News PRESS RELEASE

Encore Capital Group Announces Fourth Quarter and Full-Year 2019 Financial Results

February 26, 2020

CORRECTED RELEASE:

This press release reflects revisions made to correct a classification error in the unaudited statement of operations for the three months ended December 31, 2019 between servicing revenue and other revenues. The corrected release follows:

Encore Capital Group Announces Fourth Quarter and Full-Year 2019 Financial Results
• Encore delivers new records for collections, revenues, ERC and earnings for the year
• Record GAAP EPS from continuing operations of $5.33 in 2019, up 31%
• Record Economic EPS from continuing operations of $5.95 in 2019, up 19%
• 2019 global deployments of $1.00 billion, including a record $682 million in the U.S.

SAN DIEGO, February 26, 2020 — 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, 2019. “2019 was a terrific year for Encore in which we delivered record results in nearly every important aspect of our business,” said Ashish Masih, Encore’s President and Chief Executive Officer. “We set new highs for global collections, revenues, ERC and earnings. We also made significant progress on a number of our strategic priorities, which include concentrating on the valuable U.S. and U.K. markets, where we have our highest risk-adjusted returns, innovating to continually enhance our competitive advantages, and strengthening our balance sheet while delivering strong results.”

“In the U.S., we improved our operating leverage by growing collections to a record level while reducing our collection costs through our operational innovation and increased productivity. At the same time, we capitalized on the favorable purchasing environment in the U.S. through record deployments at the highest purchase multiples we have seen since 2013.”

“In Europe, our returns for portfolios purchased in 2019 were up between 150 and 200 basis points compared to 2018. We continue to reduce our debt leverage as planned, while maintaining our ERC. We also set a new record for collections in Europe.”

“In the fourth quarter we continued our year of strong performance, delivering solid GAAP earnings. In addition, adjusted earnings were up 8% compared to the same quarter a year ago.”

“We feel very optimistic as we begin 2020. We expect to generate new records for collections, revenues, ERC, and earnings in 2020 while further reducing our debt leverage,” said Masih.

Financial Highlights for the Full Year of 2019:

• Estimated remaining collections (ERC) increased $569 million compared to the prior year, to $7.73 billion.
• Portfolio purchases for the full year were $1.00 billion, including $682 million in the U.S. and $307 million in Europe.
• Gross collections were a record $2.03 billion, compared to $1.97 billion in 2018.
• Total revenues, adjusted by net allowances and allowance reversals, were a record $1.40 billion, compared to $1.36 billion in 2018.
• Total operating expenses were $951 million, compared to $957 million in 2018.
• Total interest expense was $227 million, compared to $240 million in 2018.
• GAAP net income attributable to Encore increased 45% to a record $168 million, or $5.33 per fully diluted share, compared to $116 million, or $4.06 per fully diluted share, in 2018.
• Adjusted net income attributable to Encore increased 32% to a record $187 million, or $5.95 per fully diluted share (also referred to as Economic EPS), compared to $142 million, or $4.98 per share in 2018.

Financial Highlights for the Fourth Quarter of 2019:

• Portfolio purchases were $235 million, including $155 million in the U.S. and $80 million in Europe.
• Gross collections were $499 million, compared to $484 million in the fourth quarter of 2018.
• Total revenues, adjusted by net allowances and allowance reversals, were $348 million, compared to $349 million in the fourth quarter of 2018.
• Total operating expenses were $235 million, compared to $233 million in the fourth quarter of 2018.
• Total interest expense decreased to $53.5 million, compared to $57.0 million in the fourth quarter of 2018.
• GAAP net income attributable to Encore was $43.1 million, or $1.36 per fully diluted share, compared to $47.0 million, or $1.50 per fully diluted share, in the fourth quarter of 2018. A year ago we recorded a favorable settlement related to Cabot’s acquisition of dlc that lifted our GAAP results, but not our adjusted results.
• Adjusted net income attributable to Encore increased 8% to $49.2 million, or $1.56 per fully diluted share. This compares to $45.5 million, or $1.45 per fully diluted share in the fourth quarter of 2018.
• As of December 31, 2019, after taking into account borrowing base and applicable debt covenants, available capacity under Encore’s U.S. revolving credit facility was $272 million, and availability under Cabot’s revolving credit facility was £160 million (approximately $211 million). These figures do not include cash on the balance sheet.

Conference Call and Webcast

The Company will host a conference call and slide presentation today, February 26, 2020, 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 ID number 8553077. 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.

Contact:

Bruce Thomas
Encore Capital Group, Inc.
Vice President, Investor Relations
(858) 309-6442
bruce.thomas@encorecapital.com