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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
May 8, 2024
Date of report (Date of earliest event reported)
______________________
ENCORE CAPITAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware
000-26489
48-1090909
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
350 Camino de la Reina, Suite 100
San Diego, California 92108
(Address of principal executive offices)(Zip Code)
(877) 445-4581
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report.)
_____________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 Par Value Per ShareECPGThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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.    ☐



Item 2.02.    Results of Operations and Financial Condition.
On May 8, 2024, Encore Capital Group, Inc. (“Encore”) issued a press release announcing its financial results for the quarter ended March 31, 2024. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
The information in Item 2.02 of this Current Report on Form 8-K, including the information contained in Exhibit 99.1, is being furnished to the Securities and Exchange Commission pursuant to Item 2.02, and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by a specific reference in such filing.
Item 9.01.    Financial Statements and Exhibits.
Exhibit Number
Description
Press release dated May 8, 2024
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)




SIGNATURE

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 hereunto duly authorized.
ENCORE CAPITAL GROUP, INC.

Date:
May 8, 2024
/s/ Jonathan C. Clark
Jonathan C. Clark
Executive Vice President, Chief Financial Officer and Treasurer




EXHIBIT INDEX
Exhibit NumberDescription
Press release dated May 8, 2024
104Cover Page Interactive Data File (embedded within the Inline XBRL document)




ecpglogo.jpg
Exhibit 99.1


Encore Capital Group Announces First Quarter 2024 Financial Results

•Highly favorable purchasing conditions continue in U.S. market
•Portfolio purchases of $296 million including record $237 million in the U.S.
•Global collections of $511 million up 10% compared to Q1 2023
•GAAP EPS of $0.95

SAN DIEGO, May 8, 2024 -- Encore Capital Group, Inc. (NASDAQ: ECPG), an international specialty finance company, today reported consolidated financial results for the first quarter ended March 31, 2024.
“2024 is off to a strong start for Encore as our first quarter performance aligned well with expectations,” said Ashish Masih, President and Chief Executive Officer. “Growth in portfolio purchasing, collections and cash generation in the first quarter reinforces our belief that 2024 will be the turning point in Encore’s operational and financial results.”
“In the U.S., the highly favorable purchasing conditions continue, driven by credit card lending growth and rising charge off rates. We remain committed to allocating capital to our highest return opportunities with 80% of our global portfolio purchases in Q1 concentrated in the U.S., resulting in $237 million deployed by MCM, establishing a new quarterly record for our U.S. business.”
“In Europe, the portfolio purchasing market remains very competitive. Although we continue to see some examples of improved pricing, we believe European market pricing still does not consistently reflect the higher cost of capital caused by higher interest rates. As a result, we continue to exercise discipline and are constraining Cabot portfolio purchases.”
“Our first quarter global collections of $511 million were up 10% compared to a year ago and were in line with expectations, continuing to reflect a stable collections environment in our key markets.”
“Driven by the disciplined execution of our strategy, along with the continued favorable portfolio purchasing environment in the U.S., our performance in Q1 keeps us on track to deliver on our 2024 guidance provided in February. This guidance called for portfolio purchasing this year to exceed our 2023 total and for our collections to grow approximately 8% to over $2 billion. We also remain committed to the critical role we play in the consumer credit ecosystem and to helping consumers restore their financial health,” said Masih.


Encore Capital Group, Inc.
Page 2


Financial Highlights for the First Quarter of 2024:
Three Months Ended March 31,
(in thousands, except percentages and earnings per share)20242023Change
Portfolio purchases(1)
$295,714 $276,431 7%
Estimated Remaining Collections (ERC)
$8,307,294 $7,789,980 7%
Collections
$510,887 $462,356 10%
Revenues
$328,386 $312,630 5%
Operating expenses
$244,795 $242,492 1%
GAAP net income
$23,239 $18,626 25%
GAAP earnings per share
$0.95 $0.75 27%
______________________
(1)Includes U.S. purchases of $236.5 million and $213.5 million, and Europe purchases of $59.2 million and $63.0 million in Q1 2024 and Q1 2023, respectively.


Conference Call and Webcast
Encore will host a conference call and slide presentation today, May 8, 2024, at 2:00 p.m. Pacific / 5:00 p.m. Eastern time, to present and discuss first quarter results.
Members of the public are invited to access the live webcast via the Internet by logging in on the Investor Relations page of Encore's website at encorecapital.com. To access the live conference call by telephone, please pre-register using this link. Registrants will receive confirmation with dial-in details.

For those who cannot listen to the live broadcast, a replay of the webcast will be available on the Company's website shortly after the call concludes.

Encore Capital Group, Inc.
Page 3


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 information concerning adjusted EBITDA because management utilizes this information in the evaluation of its operations and believes that this measure is a useful indicator of the Company’s ability to generate cash collections in excess of operating expenses through the liquidation of its receivable portfolios. Adjusted EBITDA has not been prepared in accordance with GAAP and should not be considered as an alternative to, or more meaningful than, net income and net income per share as indicators of the Company’s operating performance. Further, this non-GAAP financial measure, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. A reconciliation of Adjusted EBITDA to its most directly comparable GAAP financial measure is below.

