap agreements, the Company receives floating interest rate payments and makes interest payments based on fixed interest rates. Under the cap contracts, the Company receives floating interest rate payments and makes interest payments based on capped interest rates. The Company designates its interest rate swap and interest rate cap instruments as cash flow hedges at inception.

The Company uses cross-currency swap agreements to manage foreign currency exchange risk by converting fixed-rate Euro-denominated borrowings and fixed-rate GBP-denominated borrowings including periodic interest payments and the payment of principal at maturity to fixed-rate USD debt. The cross-currency swap agreements are accounted for as fair value hedges.

The following table summarizes the terms of the derivative instruments designated as hedging instruments as recorded in the Company’s consolidated statements of financial condition:

	March 31, 2024
	Effective date	Maturity Date	Hedge Designation	Notional Amount	Receive Floating Rate Index
Interest rate cap contracts
2019 Cap	January 2020	June 2024	Cash flow hedge	$431.7 million	3-month EURIBOR
2021 Cap(1)	November 2021	September 2024	Cash flow hedge	$315.8 million	SONIA
2024 Cap	September 2024	September 2026	Cash flow hedge	$322.1 million	SONIA
Interest rate swap agreements
2023 Euro IR Swap	October 2023	January 2028	Cash flow hedge	$107.9 million	3-month EURIBOR
2024 Euro IR Swaps	June 2024	January 2028	Cash flow hedge	$447.9 million	3-month EURIBOR
2023 SOFR IR Swaps	November 2023	October 2026	Cash flow hedge	$150.0 million	1-month SOFR CME Term
Cross-currency swap agreements
2020 Euro Swaps	September 2020	October 2025	Fair value hedge	$377.8 million	—
2023 GBP Swaps	July 2023	February 2026	Fair value hedge	$379.0 million	—

______________________

(1)The total notional amount of the 2021 Cap was $442.1 million, of which $315.8 million was hedge designated and $126.3 million was not hedge designated as of March 31, 2024.

	December 31, 2023
	Effective date	Maturity Date	Hedge Designation	Notional Amount	Receive Floating Rate Index
Interest rate cap contracts
2019 Cap	January 2020	June 2024	Cash flow hedge	$441.5 million	3-month EURIBOR
2021 Cap(1)	November 2021	September 2024	Cash flow hedge	$318.3 million	SONIA
2024 Cap	September 2024	September 2026	Cash flow hedge	$324.6 million	SONIA
Interest rate swap agreements
2023 Euro IR Swap	October 2023	January 2028	Cash flow hedge	$110.4 million	3-month EURIBOR
2024 Euro IR Swaps	June 2024	January 2028	Cash flow hedge	$458.1 million	3-month EURIBOR
2023 SOFR IR Swaps	November 2023	October 2026	Cash flow hedge	$150.0 million	1-month SOFR CME Term
Cross-currency swap agreements
2020 Euro Swaps	September 2020	October 2025	Fair value hedge	$386.3 million	—
2023 GBP Swaps	July 2023	February 2026	Fair value hedge	$381.9 million	—

_______________________

(1)The total notional amount of the 2021 Cap was $445.6 million, of which $318.3 million was hedge designated and $127.3 million was not hedge designated as of December 31, 2023.

The Company expects to reclassify approximately $7.3 million of net derivative gain from OCI into earnings relating to its cash flow designated derivatives within the next 12 months.

The following tables summarize the effects of derivatives designated as hedging instruments in the Company’s condensed consolidated financial statements (in thousands):

Derivatives Designated as Hedging Instruments	Gain (Loss) Recognized in OCI				Location of Gain (Loss) Reclassified from OCI into Income (Loss)	Gain (Loss) Reclassified from OCI into Income
	Three Months Ended March 31,					Three Months Ended March 31,
	2024		2023			2024		2023
Interest rate swap agreements	$	11,074	$	—	Interest expense	$	540	$	—
Interest rate cap contracts	(6,051)		(6,924)		Interest expense	(712)		(450)
Cross-currency swap agreements	(13,010)		2,066		Interest expense	(1,780)		(1,508)
					Other (expense) income	(11,510)		5,153

Derivatives Not Designated as Hedging Instruments

In September 2023, the Company partially dedesignated the 2021 Cap. As of March 31, 2024, £100.0 million (approximately $126.3 million based on an exchange rate of $1.00 to £0.79, the exchange rate as of March 31, 2024) of the notional amount of the 2021 Cap is not designated as a hedging instrument for accounting purposes. The gains or losses resulting from changes in fair value on the portion of the 2021 cap that is no longer designated as a hedging instrument are recognized in other income or other expenses. The Company recorded a gain of approximately $0.2 million resulting from the fair value change of the undesignated 2021 Cap during the three months ended March 31, 2024. Refer above for terms relating to the 2021 Cap.

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Investment in Receivable Portfolios, Net

3 Months Ended

Mar. 31, 2024

Receivables [Abstract]

Investment in Receivable Portfolios, Net

Investment in Receivable Portfolios, Net

The Company’s purchased portfolios of loans are grossed-up to their face value with an offsetting allowance and noncredit discount allocated to the individual receivables as the unit of account is at the individual loan level. Since each loan is deeply delinquent and deemed uncollectible at the individual loan level, the Company applies its charge-off policy and fully writes-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables immediately after purchasing the portfolio. The Company then records a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which ultimately equals the amount paid for a portfolio purchase and presented as “Investment in receivable portfolios, net” in the Company’s condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) based on the purchase price of the portfolio and the expected future cash flows at the time of purchase.

Receivable portfolio purchases are aggregated into pools based on similar risk characteristics. Examples of risk characteristics include financial asset type, collateral type, size, interest rate, date of origination, term, and geographic location. The Company’s static pools are typically grouped into credit card, purchased consumer bankruptcy, and mortgage portfolios. The Company further groups these static pools by geographic location. Once a pool is established, the portfolios will remain in the designated pool unless the underlying risk characteristics change. The purchase EIR of a pool will not change over the life of the pool even if expected future cash flows change.

Revenue is recognized for each static pool over the economic life of the pool. Debt purchasing revenue includes two components:

(1)     Revenue from receivable portfolios, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR) and also includes all revenue from zero basis portfolio (“ZBA”) collections, and

(2)     Changes in recoveries, which includes

(a)     Recoveries above or below forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and

(b)     Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases).

The Company measures expected future recoveries based on historical experience, current conditions, reasonable and supportable forecasts, and other quantitative and qualitative factors. Factors that may change the expected future recoveries may include both internal as well as external factors. Internal factors include operational performance, such as capacity and the productivity of the Company’s collection staff. External factors include new laws or regulations, new interpretations of existing laws or regulations, and macroeconomic conditions. The Company continues to reassess its expected future recoveries in each reporting period.

Investment in receivable portfolios, net consists of the following as of the dates presented (in thousands):

	March 31, 2024		December 31, 2023
Amortized cost	$	—	$	—
Negative allowance for expected recoveries	3,531,387		3,468,432
Balance, end of period	$	3,531,387	$	3,468,432

The following table summarizes the changes in the balance of investment in receivable portfolios, net during the periods presented (in thousands):

	Three Months Ended March 31,
	2024		2023
Balance, beginning of period	$	3,468,432	$	3,088,261
Negative allowance for expected recoveries - current period purchases(1)	295,714		276,431
Collections applied to investment in receivable portfolios, net (2)	(195,035)		(166,682)
Changes in recoveries (3)	(12,409)		(9,501)
Put-backs and recalls	(4,347)		(1,806)
Disposals and transfers to real estate owned	(2,045)		(1,105)
Foreign currency translation adjustments	(18,923)		29,194
Balance, end of period	$	3,531,387	$	3,214,792

_______________________

(1)The table below provides the detail on the establishment of negative allowance for expected recoveries of portfolios purchased during the periods presented:

	Three Months Ended March 31,
	2024		2023
Purchase price	$	295,714	$	276,431
Allowance for credit losses	644,514		659,644
Amortized cost	940,228		936,075
Noncredit discount	1,255,793		1,005,221
Face value	2,196,021		1,941,296
Write-off of amortized cost	(940,228)		(936,075)
Write-off of noncredit discount	(1,255,793)		(1,005,221)
Negative allowance	295,714		276,431
Negative allowance for expected recoveries - current period purchases	$	295,714	$	276,431

(2)Collections applied to investment in receivable portfolios, net, is calculated as follows during the periods presented:

	Three Months Ended March 31,
	2024		2023
Cash Collections	$	510,887	$	462,356
Less - amounts classified to revenue from receivable portfolios	(315,852)		(295,674)
Collections applied to investment in receivable portfolios, net	$	195,035	$	166,682

(3)Changes in recoveries is calculated as follows during the periods presented, where recoveries include cash collections, put-backs and recalls, and other cash-based adjustments:

	Three Months Ended March 31,
	2024		2023
Recoveries above (below) forecast	$	853	$	(15,358)
Changes in expected future recoveries	(13,262)		5,857
Changes in recoveries	$	(12,409)	$	(9,501)

Recoveries above or below forecast represent over and under-performance in the reporting period, respectively. Collections during the three months ended March 31, 2024, over-performed the forecasted collections by approximately $0.9 million. Collections during the three months ended March 31, 2023, under-performed the forecasted collections by approximately $15.4 million.

When reassessing the forecasts of expected lifetime recoveries during the three months ended March 31, 2024, management considered, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment. The updated forecast resulted in changes in the timing and amount of total estimated remaining collections which in turn, when discounted to present value, resulted in a net negative change in expected future recoveries of approximately $13.3 million for the three months ended March 31, 2024. During the three months ended March 31, 2023, the Company recorded approximately $5.9 million in net positive change in expected future period recoveries.

