- Encore sets new records for collections, revenues and profits for the year
- Record GAAP EPS from continuing operations of $4.06 in 2018, up 28%
- Record Economic EPS from continuing operations of $4.98 in 2018, up 23%
- 2018 global deployments of $1.13 billion, including a record $638 million in the U.S.
SAN DIEGO, Feb. 27, 2019 (GLOBE NEWSWIRE) — Encore Capital Group, Inc. (NASDAQ: ECPG), an international specialty finance company, today reported consolidated financial results for the fourth quarter and full year ended December 31, 2018.
“2018 was a year of significant achievement for Encore, characterized by our accomplishment of key objectives and record results,” said Ashish Masih, Encore’s President and Chief Executive Officer. “In order to capitalize on the favorable purchasing environment in the U.S., we deployed more capital in the United States in 2018 than in any prior year. Through our operational innovation and increased productivity, global collections and revenues increased to record levels. As a result, this performance helped generate record profitability and was key to delivering on our expectation of at least 20% growth in earnings per share for the year.”
“2018 was also a transformational year for Encore, during which we completed the acquisition of the remaining interest in Cabot. This established Encore as a clear leader in the U.K. in both debt purchasing and servicing. In addition, we are driving synergies through the combination of our Spanish operations as well as best practice sharing between our U.S. and European operations in key competencies such as data analytics, decision science, digital collections, speech analytics, collections platforms, and consumer-focused call techniques.”
“We ended the year on a high note, with fourth quarter GAAP and adjusted earnings both reaching all-time high levels. In the U.S., collections grew 15% in the quarter, driven by strong growth in our U.S. call center and digital channel, where collections were up 25% compared to the fourth quarter of last year. In Europe, revenues were up 13% for the quarter.”
“Finally, in anticipation of another strong year of investing in U.S. portfolios, we have already secured approximately $480 million dollars in forward flow purchase commitments for 2019, and we expect to continue to grow deployments,” said Masih.
Financial Highlights for the Fourth Quarter of 2018:
- Estimated remaining collections (ERC) increased $209 million compared to the prior year, to $7.2 billion.
- Portfolio purchases were $247 million, compared to $301 million deployed in the fourth quarter of 2017.
- Gross collections were $484 million, up 11% compared to $438 million in the fourth quarter of 2017.
- Total revenues, adjusted by net allowances and allowance reversals, were $349 million, up 10% compared to $317 million in the fourth quarter of 2017.
- Total operating expenses were $233 million, compared to $253 million in the fourth quarter of 2017. This decline was largely the result of several expenses incurred specifically in 2017 including expenses related to the withdrawn Cabot IPO and other acquisition and restructuring related costs. Adjusted operating expenses were $191 million, compared to $182 million in the fourth quarter of 2017.
- Total interest expense increased to $57 million, compared to $52 million in the fourth quarter of 2017, principally as a result of higher interest rates and Cabot refinancing costs.
- GAAP net income from continuing operations attributable to Encore was a record $47 million, or $1.50 per fully diluted share, compared to $13 million, or $0.48 per fully diluted share, in the fourth quarter of 2017.
- Adjusted income from continuing operations attributable to Encore was a record $45 million, compared to $28 million in the fourth quarter of 2017.
- Adjusted income from continuing operations attributable to Encore (also referred to as Economic EPS) was $1.45 per share, compared to $1.05 per share in the fourth quarter of 2017.
- As of December 31, 2018, after taking into account borrowing base and applicable debt covenants, available capacity under Encore’s U.S. revolving credit facility was $177 million, and availability under Cabot’s revolving credit facility was £151 million (approximately $192 million). These figures do not include cash on the balance sheet.
Financial Highlights for the Full Year of 2018:
- Portfolio purchases for the full year were $1.13 billion, including a record $638 million in the U.S. and $455 million in Europe, compared to $1.06 billion deployed overall in 2017.
- Gross collections were a record $1.97 billion, up 11% compared to $1.77 billion in 2017.
- Total revenues, adjusted by net allowances and allowance reversals, were a record $1.36 billion, up 15% compared to $1.19 billion in 2017.
