(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Exhibit Number | Description | ||||
Press release dated May 5, 2021 | |||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
ENCORE CAPITAL GROUP, INC. | ||||||||
Date: | May 5, 2021 | /s/ Jonathan C. Clark | ||||||
Jonathan C. Clark | ||||||||
Executive Vice President, Chief Financial Officer and Treasurer |
Exhibit Number | Description | ||||
Press release dated May 5, 2021 | |||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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Three Months Ended March 31, | |||||||||||||||||
(in thousands, except percentages and earnings per share) | 2021 | 2020 | Change | ||||||||||||||
Collections | $ | 606,461 | $ | 527,279 | 15 | % | |||||||||||
Revenues | $ | 416,837 | $ | 289,081 | 44 | % | |||||||||||
Portfolio purchases(1) | $ | 170,178 | $ | 214,113 | (21) | % | |||||||||||
Estimated Remaining Collections (ERC) | $ | 8,308,923 | $ | 8,458,948 | (2) | % | |||||||||||
Operating expenses | $ | 248,523 | $ | 241,879 | 3 | % | |||||||||||
GAAP net income attributable to Encore | $ | 94,630 | $ | (10,454) | $ | 105,084 | |||||||||||
GAAP earnings per share | $ | 2.97 | $ | (0.33) | $ | 3.30 | |||||||||||
LTM Pre-tax ROIC(2) | 15.8 | % | 9.4 | % | +640bps | ||||||||||||
Leverage Ratio(3) | 2.1x | 2.6x | -0.5x |
March 31, 2021 | December 31, 2020 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 184,598 | $ | 189,184 | |||||||
Investment in receivable portfolios, net | 3,225,678 | 3,291,918 | |||||||||
Property and equipment, net | 124,586 | 127,297 | |||||||||
Other assets | 323,137 | 349,162 | |||||||||
Goodwill | 912,170 | 906,962 | |||||||||
Total assets | $ | 4,770,169 | $ | 4,864,523 | |||||||
Liabilities and Equity | |||||||||||
Liabilities: | |||||||||||
Accounts payable and accrued liabilities | $ | 189,529 | $ | 215,920 | |||||||
Borrowings | 3,151,928 | 3,281,634 | |||||||||
Other liabilities | 149,928 | 146,893 | |||||||||
Total liabilities | 3,491,385 | 3,644,447 | |||||||||
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, 31,010 and 31,345 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively | 310 | 313 | |||||||||
Additional paid-in capital | 167,655 | 230,440 | |||||||||
Accumulated earnings | 1,172,756 | 1,055,668 | |||||||||
Accumulated other comprehensive loss | (64,541) | (68,813) | |||||||||
Total Encore Capital Group, Inc. stockholders’ equity | 1,276,180 | 1,217,608 | |||||||||
Noncontrolling interest | 2,604 | 2,468 | |||||||||
Total equity | 1,278,784 | 1,220,076 | |||||||||
Total liabilities and equity | $ | 4,770,169 | $ | 4,864,523 |
March 31, 2021 | December 31, 2020 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 559 | $ | 2,223 | |||||||
Investment in receivable portfolios, net | 536,177 | 553,621 | |||||||||
Other assets | 4,687 | 5,127 | |||||||||
Liabilities | |||||||||||
Borrowings | 482,377 | 478,131 | |||||||||
Other Liabilities | 11 | 37 |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Revenues | |||||||||||
Revenue from receivable portfolios | $ | 338,018 | $ | 357,365 | |||||||
Changes in expected current and future recoveries | 44,537 | (98,661) | |||||||||
Servicing revenue | 32,516 | 28,680 | |||||||||
Other revenues | 1,766 | 1,697 | |||||||||
Total revenues | 416,837 | 289,081 | |||||||||
Operating expenses | |||||||||||
Salaries and employee benefits | 96,456 | 93,098 | |||||||||
Cost of legal collections | 67,142 | 66,279 | |||||||||
General and administrative expenses | 32,148 | 31,877 | |||||||||
Other operating expenses | 28,441 | 27,164 | |||||||||
Collection agency commissions | 12,824 | 13,176 | |||||||||
Depreciation and amortization | 11,512 | 10,285 | |||||||||
Total operating expenses | 248,523 | 241,879 | |||||||||
Income from operations | 168,314 | 47,202 | |||||||||
Other (expense) income | |||||||||||
Interest expense | (46,526) | (54,662) | |||||||||
Other (expense) income | (55) | 1,439 | |||||||||
Total other expense | (46,581) | (53,223) | |||||||||
Income (loss) before income taxes | 121,733 | (6,021) | |||||||||
Provision for income taxes | (26,968) | (4,558) | |||||||||
Net income (loss) | 94,765 | (10,579) | |||||||||
Net (income) loss attributable to noncontrolling interest | (135) | 125 | |||||||||
Net income (loss) attributable to Encore Capital Group, Inc. stockholders | $ | 94,630 | $ | (10,454) | |||||||
Earnings (loss) per share attributable to Encore Capital Group, Inc.: | |||||||||||
Basic | $ | 3.01 | $ | (0.33) | |||||||
Diluted | $ | 2.97 | $ | (0.33) | |||||||
Weighted average shares outstanding: | |||||||||||
Basic | 31,469 | 31,308 | |||||||||