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Other Assets

3 Months Ended

Mar. 31, 2024

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Assets

Other Assets

Other assets consist of the following (in thousands):

	March 31, 2024		December 31, 2023
Real estate owned	$	63,961	$	70,590
Operating lease right-of-use assets	63,243		67,019
Prepaid expenses	40,599		32,910
Deferred tax assets, net	13,709		17,277
Derivative instruments	10,039		17,311
Service fee receivables	9,669		9,080
Income tax deposits	7,427		8,735
Other	68,975		70,334
Total	$	277,622	$	293,256

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Borrowings

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Borrowings

Borrowings

The Company is in compliance in all material respects with all covenants under its financing arrangements as of March 31, 2024. The components of the Company’s consolidated borrowings were as follows (in thousands):

	March 31, 2024		December 31, 2023
Global senior secured revolving credit facility	$	367,739	$	816,880
Encore private placement notes	19,540		29,310
Senior secured notes	2,128,357		1,654,989
Convertible senior notes	330,000		330,000
Cabot securitisation senior facility	322,110		324,646
U.S. facility	175,000		175,000
Other	65,902		24,904
Finance lease liabilities	2,262		2,818
	3,410,910		3,358,547
Less: debt discount and issuance costs, net of amortization	(46,881)		(40,516)
Total	$	3,364,029	$	3,318,031

Encore is the parent of the restricted group for the Global Senior Facility, the Senior Secured Notes and the Encore Private Placement Notes, each of which is guaranteed by the same group of material Encore subsidiaries and secured by the same collateral, which represents substantially all of the assets of those subsidiaries.

Global Senior Secured Revolving Credit Facility

In September 2020, the Company entered into a multi-currency senior secured revolving credit facility agreement (as amended and restated, the “Global Senior Facility”). As of March 31, 2024, the Global Senior Facility provided for a total committed facility of $1,203.0 million that matures in September 2027 and includes the following key provisions:

•Interest at Term SOFR (or EURIBOR for any loan drawn in Euro or a rate based on SONIA for any loan drawn in British Pound), with a Term SOFR (or EURIBOR or SONIA) floor of 0.00%, plus a margin of 2.50%, plus in the case of Term SOFR borrowings, a credit adjustment spread of 0.10%;

•An unused commitment fee of 0.40% per annum, payable quarterly in arrears;

•A restrictive covenant that limits the LTV Ratio (defined in the Global Senior Facility) to 0.75 in the event that the Global Senior Facility is more than 20% utilized;

•A restrictive covenant that limits the SSRCF LTV Ratio (defined in the Global Senior Facility) to 0.275;

•A restrictive covenant that requires the Company to maintain a Fixed Charge Coverage Ratio (as defined in the Global Senior Facility) of at least 2.0;

•Additional restrictions and covenants which limit, among other things, the payment of dividends and the incurrence of additional indebtedness and liens; and

•Standard events of default which, upon occurrence, may permit the lenders to terminate the Global Senior Facility and declare all amounts outstanding to be immediately due and payable.

The Global Senior Facility is secured by substantially all of the assets of the Company and the guarantors. Pursuant to the terms of an intercreditor agreement entered into with respect to the relative positions of (1) the Global Senior Facility, any super priority hedging liabilities and the Encore Private Placement Notes (collectively, “Super Senior Liabilities”) and (2) the Senior Secured Notes, Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.

As of March 31, 2024, the outstanding borrowings under the Global Senior Facility were $367.7 million. The weighted average interest rate of the Global Senior Facility was 7.89% and 7.06% for the three months ended March 31, 2024 and 2023, respectively. Available capacity under the Global Senior Facility, after taking into account applicable debt covenants, was approximately $827.3 million as of March 31, 2024.

Encore Private Placement Notes

In August 2017, Encore entered into $325.0 million in senior secured notes with a group of insurance companies (the “Encore Private Placement Notes”). As of March 31, 2024, $19.5 million of the Encore Private Placement Notes remained outstanding. The Encore Private Placement Notes bear an annual interest rate of 5.625%, mature in August 2024 and require quarterly principal payments of $9.8 million. The covenants and material terms for the Encore Private Placement Notes are substantially similar to those for the Global Senior Facility.

Senior Secured Notes

The following table provides a summary of the Company’s senior secured notes (the “Senior Secured Notes”) ($ in thousands):

	March 31, 2024		December 31, 2023		Issue Currency	Maturity Date	Interest Payment Dates	Interest Rate
2025 Notes	$	377,762	$	386,324	EUR	Oct 15, 2025	Apr 15, Oct 15	4.875	%
2026 Notes	378,952		381,937		GBP	Feb 15, 2026	Feb 15, Aug 15	5.375	%
2028 Notes	315,794		318,280		GBP	Jun 1, 2028	Jun 1, Dec 1	4.250	%
2028 Floating Rate Notes	555,849		568,448		EUR	Jan 15, 2028	Jan 15, Apr 15, Jul 15, Oct 15	EURIBOR +4.250%(1)
2029 Notes	500,000		—		USD	Apr 1, 2029	Apr 1, Oct 1	9.250	%
	$	2,128,357	$	1,654,989

_______________________

(1)Interest rate is based on three-month EURIBOR (subject to a 0% floor) plus 4.250% per annum, resets quarterly.

The Senior Secured Notes are secured by the same collateral as the Global Senior Facility and the Encore Private Placement Notes. The guarantees provided in respect of the Senior Secured Notes are pari passu with each such guarantee given in respect of the Global Senior Facility and Encore Private Placement Notes. Subject to the intercreditor agreement described above under the section “Global Senior Secured Revolving Credit Facility,” Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.

In March 2024, Encore issued $500.0 million in aggregate principal amount of 9.250% Senior Secured Notes due April 2029 at an issue price of 100.000% (the “2029 Notes”). Interest on the 2029 Notes is payable semi-annually, in arrears, on April 1 and October 1 of each year, commencing on October 1, 2024. The Company used the proceeds from this offering to pay down $493.0 million of the drawings under its Global Senior Facility and to pay certain transaction fees and expenses incurred in connection with the offering of the 2029 Notes.

The 2028 Floating Rate Notes had a weighted average interest rate of 8.12% and 6.38% for the three months ended March 31, 2024 and 2023, respectively. As discussed in “Note 4: Derivatives and Hedging Instruments,” the Company uses interest rate derivative contracts to manage its risk related to the interest rate fluctuation in its variable interest rate bearing debt. The weighted average interest rate of the 2028 Floating Rate Notes including the effect of the hedging instruments was 5.01% and 4.33% for the three months ended March 31, 2024 and 2023, respectively.

Convertible Notes

The following table provides a summary of the principal balance, maturity date and interest rate for the Company’s convertible senior notes (the “Convertible Notes”) ($ in thousands):

	March 31, 2024		December 31, 2023		Maturity Date	Interest Payment Dates	Interest Rate
2025 Convertible Notes	$	100,000	$	100,000	Oct 1, 2025	Apr 1, Oct 1	3.250	%
2029 Convertible Notes	230,000		230,000		Mar 15, 2029	Mar 15, Sep 15	4.000	%
	$	330,000	$	330,000

In order to reduce the risk related to the potential dilution and/or the potential cash payments the Company may be required to make in the event that the market price of the Company’s common stock becomes greater than the conversion prices of the Convertible Notes, the Company may enter into hedge programs that increase the effective conversion price for the Convertible Notes. In connection with the issuance of the 2029 Convertible Notes, the Company entered into privately negotiated capped call transactions that effectively raised the conversion price of the 2029 Convertible Notes from $65.89 to $82.69. These hedging instruments have been determined to be indexed to the Company’s own stock and meet the criteria for equity classification. The Company recorded the cost of the hedge instruments as a reduction in additional paid-in capital, and does not recognize subsequent changes in fair value of these financial instruments in its condensed consolidated financial statements. The Company did not hedge the 2025 Convertible Notes.

Certain key terms related to the convertible features as of March 31, 2024 are listed below ($ in thousands, except conversion price):

	2025 Convertible Notes		2029 Convertible Notes
Initial conversion price	$	40.00	$	65.89
Closing stock price at date of issuance	$	32.00	$	51.68
Closing stock price date	Sep 4, 2019		Feb 28, 2023
Initial conversion rate (shares per $1,000 principal amount)	25.0000		15.1763
Adjusted conversion rate (shares per $1,000 principal amount)(1)	25.1310		15.1763
Adjusted conversion price(1)	$	39.79	$	65.89
Adjusted effective conversion price(2)	$	39.79	$	82.69
Excess of if-converted value compared to principal(3)	$	14,622	$	—
Conversion date	Jul 1, 2025		Dec 15, 2028

_______________________

(1)Pursuant to the indenture for the Company’s 2025 Convertible Notes, the conversion rate for the 2025 Convertible Notes was adjusted upon the completion of the Company’s tender offer in December 2021.

(2)As discussed above, the Company maintains a hedge program that increases the effective conversion price for the 2029 Convertible Notes to $82.69.

(3)Represents the premium the Company would have to pay assuming the Convertible Notes were converted on March 31, 2024 using a hypothetical share price based on the closing stock price on March 28, 2024, the last trading day for the three months ended March 31, 2024.

In the event of conversion, the Convertible Notes are convertible into cash up to the aggregate principal amount of the notes and the excess conversion premium, if any, may be settled in cash or shares of the Company’s common stock at the Company’s election and subject to certain restrictions contained in each of the indentures governing the Convertible Notes.

Interest expense related to the Convertible Notes was $3.1 million and $2.9 million during the three months ended March 31, 2024 and 2023, respectively.

Cabot Securitisation Senior Facility

Cabot Securitisation UK Ltd (“Cabot Securitisation”), an indirect subsidiary of Encore, has a senior facility for a committed amount of £255.0 million (as amended, the “Cabot Securitisation Senior Facility”). Funds drawn under the Cabot Securitisation Senior Facility bear interest at a rate per annum equal to SONIA plus a margin of 3.20% plus, for periods after September 18, 2026, a step up margin ranging from 0% to 1.00%. The Cabot Securitisation Senior Facility matures in September 2028.

As of March 31, 2024, the outstanding borrowings under the Cabot Securitisation Senior Facility were £255.0 million (approximately $322.1 million based on an exchange rate of $1.00 to £0.79, the exchange rate as of March 31, 2024). The obligations of Cabot Securitisation under the Cabot Securitisation Senior Facility are secured by first ranking security interests over all of Cabot Securitisation’s property, assets and rights (including receivables purchased from Cabot Financial UK from time to time), the book value of which was approximately £329.2 million (approximately $415.8 million based on an exchange rate of $1.00 to £0.79, the exchange rate as of March 31, 2024) as of March 31, 2024. The weighted average interest rate of the Cabot Securitisation Senior Facility was 8.40% and 6.87% for the three months ended March 31, 2024 and 2023, respectively. As discussed in “Note 4, Derivatives and Hedging Instruments,” the Company uses interest rate cap contracts to manage its risk related to the interest rate fluctuations in its variable interest rate bearing debt. The weighted average interest rate of the Cabot Securitisation Senior Facility including the effect of the hedging instruments was 5.51% and 5.25% for the three months ended March 31, 2024 and 2023, respectively.

