Delaware (State or Other Jurisdiction of Incorporation) | 000-26489 (Commission File Number) | 48-1090909 (IRS Employer Identification No.) |
3111 Camino Del Rio North, Suite 103, San Diego, California (Address of Principal Executive Offices) | 92108 (Zip Code) | |
(877) 445-4581 (Registrant’s telephone number, including area code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Number | Description |
99.1 | Press release dated May 10, 2016 |
ENCORE CAPITAL GROUP, INC. | |
Date: May 10, 2016 | /s/ Jonathan C. Clark |
Jonathan C. Clark | |
Executive Vice President, Chief Financial Officer and Treasurer |
Exhibit Number | Description |
99.1 | Press release dated May 10, 2016 |
![]() | Exhibit 99.1 |
• | GAAP EPS from continuing operations increases 11% to $1.12 |
• | Non-GAAP Economic EPS from continuing operations increases 13% to $1.31 |
• | Estimated Remaining Collections (ERC) grew 12% to $5.7 billion, compared to $5.1 billion at March 31, 2015. |
• | Gross collections grew 5% to $448 million, compared to $425 million in the same period of the prior year. |
• | Investment in receivable portfolios was $257 million, compared to $125 million in the same period of the prior year. |
• | Total revenues increased 4% to $289 million, compared to $278 million in the same period of the prior year. |
• | Total operating expenses increased 5% to $206 million, compared to $195 million in the same period of the prior year. Adjusted operating expenses increased 3% to $169 million, compared to $165 million in the same period of the prior year. Adjusted operating expenses per dollar collected for the portfolio purchasing and recovery business decreased to 37.7%, compared to 38.8% in the same period of the prior year. |
• | Adjusted EBITDA increased 9% to $287 million, compared to $263 million in the same period of the prior year. |
• | Total interest expense increased to $50.7 million, as compared to $42.3 million in the same period of the prior year, reflecting the financing of recent acquisitions and portfolio purchases in Europe. |
• | GAAP income from continuing operations attributable to Encore was $28.9 million, or $1.12 per fully diluted share, as compared to $27.5 million, or $1.01 per fully diluted share in the same period of the prior year. |
• | Adjusted income from continuing operations attributable to Encore increased 11% to $33.9 million, compared to $30.6 million in the same period of the prior year. |
• | Adjusted income from continuing operations attributable to Encore per share (also referred to as Economic EPS) grew 13% to $1.31, compared to $1.16 in the same period of the prior year. In the first quarter of 2016, Economic EPS was not adjusted for shares associated with Encore’s |
• | Available capacity under Encore’s revolving credit facility, subject to borrowing base and applicable debt covenants, was $228 million as of March 31, 2016, and total debt was $2.9 billion. |
March 31, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 144,613 | $ | 123,993 | |||
Investment in receivable portfolios, net | 2,486,978 | 2,440,669 | |||||
Property and equipment, net | 68,162 | 72,546 | |||||
Deferred court costs, net | 75,829 | 75,239 | |||||
Other assets | 157,533 | 148,762 | |||||
Goodwill | 890,504 | 924,847 | |||||
Assets associated with discontinued operations | — | 388,763 | |||||
Total assets | $ | 3,823,619 | $ | 4,174,819 | |||
Liabilities and equity | |||||||
Liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 238,203 | $ | 290,608 | |||
Debt | 2,893,434 | 2,944,063 | |||||
Other liabilities | 27,975 | 59,226 | |||||
Liabilities associated with discontinued operations | — | 232,434 | |||||
Total liabilities | 3,159,612 | 3,526,331 | |||||
Commitments and contingencies | |||||||
Redeemable noncontrolling interest | 39,948 | 38,624 | |||||
Redeemable equity component of convertible senior notes | 5,359 | 6,126 | |||||
Equity: | |||||||
Convertible preferred stock, $.01 par value, 5,000 shares authorized, no shares issued and outstanding | — | — | |||||
Common stock, $.01 par value, 50,000 shares authorized, 25,508 shares and 25,288 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively | 255 | 253 | |||||
Additional paid-in capital | 109,228 | 110,533 | |||||
Accumulated earnings | 569,183 | 543,489 | |||||