Diluted | 31,832 | 31,308 |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Operating activities: | |||||||||||
Net income (loss) | $ | 94,765 | $ | (10,579) | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 11,512 | 10,285 | |||||||||
Other non-cash interest expense, net | 4,749 | 5,909 | |||||||||
Stock-based compensation expense | 3,405 | 4,527 | |||||||||
Deferred income taxes | (3,302) | (12,030) | |||||||||
Changes in expected current and future recoveries | (44,537) | 98,661 | |||||||||
Other, net | 4,931 | 2,161 | |||||||||
Changes in operating assets and liabilities | |||||||||||
Other assets | (3,816) | 3,377 | |||||||||
Prepaid income tax and income taxes payable | 28,627 | 14,970 | |||||||||
Accounts payable, accrued liabilities and other liabilities | (27,215) | (46,476) | |||||||||
Net cash provided by operating activities | 69,119 | 70,805 | |||||||||
Investing activities: | |||||||||||
Purchases of receivable portfolios, net of put-backs | (167,025) | (209,045) | |||||||||
Collections applied to investment in receivable portfolios, net | 268,443 | 169,914 | |||||||||
Other, net | (6,151) | (4,124) | |||||||||
Net cash provided by (used in) investing activities | 95,267 | (43,255) | |||||||||
Financing activities: | |||||||||||
Proceeds from credit facilities | 273,293 | 171,880 | |||||||||
Repayment of credit facilities | (235,399) | (167,221) | |||||||||
Repayment of senior secured notes | (9,770) | (16,250) | |||||||||
Repayment of convertible senior notes | (161,000) | — | |||||||||
Repurchase of common stock | (20,390) | — | |||||||||
Other, net | (6,844) | (10,171) | |||||||||
Net cash used in financing activities | (160,110) | (21,762) | |||||||||
Net increase in cash and cash equivalents | 4,276 | 5,788 | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (8,862) | (9,924) | |||||||||
Cash and cash equivalents, beginning of period | 189,184 | 192,335 | |||||||||
Cash and cash equivalents, end of period | $ | 184,598 | $ | 188,199 | |||||||
Supplemental disclosure of cash information: | |||||||||||
Cash paid for interest | $ | 37,258 | $ | 60,495 | |||||||
Cash paid for taxes, net of refunds | 813 | 766 |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
GAAP net income, as reported | $ | 94,765 | $ | (10,579) | |||||||
Adjustments: | |||||||||||
Interest expense | 46,526 | 54,662 | |||||||||
Interest income | (474) | (1,000) | |||||||||
Provision for income taxes | 26,968 | 4,558 | |||||||||
Depreciation and amortization | 11,512 | 10,285 | |||||||||
Stock-based compensation expense | 3,405 | 4,527 | |||||||||
Acquisition, integration and restructuring related expenses(1) | — | 187 | |||||||||
Adjusted EBITDA | $ | 182,702 | $ | 62,640 | |||||||
Collections applied to principal balance(2) | $ | 229,510 | $ | 268,575 |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
GAAP total operating expenses, as reported | $ | 248,523 | $ | 241,879 | |||||||
Adjustments: | |||||||||||
Operating expenses related to non-portfolio purchasing and recovery business(1) | (42,653) | (41,489) | |||||||||
Stock-based compensation expense | (3,405) | (4,527) | |||||||||
Acquisition, integration and restructuring related expenses(2) | — | (187) | |||||||||
Adjusted operating expenses related to portfolio purchasing and recovery business | $ | 202,465 | $ | 195,676 |
Last Twelve Months Ended March 31, | |||||||||||
(in thousands) | 2021 | 2020 | |||||||||
Numerator | |||||||||||
Income from operations | $ | 654,675 | $ | 382,489 | |||||||
Adjustments:(1) | |||||||||||
CFPB settlement fees | 15,009 | — | |||||||||
Acquisition, integration and restructuring related expenses | (33) | 6,028 | |||||||||
Amortization of certain acquired intangible assets(2) | 7,232 | 6,783 | |||||||||
Goodwill impairment | — | 10,718 | |||||||||
Net gain on fair value adjustments to contingent considerations | — | (2,300) | |||||||||
Adjusted income from operations | $ | 676,883 | $ | 403,718 | |||||||
Denominator | |||||||||||
Average Net Debt | $ | 3,181,033 | $ | 3,417,019 | |||||||
Average equity | 1,092,298 | 890,184 | |||||||||
Total average invested capital | $ | 4,273,331 | $ | 4,307,203 | |||||||
Pre-tax ROIC | 15.8 | % | 9.4 | % |
(in thousands) | March 31, 2021 | March 31, 2020 | March 31, 2019 | ||||||||||||||
GAAP Borrowings | $ | 3,151,928 | $ | 3,404,427 | $ | 3,592,906 | |||||||||||
Debt issuance costs and debt discounts | 67,515 | 68,583 | 79,138 | ||||||||||||||
Cash & cash equivalents | (184,598) | (188,199) | (167,096) | ||||||||||||||
Client cash(1) | 22,983 | 19,426 | 24,852 | ||||||||||||||
Net Debt | $ | 3,057,828 | $ | 3,304,237 | $ | 3,529,800 |
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