Cabot Securitisation is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 8: Variable Interest Entities” for further details.

U.S. Facility

In October 2023, an indirect subsidiary of Encore (“U.S. Financing Subsidiary”), entered into a facility for a committed amount of $175.0 million (the “U.S. Facility”). The U.S. Facility matures in October 2026. Funds drawn under the U.S. Facility bear interest at a rate per annum equal to Term SOFR plus a margin of 3.5%.

As of March 31, 2024, the outstanding borrowings under the U.S. Facility were $175.0 million. The obligations under the U.S. Facility are secured by first ranking security interests over all of U.S. Financing Subsidiary’s assets and rights. As of March 31, 2024, this included receivables acquired from MCM, the book value of which was approximately $319.8 million. The weighted average interest rate of the U.S. Facility was 8.93% for the three months ended March 31, 2024. As discussed in “Note 4: Derivatives and Hedging Instruments,” the Company uses interest rate derivative contracts to manage its risk related to the interest rate fluctuation in its variable interest rate bearing debt. The weighted average interest rate of the U.S. Facility including the effect of the hedging instruments was 8.08% for the three months ended March 31, 2024.

The U.S. Facility is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 8: Variable Interest Entities” for further details.

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Variable Interest Entities

3 Months Ended

Mar. 31, 2024

Variable Interest Entity, Measure of Activity [Abstract]

Variable Interest Entities

Variable Interest Entities

A VIE is defined as a legal entity whose equity owners do not have sufficient equity at risk, or, as a group, the holders of the equity investment at risk lack any of the following three characteristics: decision-making rights, the obligation to absorb expected losses, or the right to receive expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and the obligation to absorb expected losses or the right to receive residual returns from the entity that could potentially be significant to the VIE. The Company consolidates VIEs when it is the primary beneficiary.

As of March 31, 2024, the Company’s VIEs include certain securitized financing vehicles and other immaterial special purpose entities that were created to purchase receivable portfolios in certain geographies. The Company is the primary beneficiary of these VIEs. The Company has the power to direct the activities of the VIEs including the ability to exercise discretion in the servicing of the financial assets and has the right to receive residual returns that could potentially be significant to the VIEs. The Company’s exposure to loss is limited to the total of the carrying value of the VIEs. The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary.

Most assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the VIE.

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Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2024

Accumulated Other Comprehensive Income (Loss) [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

A summary of the Company’s changes in accumulated other comprehensive loss by component is presented below (in thousands):

	Three Months Ended March 31, 2024
	Derivatives		Currency Translation Adjustments		Accumulated Other Comprehensive Loss
Balance at beginning of period	$	(3,093)	$	(120,827)	$	(123,920)
Other comprehensive loss before reclassification	(7,987)		(6,146)		(14,133)
Reclassification	13,462		—		13,462
Tax effect	(2,685)		(160)		(2,845)
Balance at end of period	$	(303)	$	(127,133)	$	(127,436)

	Three Months Ended March 31, 2023
	Derivatives		Currency Translation Adjustments		Accumulated Other Comprehensive Loss
Balance at beginning of period	$	36,494	$	(135,310)	$	(98,816)
Other comprehensive (loss) income before reclassification	(4,858)		16,008		11,150
Reclassification	(3,195)		—		(3,195)
Tax effect	876		(383)		493
Balance at end of period	$	29,317	$	(119,685)	$	(90,368)

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Income Taxes

3 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2024 was 23.8%. For the three months ended March 31, 2023, the Company’s effective tax rate was 25.6%. For the three months ended March 31, 2024, the difference between the effective tax rate and the federal statutory rate was primarily due to state income taxes offset by other foreign adjustments. For the three months ended March 31, 2023, the difference between the effective tax rate and the federal statutory rate was primarily due to state income taxes offset by other foreign adjustments.

Each interim period is considered an integral part of the annual period and tax expense or benefit is measured using an estimated annual effective income tax rate. The estimated annual effective tax rate for the full year is applied to the respective interim period, taking into account year-to-date amounts and projected amounts for the year. Since the Company operates in foreign countries with varying tax rates, the Company’s quarterly effective tax rate is dependent on the level of income or loss from international operations in the reporting period.

The Company’s subsidiary in Costa Rica is operating under a 100% tax holiday through December 31, 2026. The impact of the tax holiday in Costa Rica for the three months ended March 31, 2024 and 2023, was immaterial.

The Company is subject to income taxes in the U.S. and foreign jurisdictions. Significant judgement is required in evaluating uncertain tax positions and determining the provision for income taxes.

In December 2021, the Organization for Economic Cooperation and Development (“OECD”) enacted model rules for a new global minimum tax framework (“Pillar Two”). Under the Pillar Two rules, a company is required to determine a combined effective tax rate for each jurisdiction. If the jurisdictional effective tax rate determined under the Pillar Two rules is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. In December 2022, European Union Member States adopted a directive implementing the Pillar Two rules requiring Member States to enact the directive into their national laws and these began to go into effect from January 1, 2024. The Company has estimated the applicable top-up tax and recorded this in tax expense for the three months ended March 31, 2024. The estimated impact of top-up tax for the quarter was immaterial.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation and Regulatory

The Company is involved in disputes, legal actions, regulatory investigations, inquiries, and other actions from time to time in the ordinary course of business. The Company, along with others in its industry, is routinely subject to legal actions asserting various claims, including those based on the Fair Debt Collection Practices Act (“FDCPA”), the Fair Credit Reporting

Act (“FCRA”), the Telephone Consumer Protection Act (“TCPA”), comparable state statutes, state and federal unfair competition statutes, and common law causes of action. The violations of law investigated or alleged in these actions often include claims that the Company lacks specified licenses to conduct its business, attempts to collect debts on which the statute of limitations has run, has made inaccurate or unsupported assertions of fact in support of its collection actions and/or has acted improperly in connection with its efforts to contact consumers. Such litigation and regulatory actions could involve potential compensatory or punitive damage claims, fines, sanctions, injunctive relief, or changes in business practices. Many continue on for some length of time and involve substantial investigation, litigation, negotiation, and other expense and effort before a result is achieved, and during the process the Company often cannot determine the substance or timing of any eventual outcome.

As of March 31, 2024, there were no material developments in any of the legal proceedings disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 or any new material legal proceedings during the three months ended March 31, 2024.

In certain legal proceedings, the Company may have recourse to insurance or third-party contractual indemnities to cover all or portions of its litigation expenses, judgments, or settlements. The Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. The Company continuously assesses the potential liability related to its pending litigation and regulatory matters and revises its estimates when additional information becomes available. The Company’s legal costs are recorded to expense as incurred. As of March 31, 2024, the Company has no material reserves for legal matters.

Purchase Commitments

In the normal course of business, the Company enters into forward flow purchase agreements. A forward flow purchase agreement is a commitment to purchase receivables over a duration that is typically three to twelve months, but can be longer, generally with a specifically defined volume range, frequency, and pricing. Typically, these forward flow contracts have provisions that allow for early termination or price re-negotiation should the underlying quality of the portfolio deteriorate over time or if any particular month’s delivery is materially different than the original portfolio used to price the forward flow contract. Certain of these forward flow purchase agreements may also have termination clauses, whereby the agreements can be canceled by either party upon providing a certain specified amount of notice.

As of March 31, 2024, the Company had entered into forward flow purchase agreements for the purchase of nonperforming loans with an estimated minimum aggregate purchase price of approximately $598.9 million. The Company expects actual purchases under these forward flow purchase agreements to be significantly greater than the estimated minimum aggregate purchase price.

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Segment and Geographic Information

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Segment and Geographic Information

Segment and Geographic Information

The Company conducts business through several operating segments. The Company’s Chief Operating Decision Maker relies on internal management reporting processes that provide segment revenue, segment operating income, and segment asset information in order to make financial decisions and allocate resources. The Company determined its operating segments meet the aggregation criteria, and therefore, it has one reportable segment, portfolio purchasing and recovery, based on similarities among the operating units including economic characteristics, the nature of the services, the nature of the production process, customer types for their services, the methods used to provide their services and the nature of the regulatory environment.

The following table presents information about geographic areas in which the Company operates (in thousands):

	Three Months Ended March 31,
	2024		2023
Total revenues:
United States	$	219,136	$	200,218
Europe
United Kingdom	72,427		77,985
Other European countries(1)	36,104		34,238
Total Europe	108,531		112,223
Other geographies(1)	719		189
Total	$	328,386	$	312,630

________________________

(1)None of these countries comprise greater than 10% of the Company's consolidated revenues.

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Goodwill and Identifiable Intangible Assets

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Identifiable Intangible Assets

Goodwill and Identifiable Intangible Assets

The Company’s goodwill is tested for impairment at the reporting unit level annually and in interim periods if certain events occur that indicate that the fair value of a reporting unit may be below its carrying value. Determining the number of reporting units and the fair value of a reporting unit requires the Company to make judgments and involves the use of significant estimates and assumptions.

The annual goodwill testing date for the reporting units that are included in the portfolio purchasing and recovery reportable segment is October 1st. There have been no events or circumstances during the three months ended March 31, 2024, that have required the Company to perform an interim assessment of goodwill carried at these reporting units. Management continues to evaluate and monitor all key factors impacting the carrying value of the Company’s recorded goodwill and intangible assets. Adverse changes in the Company’s actual or expected operating results, market capitalization, business climate, economic factors or other negative events that may be outside the control of management could result in a material non-cash impairment charge in the future.

The Company’s goodwill is attributable to the MCM and Cabot reporting units included in its portfolio purchasing and recovery segment. The following table summarizes the activity in the Company’s goodwill balance (in thousands):

	MCM		Cabot(1)		Total
Balance as of December 31, 2023	$	148,936	$	457,539	$	606,475
Effect of foreign currency translation	—		(4,075)		(4,075)
Balance as of March 31, 2024	$	148,936	$	453,464	$	602,400

______________________

(1)The amount is net of accumulated goodwill impairment loss of $238.2 million as of March 31, 2024 and December 31, 2023, related to the Cabot reporting unit.