Accumulated other comprehensive loss | (68,360 | ) | (57,822 | ) | |||
Total Encore Capital Group, Inc. stockholders’ equity | 610,306 | 596,453 | |||||
Noncontrolling interest | 8,394 | 7,285 | |||||
Total equity | 618,700 | 603,738 | |||||
Total liabilities, redeemable equity and equity | $ | 3,823,619 | $ | 4,174,819 |
March 31, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 62,539 | $ | 50,483 | |||
Investment in receivable portfolios, net | 1,217,625 | 1,197,513 | |||||
Property and equipment, net | 18,145 | 19,767 | |||||
Deferred court costs, net | 35,782 | 33,296 | |||||
Other assets | 46,804 | 31,679 | |||||
Goodwill | 680,727 | 706,812 | |||||
Assets associated with discontinued operations | — | 92,985 | |||||
Liabilities | |||||||
Accounts payable and accrued liabilities | $ | 99,010 | $ | 142,375 | |||
Debt | 1,739,579 | 1,665,009 | |||||
Other liabilities | 687 | 839 | |||||
Liabilities associated with discontinued operations | — | 58,923 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Revenues | |||||||
Revenue from receivable portfolios, net | $ | 270,094 | $ | 264,110 | |||
Other revenues | 18,923 | 13,672 | |||||
Total revenues | 289,017 | 277,782 | |||||
Operating expenses | |||||||
Salaries and employee benefits | 69,642 | 65,552 | |||||
Cost of legal collections | 54,308 | 54,998 | |||||
Other operating expenses | 26,343 | 24,326 | |||||
Collection agency commissions | 10,120 | 10,685 | |||||
General and administrative expenses | 35,239 | 31,197 | |||||
Depreciation and amortization | 9,861 | 8,137 | |||||
Total operating expenses | 205,513 | 194,895 | |||||
Income from operations | 83,504 | 82,887 | |||||
Other (expense) income | |||||||
Interest expense | (50,691 | ) | (42,303 | ) | |||
Other income | 7,124 | 2,117 | |||||
Total other expense | (43,567 | ) | (40,186 | ) | |||
Income before income taxes | 39,937 | 42,701 | |||||
Provision for income taxes | (10,148 | ) | (14,614 | ) | |||
Income from continuing operations | 29,789 | 28,087 | |||||
(Loss) income from discontinued operations, net of tax | (3,182 | ) | 1,880 | ||||
Net income | 26,607 | 29,967 | |||||
Net income attributable to noncontrolling interest | (913 | ) | (542 | ) | |||
Net income attributable to Encore Capital Group, Inc. stockholders | $ | 25,694 | $ | 29,425 | |||
Amounts attributable to Encore Capital Group, Inc.: | |||||||
Income from continuing operations | $ | 28,876 | $ | 27,545 | |||
(Loss) income from discontinued operations, net of tax | (3,182 | ) | 1,880 | ||||
Net income | $ | 25,694 | $ | 29,425 | |||
Earnings (loss) per share attributable to Encore Capital Group, Inc.: | |||||||
Basic earnings (loss) per share from: | |||||||
Continuing operations | $ | 1.13 | $ | 1.06 | |||
Discontinued operations | $ | (0.12 | ) | $ | 0.07 | ||
Basic | $ | 1.01 | $ | 1.13 | |||
Diluted earnings (loss) per share from: | |||||||
Continuing operations | $ | 1.12 | $ | 1.01 | |||
Discontinued operations | $ | (0.13 | ) | $ | 0.07 | ||
Diluted | $ | 0.99 | $ | 1.08 | |||
Weighted average shares outstanding: | |||||||
Basic | 25,550 | 26,072 | |||||
Diluted | 25,868 | 27,315 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Operating activities: | |||||||
Net income | $ | 26,607 | $ | 29,967 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Loss (income) from discontinued operations, net of income taxes | 1,352 | (1,880 | ) | ||||
Depreciation and amortization | 9,861 | 8,137 | |||||
Non-cash interest expense, net | 9,533 | 7,805 | |||||
Stock-based compensation expense | 3,718 | 5,905 | |||||
Gain on derivative instruments | (5,399 | ) | — | ||||
Deferred income taxes | (21,588 | ) | (4,276 | ) | |||
Excess tax benefit from stock-based payment arrangements | — | (637 | ) | ||||
Loss on sale of discontinued operations, net of tax | 1,830 | — | |||||
Reversal of allowances on receivable portfolios, net | (2,191 | ) | (2,859 | ) | |||
Changes in operating assets and liabilities | |||||||
Deferred court costs and other assets | 1,233 | (11,873 | ) | ||||
Prepaid income tax and income taxes payable | 18,824 | 4,847 | |||||
Accounts payable, accrued liabilities and other liabilities | (14,023 | ) | (15,081 | ) | |||
Net cash provided by operating activities from continuing operations | 29,757 | 20,055 | |||||
