- Improved global collections and favorable U.S. market conditions drive higher returns
- Estimated Remaining Collections of $6.6 billion establishes new all-time high
SAN DIEGO, Nov. 02, 2017 (GLOBE NEWSWIRE) — Encore Capital Group, Inc. (NASDAQ:ECPG), an international specialty finance company providing debt recovery solutions for consumers across a broad range of assets, today reported consolidated financial results for the third quarter ended September 30, 2017.
“The third quarter for Encore was a period of solid financial and operational performance. In the U.S., our largest market, the supply of charged-off credit card debt continues to grow and the pricing environment remains favorable. These market conditions coupled with improved collections performance are driving higher returns than a year ago,” said Ashish Masih, President and Chief Executive Officer. “On the international front, we had a strong quarter of portfolio purchasing in Europe, where liquidation improvement initiatives are delivering sustained improvement in collections performance, resulting in better returns and increased expectations for future collections. In addition, on October 20th our subsidiary Cabot Credit Management filed its intention to float shares on the London Stock Exchange in connection with its IPO process.”
Key Financial Metrics for the Third Quarter of 2017:
- Estimated Remaining Collections (ERC) grew 15% compared to the same period of the prior year, to $6.57 billion.
- Investment in receivable portfolios was $292 million, including $111 million in the U.S. and $177 million in Europe, compared to $206 million deployed overall in the same period a year ago.
- Gross collections grew 9% to $443 million, compared to $407 million in the same period of the prior year.
- Total revenues were $307 million, compared to $179 million in the third quarter of 2016. Excluding a $28.0 million allowance reversal recorded in the third quarter of 2017 resulting from collections overperformance in Europe, a $10.2 million weather-related allowance charge on two pool groups containing a large concentration of Puerto Rico-based accounts in the third quarter of 2017, and a $94.0 million portfolio allowance charge on certain pool groups in Europe recorded in the third quarter of 2016, revenue increased 6% compared to the third quarter of 2016.
- Total operating expenses were $203 million, compared to $201 million in the same period of the prior year. Adjusted operating expenses increased 2% to $170 million, compared to $167 million in the same period of the prior year.
- Total interest expense increased to $52.8 million, compared to $48.6 million in the same period of the prior year.
- GAAP net income attributable to Encore was $28.2 million, or $1.05 per fully diluted share, as compared to a loss of $1.5 million, or $0.06 per fully diluted share in the same period a year ago. The loss in the third quarter of 2016 was largely due to the portfolio allowance charge on certain pool groups in Europe.
- Adjusted income attributable to Encore was $30.7 million, compared to $3.6 million in the third quarter of 2016.
- Adjusted income attributable to Encore per share (also referred to as Economic EPS) was $1.17, compared to $0.14 in the same period of the prior year. In calculating Economic EPS for the third quarter of 2017, 0.5 million shares associated with convertible notes that will not be issued but are reflected in the fully diluted share count were excluded for accounting purposes. In the third quarter of 2016, Economic EPS was not adjusted for shares associated with Encore’s convertible notes.
- Available capacity under Encore’s domestic revolving credit facility, subject to borrowing base and applicable debt covenants, was $382 million as of September 30, 2017.
Conference Call and Webcast
Encore will host a conference call and slide presentation today, November 2, 2017, at 2:00 p.m. Pacific / 5:00 p.m. Eastern time, presenting and discussing the reported 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 7495439. 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 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 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 for consumers across a broad range of assets. Through its subsidiaries, Encore purchases portfolios of consumer receivables from major banks and credit unions.
Encore partners with individuals as they repay their 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, the company 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 Encore 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 website 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, as they may be amended from time to time. The Company disclaims any intent or obligation to update these forward-looking statements.
Vice President, Investor Relations
Encore Capital Group, Inc.