	MCM		Cabot		Total
Balance as of December 31, 2022	$	148,936	$	672,278	$	821,214
Effect of foreign currency translation	—		12,960		12,960
Balance as of March 31, 2023	$	148,936	$	685,238	$	834,174

There was no accumulated goodwill impairment loss as of March 31, 2023 and December 31, 2022.

The Company’s acquired intangible assets are summarized as follows (in thousands):

	As of March 31, 2024						As of December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade name and other	$	918	$	(918)	$	—	$	918	$	(870)	$	48
Total intangible assets	$	918	$	(918)	$	—	$	918	$	(870)	$	48

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure
Net Income (Loss) Attributable to Parent	$ 23,239	$ 18,626

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Insider Trading Arrangements

3 Months Ended

Mar. 31, 2024

shares

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

On March 18, 2024, Andrew Asch, Senior Vice President and General Counsel, adopted a trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) to sell up to 2,025 shares of Encore Capital Group, Inc. common stock between June 17, 2024, and June 18, 2025, subject to certain conditions.

Non-Rule 10b5-1 Arrangement Adopted

false

Rule 10b5-1 Arrangement Terminated

false

Non-Rule 10b5-1 Arrangement Terminated

false

Andrew Asch [Member]

Trading Arrangements, by Individual

Name

Andrew Asch

Title

Senior Vice President and General Counsel

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

March 18, 2024

Arrangement Duration

366 days

Aggregate Available

2,025

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Ownership, Description of Business, and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Financial Statement Preparation and Presentation

Financial Statement Preparation and Presentation

The accompanying interim condensed consolidated financial statements have been prepared by the Company, without audit, in accordance with the instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”) and, therefore, do not include all information and footnotes necessary for a fair presentation of its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).

In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of the Company’s condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.

Use of Estimates

The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in the Company’s condensed financial statements and the accompanying notes. Actual results could materially differ from those estimates.

Basis of Consolidation

Basis of Consolidation

The condensed consolidated financial statements have been prepared in conformity with GAAP and reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. The Company also consolidates variable interest entities (“VIEs”) for which it is the primary beneficiary. The primary beneficiary has both (a) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance, and (b) either the obligation to absorb losses or the right to receive benefits. Refer to “Note 8: Variable Interest Entities” for further details. All intercompany transactions and balances have been eliminated in consolidation.

Translation of Foreign Currencies

Translation of Foreign Currencies

The condensed financial statements of certain of the Company’s foreign subsidiaries are measured using their local currency as the functional currency. Assets and liabilities of foreign operations are translated into U.S. dollars using period-end exchange rates, and revenues and expenses are translated into U.S. dollars using average exchange rates in effect during each period. The resulting translation adjustments are recorded as a component of other comprehensive income or loss. Equity accounts are translated at historical rates, except for the change in retained earnings during the year which is the result of the income statement translation process. Intercompany transaction gains or losses at each period end arising from subsequent measurement of balances for which settlement is not planned or anticipated in the foreseeable future are included as translation adjustments and recorded within other comprehensive income or loss. Translation gains or losses are the material components of accumulated other comprehensive income or loss and are reclassified to earnings upon the substantial sale or liquidation of investments in foreign operations.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within the segment measure of profit or loss. This guidance will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024. This ASU will likely result in additional required disclosure when adopted. The Company is currently evaluating the provisions of this ASU and the impact on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The new standard is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Earnings Per Share

Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period.

The number of shares used to calculate the diluted earnings per share is computed by using the basic weighted-average number of common shares outstanding plus any dilutive potential common shares outstanding during the period, except when their effect is anti-dilutive. Dilutive potential common shares include outstanding stock based awards, and the dilutive effect of the convertible and exchangeable senior notes, if applicable.

Fair Value Measurements

Fair value is defined as the price that would be received upon sale of an asset or the price paid to transfer a liability, in an orderly transaction between market participants at the measurement date (i.e., the “exit price”). The Company uses a fair value hierarchy that prioritizes the inputs used in valuation techniques to measure fair value into three broad levels. The following is a brief description of each level:

•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•Level 3: Unobservable inputs, including inputs that reflect the reporting entity’s own assumptions.

The Company’s cash and cash equivalents, certain other assets, accounts payable and accrued liabilities, and other liabilities approximate their fair values due to their short-term nature, which are determined to be a Level 1 measurement.

Derivative Contracts:

The Company uses derivative instruments to manage its exposure to fluctuations in interest rates and foreign currency exchange rates. Fair values of these derivative instruments are estimated using industry standard valuation models. These models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign currency exchange rates, and forward and spot prices for currencies. The Company’s derivative agreements are subject to underlying agreements with master netting arrangements, which provide for the right of offset in the event of default or in the event of bankruptcy of either party to the transactions. The Company reports its assets and liabilities subject to these arrangements on a gross basis for certain derivative agreements.

Non-Recurring Fair Value Measurement:

Certain assets are measured at fair value on a nonrecurring basis. These assets include real estate-owned assets classified as held for sale at the lower of their carrying value or fair value less cost to sell. The fair value of the assets held for sale and estimated selling expenses were determined at the time of initial recognition and in each reporting period using Level 3 measurements based on appraised values using market comparables.

Investment in Receivable Portfolios:

The fair value of investment in receivable portfolios is measured using Level 3 inputs by discounting the estimated future cash flows generated by the Company’s proprietary forecasting models. The key inputs include the estimated future gross cash flow, average cost to collect, and discount rate. The determination of such inputs requires significant judgment, including assessing the assumed market participant’s cost structure, its determination of whether to include fixed costs in its valuation, its collection strategies, and determining the appropriate weighted average cost of capital. The Company evaluates the use of these key inputs on an ongoing basis and refines the data as it continues to obtain better information from market participants in the debt recovery and purchasing business.

Borrowings:

The Company’s convertible notes, senior secured notes and private placement notes are carried at historical cost, adjusted for the applicable debt discount. The fair value estimate for the convertible notes incorporates quoted market prices using Level 2 inputs. The fair value of the senior secured notes and private placement notes is estimated using widely accepted valuation techniques, including discounted cash flow analyses using available market information on discount and borrowing rates with similar terms, maturities, and credit ratings. Accordingly, the Company used Level 2 inputs for these debt instrument fair value estimates.

The carrying value of the Company’s senior secured revolving credit facility, securitisation senior facility, U.S. facility, and other borrowings approximates fair value due to the use of current market rates that are repriced frequently, which are determined to be a Level 2 measurement

Derivatives

The Company may periodically enter into derivative financial instruments to manage risks related to interest rates and foreign currency. Certain of the Company’s derivative financial instruments qualify for hedge accounting treatment.

Investment in Receivable Portfolios, Net

The Company’s purchased portfolios of loans are grossed-up to their face value with an offsetting allowance and noncredit discount allocated to the individual receivables as the unit of account is at the individual loan level. Since each loan is deeply delinquent and deemed uncollectible at the individual loan level, the Company applies its charge-off policy and fully writes-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables immediately after purchasing the portfolio. The Company then records a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which ultimately equals the amount paid for a portfolio purchase and presented as “Investment in receivable portfolios, net” in the Company’s condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) based on the purchase price of the portfolio and the expected future cash flows at the time of purchase.

Receivable portfolio purchases are aggregated into pools based on similar risk characteristics. Examples of risk characteristics include financial asset type, collateral type, size, interest rate, date of origination, term, and geographic location. The Company’s static pools are typically grouped into credit card, purchased consumer bankruptcy, and mortgage portfolios. The Company further groups these static pools by geographic location. Once a pool is established, the portfolios will remain in the designated pool unless the underlying risk characteristics change. The purchase EIR of a pool will not change over the life of the pool even if expected future cash flows change.

Revenue is recognized for each static pool over the economic life of the pool. Debt purchasing revenue includes two components:

(1)     Revenue from receivable portfolios, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR) and also includes all revenue from zero basis portfolio (“ZBA”) collections, and

(2)     Changes in recoveries, which includes

(a)     Recoveries above or below forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and

(b)     Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases).

The Company measures expected future recoveries based on historical experience, current conditions, reasonable and supportable forecasts, and other quantitative and qualitative factors. Factors that may change the expected future recoveries may include both internal as well as external factors. Internal factors include operational performance, such as capacity and the productivity of the Company’s collection staff. External factors include new laws or regulations, new interpretations of existing laws or regulations, and macroeconomic conditions. The Company continues to reassess its expected future recoveries in each reporting period.

Variable Interest Entities

A VIE is defined as a legal entity whose equity owners do not have sufficient equity at risk, or, as a group, the holders of the equity investment at risk lack any of the following three characteristics: decision-making rights, the obligation to absorb expected losses, or the right to receive expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and the obligation to absorb expected losses or the right to receive residual returns from the entity that could potentially be significant to the VIE. The Company consolidates VIEs when it is the primary beneficiary.

As of March 31, 2024, the Company’s VIEs include certain securitized financing vehicles and other immaterial special purpose entities that were created to purchase receivable portfolios in certain geographies. The Company is the primary beneficiary of these VIEs. The Company has the power to direct the activities of the VIEs including the ability to exercise discretion in the servicing of the financial assets and has the right to receive residual returns that could potentially be significant to the VIEs. The Company’s exposure to loss is limited to the total of the carrying value of the VIEs. The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary.

Most assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the VIE.

Segment Reporting

The Company conducts business through several operating segments. The Company’s Chief Operating Decision Maker relies on internal management reporting processes that provide segment revenue, segment operating income, and segment asset information in order to make financial decisions and allocate resources. The Company determined its operating segments meet the aggregation criteria, and therefore, it has one reportable segment, portfolio purchasing and recovery, based on similarities among the operating units including economic characteristics, the nature of the services, the nature of the production process, customer types for their services, the methods used to provide their services and the nature of the regulatory environment.

Goodwill

The Company’s goodwill is tested for impairment at the reporting unit level annually and in interim periods if certain events occur that indicate that the fair value of a reporting unit may be below its carrying value. Determining the number of reporting units and the fair value of a reporting unit requires the Company to make judgments and involves the use of significant estimates and assumptions.