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.

Encore Capital Group, Inc.
Page 4


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, supply and pricing, liquidity, ability to access capital markets, 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, Global Investor Relations
(858) 309-6442
bruce.thomas@encorecapital.com

SOURCE: Encore Capital Group, Inc.



FINANCIAL TABLES FOLLOW


Encore Capital Group, Inc.
Page 5


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, net3,531,387 3,468,432 
Property and equipment, net102,776 103,959 
Other assets277,622 293,256 
Goodwill602,400 606,475 
Total assets
$4,687,175 $4,630,486 
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities$180,206 $189,928 
Borrowings3,364,029 3,318,031 
Other liabilities189,081 185,989 
Total liabilities
3,733,316 3,693,948 
Commitments and Contingencies
Equity:
Convertible preferred stock, $0.01 par value, 5,000 shares authorized, no shares issued and outstanding— — 
Common stock, $0.01 par value, 75,000 shares authorized, 23,687 and 23,545 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
237 235 
Additional paid-in capital8,648 11,052 
Accumulated earnings1,072,410 1,049,171 
Accumulated other comprehensive loss(127,436)(123,920)
Total stockholders’ equity953,859 936,538 
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.
March 31,
2024		December 31,
2023
Assets
Cash and cash equivalents$26,879 $24,472 
Investment in receivable portfolios, net736,226 717,556 
Other assets11,280 19,358 
Liabilities
Accounts payable and accrued liabilities1,005 1,854 
Borrowings492,027 494,925 
Other liabilities253 2,452 

Encore Capital Group, Inc.
Page 6


ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Income
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended
March 31,
20242023
Revenues
Revenue from receivable portfolios$315,852 $295,674 
Changes in recoveries(12,409)(9,501)
Total debt purchasing revenue303,443 286,173 
Servicing revenue20,379 22,585 
Other revenues4,564 3,872 
Total revenues328,386 312,630 
Operating expenses
Salaries and employee benefits104,184 103,850 
Cost of legal collections58,721 54,101 
General and administrative expenses36,241 37,965 
Other operating expenses30,367 27,556 
Collection agency commissions7,434 8,150 
Depreciation and amortization7,848 10,870 
Total operating expenses244,795 242,492 
Income from operations83,591 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 taxes30,492 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:
Basic23,784 23,548 
Diluted24,468 24,942 

Encore Capital Group, Inc.
Page 7


ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, In Thousands)
Three Months Ended March 31,
20242023
Operating activities:
Net income$23,239 $18,626 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization7,848 10,870 
Other non-cash interest expense, net3,727 4,594 
Stock-based compensation expense3,357 4,052 
Deferred income taxes170 1,369 
Changes in recoveries12,409 9,501 
Other, net717 (1,843)
Changes in operating assets and liabilities
Other assets(6,223)(3,139)
Accounts payable, accrued liabilities and other liabilities5,740 (8,117)
Net cash provided by operating activities50,984 35,913 
Investing activities:
Purchases of receivable portfolios, net of put-backs(291,367)(274,625)
Collections applied to investment in receivable portfolios195,035 166,682 
Purchases of asset held for sale(212)(22,596)
Purchases of property and equipment(6,861)(4,885)
Other, net12,523 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 facilities248,549 229,128 
Repayment of credit facilities(696,351)(140,043)
Proceeds from senior secured notes500,000 — 
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, net23,564 (10,684)
Net cash provided by financing activities55,790 110,374 
Net increase in cash and cash equivalents15,892 15,572 
Effect of exchange rate changes on cash and cash equivalents(1,266)(710)
Cash and cash equivalents, beginning of period158,364 143,912 
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 refunds1,542 908 
Supplemental schedule of non-cash investing activities:
Investment in receivable portfolios transferred to real estate owned$2,045 $1,105 

Encore Capital Group, Inc.
Page 8


ENCORE CAPITAL GROUP, INC.
Supplemental Financial Information
Reconciliation of Non-GAAP Metrics
Adjusted EBITDA
Three Months Ended
March 31,
(in thousands, unaudited)20242023
GAAP net income, as reported$23,239 $18,626 
Adjustments:
Interest expense55,765 46,835 
Interest income(1,368)(944)
Provision for income taxes7,253 6,409 
Depreciation and amortization7,848 10,870 
Net gain on derivative instruments(1)
(195)— 
Stock-based compensation expense3,357 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.
(3)Amount represents (a) gross collections from receivable portfolios less (b) debt purchasing revenue, plus (c) proceeds applied to basis from sales of real estate owned (“REO”) assets and other receivable portfolios. A reconciliation of “collections applied to investment in receivable portfolios, net” to “collections applied to principal balance” is available in the Form 10-Q for the period ending March 31, 2024.


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