- Total operating expenses were $957 million, compared to $862 million in 2017. This increase was principally the result of variable costs associated with the large increase in collections, expenses associated with Wescot, which was acquired in November 2017, and the Cabot transaction. Adjusted operating expenses were $745 million, compared to $698 million in 2017.
- Total interest expense was $240 million, compared to $204 million in 2017, principally as a result of higher interest rates and Cabot refinancing costs.
- GAAP net income from continuing operations attributable to Encore was a record $116 million, or $4.06 per fully diluted share, compared to $83 million, or $3.16 per fully diluted share, in 2017.
- Adjusted income from continuing operations attributable to Encore was a record $142 million, or $4.98 per fully diluted share (also referred to as Economic EPS), compared to $106 million, or $4.04 per share in 2017.
Conference Call and Webcast
The Company will host a conference call and slide presentation today, February 27, 2019, at 2:00 p.m. Pacific time / 5:00 p.m. Eastern time to discuss fourth quarter and full year results.
Members of the public are invited to access the live webcast via the Internet by logging on at the Investor Relations page of Encore’s website at www.encorecapital.com. To access the live, listen-only telephone conference portion, please dial (855) 541-0982 or (704) 288-0606.
For those who cannot listen to the live broadcast, a telephonic replay will be available for seven days by dialing (800) 585-8367 or (404) 537-3406 and entering the conference number 3575827. A replay of the webcast will also be available shortly after the call on the Company’s website.
Non-GAAP Financial Measures
This news release includes certain financial measures that exclude the impact of certain items and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company has included adjusted income attributable to Encore and adjusted income from continuing operations attributable to Encore per share (also referred to as economic EPS when adjusted for certain shares associated with our convertible notes that will not be issued but are reflected in the fully diluted share count for accounting purposes) because management uses this measure to assess operating performance, in order to highlight trends in the Company’s business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. The Company has included information concerning adjusted operating expenses in order to facilitate a comparison of approximate cash costs to cash collections for the portfolio purchasing and recovery business in the periods presented. Adjusted income attributable to Encore, adjusted income from continuing operations attributable to Encore per share/economic EPS, and adjusted operating expenses have not been prepared in accordance with GAAP. These non-GAAP financial measures should not be considered as alternatives to, or more meaningful than, net income, net income per share, and total operating expenses as indicators of the Company’s operating performance. Further, these non-GAAP financial measures, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. The Company has attached to this news release a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.
About Encore Capital Group, Inc.
Encore Capital Group is an international specialty finance company that provides debt recovery solutions and other related services for consumers across a broad range of financial assets. Through its subsidiaries around the globe, Encore purchases portfolios of consumer receivables from major banks, credit unions, and utility providers.
Encore partners with individuals as they repay their debt obligations, helping them on the road to financial recovery and ultimately improving their economic well-being. Encore is the first and only company of its kind to operate with a Consumer Bill of Rights that provides industry-leading commitments to consumers. Headquartered in San Diego, Encore is a publicly traded NASDAQ Global Select company (ticker symbol: ECPG) and a component stock of the Russell 2000, the S&P Small Cap 600 and the Wilshire 4500. More information about the company can be found at http://www.encorecapital.com. More information about the Company’s Cabot Credit Management subsidiary can be found at http://www.cabotcm.com. Information found on the company’s or Cabot’s website is not incorporated by reference.
Forward Looking Statements
The statements in this press release that are not historical facts, including, most importantly, those statements preceded by, or that include, the words “will,” “may,” “believe,” “projects,” “expects,” “anticipates” or the negation thereof, or similar expressions, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). These statements may include, but are not limited to, statements regarding our future operating results, performance, business plans or prospects. For all “forward-looking statements,” the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act. Such forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company and its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors are discussed in the reports filed by the Company with the Securities and Exchange Commission, including the most recent reports on Forms 10-K and 10-Q, each as it may be amended from time to time. The Company disclaims any intent or obligation to update these forward-looking statements.
Encore Capital Group, Inc.
Vice President, Investor Relations
SOURCE: Encore Capital Group, Inc.