Management continues to evaluate and monitor all key factors impacting the carrying value of the Company’s recorded goodwill and intangible assets. Adverse changes in the Company’s actual or expected operating results, market capitalization, business climate, economic factors or other negative events that may be outside the control of management could result in a material non-cash impairment charge in the future

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Schedule of Reconciliation of Shares Used in Calculating Earnings Per Basic and Diluted Shares

A reconciliation of shares used in calculating earnings per basic and diluted shares follows (in thousands, except per share amounts):

	Three Months Ended March 31,
	2024		2023
Net income	$	23,239	$	18,626
Shares:
Total weighted-average basic shares outstanding	23,784		23,548
Dilutive effect of stock-based awards	200		291
Dilutive effect of convertible and exchangeable senior notes	484		1,103
Total weighted-average dilutive shares outstanding	24,468		24,942
Basic earnings per share	$	0.98	$	0.79
Diluted earnings per share	$	0.95	$	0.75

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

Financial assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

	Fair Value Measurements as of March 31, 2024
	Level 1		Level 2		Level 3		Total
Assets
Interest rate cap contracts	$	—	$	10,039	$	—	$	10,039
Liabilities
Interest rate swap agreements	—		(11,976)		—		(11,976)
Cross-currency swap agreements	—		(39,004)		—		(39,004)

	Fair Value Measurements as of December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets
Interest rate cap contracts	$	—	$	16,950	$	—	$	16,950
Cross-currency swap agreements	—		361		—		361
Liabilities
Interest rate swap agreements	—		(22,510)		—		(22,510)
Cross-currency swap agreements	—		(28,039)		—		(28,039)

Schedule of Financial Instruments Not Required to be Carried at Fair Value

The carrying amounts in the following table are included in the condensed consolidated statements of financial condition as of March 31, 2024 and December 31, 2023 (in thousands):

	March 31, 2024				December 31, 2023
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets
Investment in receivable portfolios, net	$	3,531,387	$	3,582,622	$	3,468,432	$	3,515,651
Financial Liabilities
Global senior secured revolving credit facility	367,739		367,739		816,880		816,880
Encore private placement notes	19,540		19,409		29,310		28,922
Senior secured notes(1)	2,123,535		2,084,677		1,649,621		1,598,636
Convertible senior notes due October 2025	100,000		125,369		100,000		136,403
Convertible senior notes due March 2029	230,000		215,540		230,000		226,794
Cabot securitisation senior facility	322,110		322,110		324,646		324,646
U.S. facility	175,000		175,000		175,000		175,000
Other borrowings	65,902		65,902		24,904		24,904

_______________________

(1)Carrying amount represents historical cost, adjusted for any related debt discount.

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Derivatives and Hedging Instruments (Tables)

3 Months Ended

Mar. 31, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Fair Value of Derivative Instruments

The following table summarizes the fair value of derivative instruments as recorded in the Company’s condensed consolidated statements of financial condition (in thousands):

	March 31, 2024			December 31, 2023
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Interest rate cap contracts	Other assets	$	8,405	Other assets	$	14,564
Interest rate swap agreements	Other liabilities	(11,976)		Other liabilities	(22,510)
Cross-currency swap agreements	Other assets	—		Other assets	361
Cross-currency swap agreements	Other liabilities	(39,004)		Other liabilities	(28,039)
Derivatives not designated as hedging instruments:
Interest rate cap contracts	Other assets	1,634		Other assets	2,386

Schedule of Derivative Instruments

The following table summarizes the terms of the derivative instruments designated as hedging instruments as recorded in the Company’s consolidated statements of financial condition:

	March 31, 2024
	Effective date	Maturity Date	Hedge Designation	Notional Amount	Receive Floating Rate Index
Interest rate cap contracts
2019 Cap	January 2020	June 2024	Cash flow hedge	$431.7 million	3-month EURIBOR
2021 Cap(1)	November 2021	September 2024	Cash flow hedge	$315.8 million	SONIA
2024 Cap	September 2024	September 2026	Cash flow hedge	$322.1 million	SONIA
Interest rate swap agreements
2023 Euro IR Swap	October 2023	January 2028	Cash flow hedge	$107.9 million	3-month EURIBOR
2024 Euro IR Swaps	June 2024	January 2028	Cash flow hedge	$447.9 million	3-month EURIBOR
2023 SOFR IR Swaps	November 2023	October 2026	Cash flow hedge	$150.0 million	1-month SOFR CME Term
Cross-currency swap agreements
2020 Euro Swaps	September 2020	October 2025	Fair value hedge	$377.8 million	—
2023 GBP Swaps	July 2023	February 2026	Fair value hedge	$379.0 million	—

______________________

(1)The total notional amount of the 2021 Cap was $442.1 million, of which $315.8 million was hedge designated and $126.3 million was not hedge designated as of March 31, 2024.

	December 31, 2023
	Effective date	Maturity Date	Hedge Designation	Notional Amount	Receive Floating Rate Index
Interest rate cap contracts
2019 Cap	January 2020	June 2024	Cash flow hedge	$441.5 million	3-month EURIBOR
2021 Cap(1)	November 2021	September 2024	Cash flow hedge	$318.3 million	SONIA
2024 Cap	September 2024	September 2026	Cash flow hedge	$324.6 million	SONIA
Interest rate swap agreements
2023 Euro IR Swap	October 2023	January 2028	Cash flow hedge	$110.4 million	3-month EURIBOR
2024 Euro IR Swaps	June 2024	January 2028	Cash flow hedge	$458.1 million	3-month EURIBOR
2023 SOFR IR Swaps	November 2023	October 2026	Cash flow hedge	$150.0 million	1-month SOFR CME Term
Cross-currency swap agreements
2020 Euro Swaps	September 2020	October 2025	Fair value hedge	$386.3 million	—
2023 GBP Swaps	July 2023	February 2026	Fair value hedge	$381.9 million	—

_______________________

(1)The total notional amount of the 2021 Cap was $445.6 million, of which $318.3 million was hedge designated and $127.3 million was not hedge designated as of December 31, 2023.

Effects of Derivatives in Cash Flow Hedging Relationships

The following tables summarize the effects of derivatives designated as hedging instruments in the Company’s condensed consolidated financial statements (in thousands):

Derivatives Designated as Hedging Instruments	Gain (Loss) Recognized in OCI				Location of Gain (Loss) Reclassified from OCI into Income (Loss)	Gain (Loss) Reclassified from OCI into Income
	Three Months Ended March 31,					Three Months Ended March 31,
	2024		2023			2024		2023
Interest rate swap agreements	$	11,074	$	—	Interest expense	$	540	$	—
Interest rate cap contracts	(6,051)		(6,924)		Interest expense	(712)		(450)
Cross-currency swap agreements	(13,010)		2,066		Interest expense	(1,780)		(1,508)
					Other (expense) income	(11,510)		5,153

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Investment in Receivable Portfolios, Net (Tables)

3 Months Ended

Mar. 31, 2024

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable

Investment in receivable portfolios, net consists of the following as of the dates presented (in thousands):

	March 31, 2024		December 31, 2023
Amortized cost	$	—	$	—
Negative allowance for expected recoveries	3,531,387		3,468,432
Balance, end of period	$	3,531,387	$	3,468,432

Schedule of Investment in Receivable Portfolios

The following table summarizes the changes in the balance of investment in receivable portfolios, net during the periods presented (in thousands):

	Three Months Ended March 31,
	2024		2023
Balance, beginning of period	$	3,468,432	$	3,088,261
Negative allowance for expected recoveries - current period purchases(1)	295,714		276,431
Collections applied to investment in receivable portfolios, net (2)	(195,035)		(166,682)
Changes in recoveries (3)	(12,409)		(9,501)
Put-backs and recalls	(4,347)		(1,806)
Disposals and transfers to real estate owned	(2,045)		(1,105)
Foreign currency translation adjustments	(18,923)		29,194
Balance, end of period	$	3,531,387	$	3,214,792

_______________________

(1)The table below provides the detail on the establishment of negative allowance for expected recoveries of portfolios purchased during the periods presented:

	Three Months Ended March 31,
	2024		2023
Purchase price	$	295,714	$	276,431
Allowance for credit losses	644,514		659,644
Amortized cost	940,228		936,075
Noncredit discount	1,255,793		1,005,221
Face value	2,196,021		1,941,296
Write-off of amortized cost	(940,228)		(936,075)
Write-off of noncredit discount	(1,255,793)		(1,005,221)
Negative allowance	295,714		276,431
Negative allowance for expected recoveries - current period purchases	$	295,714	$	276,431

(2)Collections applied to investment in receivable portfolios, net, is calculated as follows during the periods presented:

	Three Months Ended March 31,
	2024		2023
Cash Collections	$	510,887	$	462,356
Less - amounts classified to revenue from receivable portfolios	(315,852)		(295,674)
Collections applied to investment in receivable portfolios, net	$	195,035	$	166,682

(3)Changes in recoveries is calculated as follows during the periods presented, where recoveries include cash collections, put-backs and recalls, and other cash-based adjustments:

	Three Months Ended March 31,
	2024		2023
Recoveries above (below) forecast	$	853	$	(15,358)
Changes in expected future recoveries	(13,262)		5,857
Changes in recoveries	$	(12,409)	$	(9,501)

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Other Assets (Tables)

3 Months Ended

Mar. 31, 2024

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Components of Other Assets

Other assets consist of the following (in thousands):

	March 31, 2024		December 31, 2023
Real estate owned	$	63,961	$	70,590
Operating lease right-of-use assets	63,243		67,019
Prepaid expenses	40,599		32,910
Deferred tax assets, net	13,709		17,277
Derivative instruments	10,039		17,311
Service fee receivables	9,669		9,080
Income tax deposits	7,427		8,735
Other	68,975		70,334
Total	$	277,622	$	293,256

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Borrowings (Tables)

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Schedule of Consolidated Debt and Capital Lease Obligations

The components of the Company’s consolidated borrowings were as follows (in thousands):

	March 31, 2024		December 31, 2023
Global senior secured revolving credit facility	$	367,739	$	816,880
Encore private placement notes	19,540		29,310
Senior secured notes	2,128,357		1,654,989
Convertible senior notes	330,000		330,000
Cabot securitisation senior facility	322,110		324,646
U.S. facility	175,000		175,000
Other	65,902		24,904
Finance lease liabilities	2,262		2,818
	3,410,910		3,358,547
Less: debt discount and issuance costs, net of amortization	(46,881)		(40,516)
Total	$	3,364,029	$	3,318,031

Schedule of Notes

The following table provides a summary of the Company’s senior secured notes (the “Senior Secured Notes”) ($ in thousands):

	March 31, 2024		December 31, 2023		Issue Currency	Maturity Date	Interest Payment Dates	Interest Rate
2025 Notes	$	377,762	$	386,324	EUR	Oct 15, 2025	Apr 15, Oct 15	4.875	%
2026 Notes	378,952		381,937		GBP	Feb 15, 2026	Feb 15, Aug 15	5.375	%
2028 Notes	315,794		318,280		GBP	Jun 1, 2028	Jun 1, Dec 1	4.250	%
2028 Floating Rate Notes	555,849		568,448		EUR	Jan 15, 2028	Jan 15, Apr 15, Jul 15, Oct 15	EURIBOR +4.250%(1)
2029 Notes	500,000		—		USD	Apr 1, 2029	Apr 1, Oct 1	9.250	%
	$	2,128,357	$	1,654,989

_______________________

(1)Interest rate is based on three-month EURIBOR (subject to a 0% floor) plus 4.250% per annum, resets quarterly.