Net cash provided by (used in) operating activities from discontinued operations | 2,096 | (665 | ) | ||||
Net cash provided by operating activities | 31,853 | 19,390 | |||||
Investing activities: | |||||||
Cash paid for acquisitions, net of cash acquired | (675 | ) | — | ||||
Proceeds from divestiture of business, net of cash divested | 106,041 | — | |||||
Purchases of receivable portfolios, net of put-backs | (280,990 | ) | (143,239 | ) | |||
Collections applied to investment in receivable portfolios, net | 180,796 | 164,217 | |||||
Purchases of property and equipment | (2,252 | ) | (4,271 | ) | |||
Other, net | 1,191 | (251 | ) | ||||
Net cash provided by investing activities from continuing operations | 4,111 | 16,456 | |||||
Net cash provided by (used in) used in investing activities from discontinued operations | 14,685 | (11,965 | ) | ||||
Net cash provided by investing activities | 18,796 | 4,491 | |||||
Financing activities: | |||||||
Payment of loan costs | (1,395 | ) | (4,279 | ) | |||
Proceeds from credit facilities | 185,883 | 134,285 | |||||
Repayment of credit facilities | (235,151 | ) | (124,395 | ) | |||
Repayment of senior secured notes | (3,750 | ) | (3,750 | ) | |||
Repayment of securitized notes | (935 | ) | (6,625 | ) | |||
Taxes paid related to net share settlement of equity awards | (3,354 | ) | (4,554 | ) | |||
Excess tax benefit from stock-based payment arrangements | — | 637 | |||||
Other, net | (2,785 | ) | (3,592 | ) | |||
Net cash used in financing activities | (61,487 | ) | (12,273 | ) | |||
Net (decrease) increase in cash and cash equivalents | (10,838 | ) | 11,608 | ||||
Effect of exchange rate changes on cash | 1,858 | 438 | |||||
Cash and cash equivalents, beginning of period | 153,593 | 124,163 | |||||
Cash and cash equivalents, end of period | 144,613 | 136,209 | |||||
Cash and cash equivalents of discontinued operations, end of period | — | 24,183 | |||||
Cash and cash equivalents of continuing operations, end of period | $ | 144,613 | $ | 112,026 |
Three Months Ended March 31, | |||||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||||
$ | Per Diluted Share— Accounting | Per Diluted Share— Economic | $ | Per Diluted Share— Accounting | Per Diluted Share— Economic | ||||||||||||||||||
GAAP net income from continuing operations attributable to Encore, as reported | $ | 28,876 | $ | 1.12 | $ | 1.12 | $ | 27,545 | $ | 1.01 | $ | 1.04 | |||||||||||
Adjustments: | |||||||||||||||||||||||
Convertible notes non-cash interest and issuance cost amortization, net of tax | 1,804 | 0.07 | 0.07 | 1,666 | 0.06 | 0.07 | |||||||||||||||||
Acquisition, integration and restructuring related expenses, net of tax | 1,329 | 0.05 | 0.05 | 1,348 | 0.05 | 0.05 | |||||||||||||||||
Settlement fees and related administrative expenses, net of tax | 1,853 | 0.07 | 0.07 | — | — | — | |||||||||||||||||
Adjusted income from continuing operations attributable to Encore | $ | 33,862 | $ | 1.31 | $ | 1.31 | $ | 30,559 | $ | 1.12 | $ | 1.16 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
GAAP net income, as reported | $ | 26,607 | $ | 29,967 | |||
Adjustments: | |||||||
Loss (income) from discontinued operations, net of tax | 3,182 | (1,880 | ) | ||||
Interest expense | 50,691 | 42,303 | |||||
Provision for income taxes | 10,148 | 14,614 | |||||
Depreciation and amortization | 9,861 | 8,137 | |||||
Amount applied to principal on receivable portfolios | 177,711 | 160,961 | |||||
Stock-based compensation expense | 3,718 | 5,905 | |||||
Acquisition, integration and restructuring related expenses | 2,141 | 2,766 | |||||
Settlement fees and related administrative expenses | 2,988 | — | |||||
Adjusted EBITDA | $ | 287,047 | $ | 262,773 |
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
GAAP total operating expenses, as reported | $ | 205,513 | $ | 194,895 | |||
Adjustments: | |||||||
Stock-based compensation expense | (3,718 | ) | (5,905 | ) | |||
Operating expenses related to non-portfolio purchasing and recovery business | (26,885 | ) | (21,623 | ) | |||
Acquisition, integration and restructuring related expenses | (3,059 | ) | (2,766 | ) | |||
Settlement fees and related administrative expenses | (2,988 | ) | — | ||||
Adjusted operating expenses related to portfolio purchasing and recovery business | $ | 168,863 | $ | 164,601 |
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