The following table provides a summary of the principal balance, maturity date and interest rate for the Company’s convertible senior notes (the “Convertible Notes”) ($ in thousands):

	March 31, 2024		December 31, 2023		Maturity Date	Interest Payment Dates	Interest Rate
2025 Convertible Notes	$	100,000	$	100,000	Oct 1, 2025	Apr 1, Oct 1	3.250	%
2029 Convertible Notes	230,000		230,000		Mar 15, 2029	Mar 15, Sep 15	4.000	%
	$	330,000	$	330,000

Schedule of Hedge Program for Convertible Notes

Certain key terms related to the convertible features as of March 31, 2024 are listed below ($ in thousands, except conversion price):

	2025 Convertible Notes		2029 Convertible Notes
Initial conversion price	$	40.00	$	65.89
Closing stock price at date of issuance	$	32.00	$	51.68
Closing stock price date	Sep 4, 2019		Feb 28, 2023
Initial conversion rate (shares per $1,000 principal amount)	25.0000		15.1763
Adjusted conversion rate (shares per $1,000 principal amount)(1)	25.1310		15.1763
Adjusted conversion price(1)	$	39.79	$	65.89
Adjusted effective conversion price(2)	$	39.79	$	82.69
Excess of if-converted value compared to principal(3)	$	14,622	$	—
Conversion date	Jul 1, 2025		Dec 15, 2028

_______________________

(1)Pursuant to the indenture for the Company’s 2025 Convertible Notes, the conversion rate for the 2025 Convertible Notes was adjusted upon the completion of the Company’s tender offer in December 2021.

(2)As discussed above, the Company maintains a hedge program that increases the effective conversion price for the 2029 Convertible Notes to $82.69.

(3)Represents the premium the Company would have to pay assuming the Convertible Notes were converted on March 31, 2024 using a hypothetical share price based on the closing stock price on March 28, 2024, the last trading day for the three months ended March 31, 2024.

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2024

Accumulated Other Comprehensive Income (Loss) [Abstract]

Accumulated Other Comprehensive Loss

A summary of the Company’s changes in accumulated other comprehensive loss by component is presented below (in thousands):

	Three Months Ended March 31, 2024
	Derivatives		Currency Translation Adjustments		Accumulated Other Comprehensive Loss
Balance at beginning of period	$	(3,093)	$	(120,827)	$	(123,920)
Other comprehensive loss before reclassification	(7,987)		(6,146)		(14,133)
Reclassification	13,462		—		13,462
Tax effect	(2,685)		(160)		(2,845)
Balance at end of period	$	(303)	$	(127,133)	$	(127,436)

	Three Months Ended March 31, 2023
	Derivatives		Currency Translation Adjustments		Accumulated Other Comprehensive Loss
Balance at beginning of period	$	36,494	$	(135,310)	$	(98,816)
Other comprehensive (loss) income before reclassification	(4,858)		16,008		11,150
Reclassification	(3,195)		—		(3,195)
Tax effect	876		(383)		493
Balance at end of period	$	29,317	$	(119,685)	$	(90,368)

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Segment and Geographic Information (Tables)

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Schedule of Geographical Areas of Operations

The following table presents information about geographic areas in which the Company operates (in thousands):

	Three Months Ended March 31,
	2024		2023
Total revenues:
United States	$	219,136	$	200,218
Europe
United Kingdom	72,427		77,985
Other European countries(1)	36,104		34,238
Total Europe	108,531		112,223
Other geographies(1)	719		189
Total	$	328,386	$	312,630

________________________

(1)None of these countries comprise greater than 10% of the Company's consolidated revenues.

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Goodwill and Identifiable Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Activity in the Goodwill Balance

The Company’s goodwill is attributable to the MCM and Cabot reporting units included in its portfolio purchasing and recovery segment. The following table summarizes the activity in the Company’s goodwill balance (in thousands):

	MCM		Cabot(1)		Total
Balance as of December 31, 2023	$	148,936	$	457,539	$	606,475
Effect of foreign currency translation	—		(4,075)		(4,075)
Balance as of March 31, 2024	$	148,936	$	453,464	$	602,400

______________________

(1)The amount is net of accumulated goodwill impairment loss of $238.2 million as of March 31, 2024 and December 31, 2023, related to the Cabot reporting unit.

	MCM		Cabot		Total
Balance as of December 31, 2022	$	148,936	$	672,278	$	821,214
Effect of foreign currency translation	—		12,960		12,960
Balance as of March 31, 2023	$	148,936	$	685,238	$	834,174

Schedule of Acquired Intangible Assets

The Company’s acquired intangible assets are summarized as follows (in thousands):

	As of March 31, 2024						As of December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade name and other	$	918	$	(918)	$	—	$	918	$	(870)	$	48
Total intangible assets	$	918	$	(918)	$	—	$	918	$	(870)	$	48

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Earnings Per Share - Narrative (Details) - shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share (shares)	0	0

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Earnings Per Share - Table (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Earnings Per Share [Abstract]
Net Income (Loss) Attributable to Parent	$ 23,239	$ 18,626
Total weighted-average basic shares outstanding (shares)	23,784	23,548
Dilutive effect of stock-based awards (shares)	200	291
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities (in shares)	484	1,103
Total weighted-average dilutive shares outstanding (shares)	24,468	24,942
Basic earnings per share (USD per share)	$ 0.98	$ 0.79
Diluted earnings per share (USD per share)	$ 0.95	$ 0.75

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Fair Value Measurements - Financial Instruments Required to be Carried at Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Interest rate cap contracts
Assets
Interest rate cap contracts	$ 10,039	$ 16,950
Interest rate cap contracts | Level 1
Assets
Interest rate cap contracts	0	0
Interest rate cap contracts | Level 2
Assets
Interest rate cap contracts	10,039	16,950
Interest rate cap contracts | Level 3
Assets
Interest rate cap contracts	0	0
Interest rate swap agreements
Assets
Interest rate swap agreements	(11,976)	(22,510)
Interest rate swap agreements | Level 1
Assets
Interest rate swap agreements	0	0
Interest rate swap agreements | Level 2
Assets
Interest rate swap agreements	(11,976)	(22,510)
Interest rate swap agreements | Level 3
Assets
Interest rate swap agreements	0	0
Cross-currency swap agreements
Assets
Foreign Currency Contract, Asset, Fair Value Disclosure		361
Liabilities
Cross-currency swap agreements	(39,004)	(28,039)
Cross-currency swap agreements | Level 1
Assets
Foreign Currency Contract, Asset, Fair Value Disclosure		0
Liabilities
Cross-currency swap agreements	0	0
Cross-currency swap agreements | Level 2
Assets
Foreign Currency Contract, Asset, Fair Value Disclosure		361
Liabilities
Cross-currency swap agreements	(39,004)	(28,039)
Cross-currency swap agreements | Level 3
Assets
Foreign Currency Contract, Asset, Fair Value Disclosure		0
Liabilities
Cross-currency swap agreements	$ 0	$ 0

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Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Fair Value Disclosures [Abstract]
Assets held for sale	$ 63,961	$ 70,590

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Fair Value Measurements - Financial Instruments Not Required to be Carried at Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Carrying Amount
Financial Assets
Investment in receivable portfolios, net	$ 3,531,387	$ 3,468,432
Carrying Amount | Other
Financial Liabilities
Debt instrument, fair value disclosure	65,902	24,904
Carrying Amount | Global senior secured revolving credit facility
Financial Liabilities
Debt instrument, fair value disclosure	367,739	816,880
Carrying Amount | Cabot securitisation senior facility
Financial Liabilities
Debt instrument, fair value disclosure	322,110	324,646
Carrying Amount | U.S. facility
Financial Liabilities
Debt instrument, fair value disclosure	175,000	175,000
Carrying Amount | Encore private placement notes
Financial Liabilities
Debt instrument, fair value disclosure	19,540	29,310
Carrying Amount | Senior secured notes
Financial Liabilities
Debt instrument, fair value disclosure	2,123,535	1,649,621
Carrying Amount | 2025 Convertible Notes
Financial Liabilities
Debt instrument, fair value disclosure	100,000	100,000
Carrying Amount | 2029 Convertible Notes
Financial Liabilities
Debt instrument, fair value disclosure	230,000	230,000
Estimated Fair Value
Financial Assets
Investment in receivable portfolios, net	3,582,622	3,515,651
Estimated Fair Value | Other
Financial Liabilities
Debt instrument, fair value disclosure	65,902	24,904
Estimated Fair Value | Global senior secured revolving credit facility
Financial Liabilities
Debt instrument, fair value disclosure	367,739	816,880
Estimated Fair Value | Cabot securitisation senior facility
Financial Liabilities
Debt instrument, fair value disclosure	322,110	324,646
Estimated Fair Value | U.S. facility
Financial Liabilities
Debt instrument, fair value disclosure	175,000	175,000
Estimated Fair Value | Encore private placement notes
Financial Liabilities
Debt instrument, fair value disclosure	19,409	28,922
Estimated Fair Value | Senior secured notes
Financial Liabilities
Debt instrument, fair value disclosure	2,084,677	1,598,636
Estimated Fair Value | 2025 Convertible Notes
Financial Liabilities
Debt instrument, fair value disclosure	125,369	136,403
Estimated Fair Value | 2029 Convertible Notes
Financial Liabilities
Debt instrument, fair value disclosure	$ 215,540	$ 226,794

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Derivatives and Hedging Instruments - Schedule of Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Interest rate cap contracts
Derivative [Line Items]
Interest Rate Derivative Assets, at Fair Value	$ (10,039)	$ (16,950)
Cross-currency swap agreements
Derivative [Line Items]
Foreign Currency Contract, Asset, Fair Value Disclosure		361
Foreign Currency Contracts, Liability, Fair Value Disclosure	39,004	28,039
Derivatives Designated as Hedging Instruments | Interest rate cap contracts | Other assets
Derivative [Line Items]
Interest Rate Derivative Assets, at Fair Value	(8,405)	(14,564)
Derivatives Designated as Hedging Instruments | Interest rate swap agreements | Other liabilities
Derivative [Line Items]
Interest Rate Derivative Assets, at Fair Value	(11,976)	(22,510)
Derivatives Designated as Hedging Instruments | Cross-currency swap agreements | Other assets
Derivative [Line Items]
Foreign Currency Contract, Asset, Fair Value Disclosure	0	361
Derivatives Designated as Hedging Instruments | Cross-currency swap agreements | Other liabilities
Derivative [Line Items]
Foreign Currency Contracts, Liability, Fair Value Disclosure	39,004	28,039
Not Designated as Hedging Instrument | Interest rate cap contracts | Other assets
Derivative [Line Items]
Interest Rate Derivative Assets, at Fair Value	$ (1,634)	$ (2,386)

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Derivatives and Hedging Instruments - Notional Amount (Details) - USD ($) $ in Millions	Mar. 31, 2024	Dec. 31, 2023
2019 Cap | Cash flow hedge | Derivatives Designated as Hedging Instruments
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative instrument, notional amount	$ 431.7	$ 441.5
2021 Cap
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative instrument, notional amount	442.1	445.6
2021 Cap | Not Designated as Hedging Instrument
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative instrument, notional amount	126.3	127.3
2021 Cap | Cash flow hedge | Derivatives Designated as Hedging Instruments
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative instrument, notional amount	315.8	318.3
2024 Cap | Cash flow hedge | Derivatives Designated as Hedging Instruments
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative instrument, notional amount	322.1	324.6
2023 Euro IR Swap | Cash flow hedge | Derivatives Designated as Hedging Instruments
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative instrument, notional amount	107.9	110.4
2024 Euro IR Swaps | Cash flow hedge | Derivatives Designated as Hedging Instruments
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative instrument, notional amount	447.9	458.1
2023 SOFR IR Swaps | Cash flow hedge | Derivatives Designated as Hedging Instruments
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative instrument, notional amount	150.0	150.0
2020 Euro Swaps | Fair value hedge | Derivatives Designated as Hedging Instruments
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative instrument, notional amount	377.8	386.3
2023 GBP Swaps | Fair value hedge | Derivatives Designated as Hedging Instruments
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative instrument, notional amount	$ 379.0	$ 381.9

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Derivatives and Hedging Instruments - Effects of Derivatives (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Derivative [Line Items]
Gain (Loss) Recognized in OCI	$ 2,790	$ (7,177)
Derivatives Designated as Hedging Instruments | Interest rate swap agreements | Cash flow hedge | Interest expense
Derivative [Line Items]
Gain (Loss) Recognized in OCI	11,074	0
Gain (Loss) Reclassified from OCI into Income	540	0
Derivatives Designated as Hedging Instruments | Interest rate cap contracts | Cash flow hedge | Interest expense
Derivative [Line Items]
Gain (Loss) Recognized in OCI	(6,051)	(6,924)
Gain (Loss) Reclassified from OCI into Income	(712)	(450)
Derivatives Designated as Hedging Instruments | Cross-currency swap agreements | Cash flow hedge | Interest expense
Derivative [Line Items]
Gain (Loss) Reclassified from OCI into Income	(1,780)	(1,508)
Derivatives Designated as Hedging Instruments | Cross-currency swap agreements | Cash flow hedge | Interest Expense / Other Income (Expense)
Derivative [Line Items]
Gain (Loss) Recognized in OCI	(13,010)	2,066
Derivatives Designated as Hedging Instruments | Cross-currency swap agreements | Cash flow hedge | Other Expense
Derivative [Line Items]
Gain (Loss) Reclassified from OCI into Income	$ (11,510)	$ 5,153

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Derivatives and Hedging Instruments - Narrative (Details) £ in Millions, $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2024 USD ($)	Mar. 31, 2025 USD ($)	Mar. 31, 2024 GBP (£)
Derivative [Line Items]
Dedesignated derivative	$ 126.3		£ 100.0
Derivative, gain (loss) on derivative, net	$ 0.2
Subsequent Event | Forecast
Derivative [Line Items]
Cash flow hedge gain (loss) to be reclassified within 12 months		$ 7.3
United Kingdom, Pounds
Derivative [Line Items]
Foreign currency exchange rate, translation	0.79		0.79

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Investment in Receivable Portfolios, Net - Schedule of Investment Receivable Portfolios (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Receivables [Abstract]
Financing Receivable, before Allowance for Credit Loss	$ 0	$ 0
Negative allowance for expected recoveries	3,531,387	3,468,432
Balance, end of period	$ 3,531,387	$ 3,468,432

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Investment in Receivable Portfolios, Net - Change in the Balance of the Investment in Receivable Portfolios (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Investment in Receivables Portfolio [Roll Forward]
Balance, beginning of period	$ 3,468,432	$ 3,088,261
Purchases of receivable portfolios	295,714	276,431
Collections applied to investment in receivable portfolios, net	(195,035)	(166,682)
Changes in expected recoveries	(12,409)	(9,501)
Put-backs and recalls	(4,347)	(1,806)
Disposals and transfers to real estate owned	(2,045)	(1,105)
Foreign currency translation adjustments	(18,923)	29,194
Balance, end of period	3,531,387	3,214,792
Financing Receivable, Purchased with Credit Deterioration, Amount at Purchase Price [Abstract]
Purchase price	295,714	276,431
Allowance for credit losses	644,514	659,644
Amortized cost	940,228	936,075
Noncredit discount	1,255,793	1,005,221
Face value	2,196,021	1,941,296
Write-off of amortized cost	(940,228)	(936,075)
Write-off of noncredit discount	(1,255,793)	(1,005,221)
Negative allowance	295,714	276,431
Negative allowance for expected recoveries - current period purchases	295,714	276,431
Collections applied to principal balance (debt purchasing)
Cash Collections	510,887	462,356
Less - amounts classified to revenue from receivable portfolios	(315,852)	(295,674)
Collections applied to investment in receivable portfolios, net	195,035	166,682
Changes in expected recoveries
Recoveries above (below) forecast	853	(15,358)
Changes in expected future recoveries	(13,262)	5,857
Changes in recoveries	$ (12,409)	$ (9,501)

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Investment in Receivable Portfolios, Net - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Receivables [Abstract]
Recoveries above (below) forecast	$ 853	$ (15,358)
Changes in expected future recoveries	$ (13,262)	$ 5,857

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Other Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Real estate owned	$ 63,961	$ 70,590
Operating lease right-of-use assets	63,243	67,019
Prepaid expenses	40,599	32,910
Deferred tax assets, net	13,709	17,277
Derivative instruments	10,039	17,311
Service fee receivables	9,669	9,080
Income tax deposits	7,427	8,735
Other	68,975	70,334
Total	$ 277,622	$ 293,256
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Total	Total

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Borrowings - Consolidated Debt and Capital Lease Obligations - Table and Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Finance lease liabilities	$ 2,262	$ 2,818
Debt and finance lease liabilities, gross	3,410,910	3,358,547
Less: debt discount and issuance costs, net of amortization	(46,881)	(40,516)
Total	$ 3,364,029	$ 3,318,031
Finance Lease, Liability, Statement of Financial Position [Extensible List]	Total	Total
Credit Facility | Global senior secured revolving credit facility
Debt Instrument [Line Items]
Long-term debt	$ 367,739	$ 816,880
Credit Facility | Cabot securitisation senior facility
Debt Instrument [Line Items]
Long-term debt	322,110	324,646
Credit Facility | U.S. facility
Debt Instrument [Line Items]
Long-term debt	175,000	175,000
Encore private placement notes | Encore private placement notes
Debt Instrument [Line Items]
Long-term debt	19,540	29,310
Senior secured notes | Senior secured notes
Debt Instrument [Line Items]
Long-term debt	2,128,357	1,654,989
Convertible senior notes | Convertible senior notes
Debt Instrument [Line Items]
Long-term debt	330,000	330,000
Other
Debt Instrument [Line Items]
Long-term debt	$ 65,902	$ 24,904

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Borrowings - Global Senior Secured Revolving Credit Facility - Narrative (Details) - Global senior secured revolving credit facility - Revolving Credit Facility - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Debt Instrument [Line Items]
Revolving credit facility	$ 1,203.0
Commitment fee (as a percent)	0.40%
Maximum ratio of financial indebtedness to cash and cash equivalent investments	0.75
Utilization threshold (as a percent)	20.00%
Maximum ratio of super senior liabilities to cash and cash equivalent investments	0.275
Fixed charge coverage ratio	2.0
Long-term debt	$ 367.7
Weighted average interest rate (as a percent)	7.89%	7.06%
Remaining borrowing capacity	$ 827.3
Euro Interbank Offered Rate (EURIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	2.50%
Euro Interbank Offered Rate (EURIBOR) | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	0.00%
Sterling Overnight Index Average (SONIA)
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	2.50%
Sterling Overnight Index Average (SONIA) | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	0.00%
Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	2.50%
Debt Instrument, Interest Rate, Adjustment Spread (as a percent)	0.10%
Secured Overnight Financing Rate (SOFR) | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	0.00%

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Borrowings - Encore Private Placement Notes - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Dec. 31, 2023	Aug. 31, 2017
Debt Instrument [Line Items]
Debt issued	$ 330,000,000	$ 330,000,000
Encore private placement notes | Notes Payable, Other Payables
Debt Instrument [Line Items]
Debt issued			$ 325,000,000
Long-term debt	$ 19,540,000	$ 29,310,000
Stated interest rate (as a percent)	5.625%
Senior secured notes, periodic principal repayment	$ 9,800,000

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Borrowings - Senior Secured Notes Table (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Senior secured notes	$ 2,128,357	$ 1,654,989
2025 Notes | Secured Debt
Debt Instrument [Line Items]
Senior secured notes	$ 377,762	386,324
Stated interest rate (as a percent)	4.875%
2026 Notes | Secured Debt
Debt Instrument [Line Items]
Senior secured notes	$ 378,952	381,937
Stated interest rate (as a percent)	5.375%
2028 Notes | Secured Debt
Debt Instrument [Line Items]
Senior secured notes	$ 315,794	318,280
Stated interest rate (as a percent)	4.25%
2028 Floating Rate Notes | Secured Debt
Debt Instrument [Line Items]
Senior secured notes	$ 555,849	568,448
Variable rate floor (as a percent)	0.00%
2028 Floating Rate Notes | Euro Interbank Offered Rate (EURIBOR) | Secured Debt
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	4.25%
Encore 2029 Notes | Secured Debt
Debt Instrument [Line Items]
Senior secured notes	$ 500,000	$ 0
Stated interest rate (as a percent)	9.25%

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Borrowings - Senior Secured Notes Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Debt Instrument [Line Items]
Debt instrument face value	$ 330,000		$ 330,000
Credit Facility | Global senior secured revolving credit facility
Debt Instrument [Line Items]
Repayment of borrowings	493,000
Senior secured notes | Senior notes
Debt Instrument [Line Items]
Debt instrument face value	$ 500,000
Issuance price (as a percent)	1.00000
Stated interest rate (as a percent)	9.25%
2028 Floating Rate Notes | Secured Debt
Debt Instrument [Line Items]
Weighted average interest rate (as a percent)	8.12%	6.38%
2028 Floating Rate Notes | Secured Debt | Derivatives Designated as Hedging Instruments
Debt Instrument [Line Items]
Weighted average interest rate (as a percent)	5.01%	4.33%

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Borrowings - Encore Convertible Notes and Exchangeable Notes - Table and Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	Mar. 31, 2024	Dec. 31, 2023	Apr. 01, 2023	Mar. 31, 2023
Debt Instrument [Line Items]
Debt issued	$ 330,000	$ 330,000
Convertible Notes | 2025 Convertible Notes
Debt Instrument [Line Items]
Debt issued	$ 100,000	100,000
Stated interest rate (as a percent)	3.25%
Initial conversion price (usd per share)	$ 40.00
Convertible Notes | 2029 Convertible Notes
Debt Instrument [Line Items]
Debt issued	$ 230,000	$ 230,000
Stated interest rate (as a percent)	4.00%
Initial conversion price (usd per share)	$ 65.89		$ 82.69	$ 65.89

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Borrowings - Exchangeable and Convertible Notes Features and Certain Key Terms (Details) - Convertible Notes $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($) $ / shares	Apr. 01, 2023 $ / shares	Mar. 31, 2023 $ / shares
2025 Convertible Notes
Debt Instrument [Line Items]
Initial conversion price (usd per share)	$ 40.00
Closing stock price at date of issuance (usd per share)	$ 32.00
Initial conversion rate (shares per $1,000 principal amount)	25.0000
Adjusted conversion rate (shares per $1,000 principal amount)(1)	25.1310
Adjusted conversion or exchange price (usd per share)	$ 39.79
Adjusted effective conversion or exchange price (usd per share)	$ 39.79
Excess of if-converted value compared to principal | $	$ 14,622
2029 Convertible Notes
Debt Instrument [Line Items]
Initial conversion price (usd per share)	$ 65.89	$ 82.69	$ 65.89
Closing stock price at date of issuance (usd per share)	$ 51.68
Initial conversion rate (shares per $1,000 principal amount)	15.1763
Adjusted conversion rate (shares per $1,000 principal amount)(1)	15.1763
Adjusted conversion or exchange price (usd per share)	$ 65.89
Adjusted effective conversion or exchange price (usd per share)	$ 82.69
Excess of if-converted value compared to principal | $	$ 0

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Borrowings - Interest Expense Related to Convertible and Exchangeable Notes -Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Convertible senior notes
Debt Instrument [Line Items]
Interest expense, debt, excluding amortization	$ 3.1	$ 2.9

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Borrowings - Cabot Securitisation Senior Facility (Details) $ in Thousands, £ in Millions		3 Months Ended
	Sep. 16, 2026	Mar. 31, 2024 USD ($)	Mar. 31, 2023	Mar. 31, 2024 GBP (£)	Dec. 31, 2023 USD ($)
Debt Instrument [Line Items]
Financing Receivable, before Allowance for Credit Loss		$ 0			$ 0
United Kingdom, Pounds
Debt Instrument [Line Items]
Foreign currency exchange rate, translation		0.79		0.79
Cabot securitisation senior facility
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 322,100		£ 255.0
Weighted average interest rate (as a percent)		8.40%	6.87%
Financing Receivable, before Allowance for Credit Loss		$ 415,800		£ 329.2
Cabot securitisation senior facility | Derivatives Designated as Hedging Instruments
Debt Instrument [Line Items]
Weighted average interest rate (as a percent)		5.51%	5.25%
Cabot securitisation senior facility | Sterling Overnight Index Average (SONIA) | Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)		3.20%
Cabot securitisation senior facility | Minimum | Sterling Overnight Index Average (SONIA) | Debt Instrument, Redemption, Period Two | Forecast
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	0.00%
Cabot securitisation senior facility | Maximum | Sterling Overnight Index Average (SONIA) | Debt Instrument, Redemption, Period Two | Forecast
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	1.00%

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Borrowings - U.S. Facility (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Financing Receivable, before Allowance for Credit Loss	$ 0	$ 0
U.S. facility
Debt Instrument [Line Items]
Weighted average interest rate (as a percent)	8.93%
U.S. facility | Derivatives Designated as Hedging Instruments
Debt Instrument [Line Items]
Weighted average interest rate (as a percent)	8.08%
U.S. facility
Debt Instrument [Line Items]
Financing Receivable, before Allowance for Credit Loss	$ 319,800
U.S. facility | Credit Facility
Debt Instrument [Line Items]
Long-term debt	$ 175,000	$ 175,000
U.S. facility | Credit Facility | Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Basis spread on variable rate (as a percent)	3.50%

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Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at Beginning of period	$ 936,538	$ 1,179,627
Balance at end of period	953,859	1,184,156
Derivatives
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at Beginning of period	(3,093)	36,494
Other comprehensive loss before reclassification	(7,987)	(4,858)
Reclassification	13,462	(3,195)
Tax effect	(2,685)	876
Balance at end of period	(303)	29,317
Currency Translation Adjustments
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at Beginning of period	(120,827)	(135,310)
Other comprehensive loss before reclassification	(6,146)	16,008
Reclassification	0	0
Tax effect	(160)	(383)
Balance at end of period	(127,133)	(119,685)
Accumulated Other Comprehensive Loss
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Balance at Beginning of period	(123,920)	(98,816)
Other comprehensive loss before reclassification	(14,133)	11,150
Reclassification	13,462	(3,195)
Tax effect	(2,845)	493
Balance at end of period	$ (127,436)	$ (90,368)

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Income Taxes - Narrative (Details)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Tax Contingency [Line Items]
Effective rate (as a percent)	23.80%	25.60%
Costa Rica | Tax holiday through December 31, 2026
Income Tax Contingency [Line Items]
Holiday tax rate (as a percent)	100.00%	100.00%

XML

Commitments and Contingencies (Details)	Mar. 31, 2024 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Material reserves for litigation	$ 0
Purchase price	$ 598,900,000

XML

Segment and Geographic Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($) segment	Mar. 31, 2023 USD ($)
Segment Reporting [Abstract]
Number of reportable segments | segment	1
Segment Reporting Information [Line Items]
Revenues	$ 328,386	$ 312,630
United States
Segment Reporting Information [Line Items]
Revenues	219,136	200,218
Total Europe
Segment Reporting Information [Line Items]
Revenues	108,531	112,223
United Kingdom
Segment Reporting Information [Line Items]
Revenues	72,427	77,985
Other European countries
Segment Reporting Information [Line Items]
Revenues	36,104	34,238
Other Geographies
Segment Reporting Information [Line Items]
Revenues	$ 719	$ 189

XML

Goodwill and Identifiable Intangible Assets - Activity in Goodwill Balance (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023	Dec. 31, 2022
Goodwill [Line Items]
Goodwill impairment	$ 238,200,000	$ 0	$ 238,200,000	$ 0
Effect of foreign currency translation	(4,075,000)	12,960,000
Goodwill	602,400,000	834,174,000	606,475,000	821,214,000
Goodwill [Roll Forward]
Balance at beginning of period	606,475,000	821,214,000
Effect of foreign currency translation	(4,075,000)	12,960,000
Balance at end of period	602,400,000	834,174,000
MCM
Goodwill [Line Items]
Effect of foreign currency translation	0	0
Goodwill	148,936,000	148,936,000	148,936,000	148,936,000
Goodwill [Roll Forward]
Balance at beginning of period	148,936,000	148,936,000
Effect of foreign currency translation	0	0
Balance at end of period	148,936,000	148,936,000
Cabot
Goodwill [Line Items]
Effect of foreign currency translation	(4,075,000)	12,960,000
Goodwill	453,464,000	685,238,000	$ 457,539,000	$ 672,278,000
Goodwill [Roll Forward]
Balance at beginning of period	457,539,000	672,278,000
Effect of foreign currency translation	(4,075,000)	12,960,000
Balance at end of period	$ 453,464,000	$ 685,238,000

XML

Goodwill and Identifiable Intangible Assets - Acquired Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 918	$ 918
Accumulated Amortization	(918)	(870)
Net Carrying Amount	0	48
Trade name and other
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	918	918
Accumulated Amortization	(918)	(870)
Net Carrying Amount	$ 0	$ 48