(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 August 4, 2021 | |||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
ENCORE CAPITAL GROUP, INC. | ||||||||
Date: | August 4, 2021 | /s/ Jonathan C. Clark | ||||||
Jonathan C. Clark | ||||||||
Executive Vice President, Chief Financial Officer and Treasurer |
Exhibit Number | Description | ||||
Press release dated August 4, 2021 | |||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Three Months Ended June 30, | |||||||||||||||||
(in thousands, except percentages and earnings per share) | 2021 | 2020 | Change | ||||||||||||||
Collections | $ | 612,427 | $ | 508,215 | 21 | % | |||||||||||
Revenues | $ | 427,735 | $ | 426,033 | — | % | |||||||||||
Portfolio purchases(1) | $ | 142,728 | $ | 147,939 | (4) | % | |||||||||||
Estimated Remaining Collections (ERC) | $ | 8,111,917 | $ | 8,381,829 | (3) | % | |||||||||||
Operating expenses | $ | 253,448 | $ | 206,341 | 23 | % | |||||||||||
GAAP net income attributable to Encore | $ | 96,503 | $ | 130,332 | (26) | % | |||||||||||
GAAP earnings per share | $ | 3.07 | $ | 4.13 | (26) | % | |||||||||||
LTM Pre-tax ROIC(2) | 15.0 | % | 11.9 | % | +310bps | ||||||||||||
Leverage Ratio(3) | 1.9x | 2.4x | -0.5x |
Six Months Ended June 30, | |||||||||||||||||
(in thousands, except percentages and earnings per share) | 2021 | 2020 | Change | ||||||||||||||
Collections | $ | 1,218,888 | $ | 1,035,494 | 18 | % | |||||||||||
Revenues | $ | 844,572 | $ | 715,114 | 18 | % | |||||||||||
Portfolio purchases(1) | $ | 312,906 | $ | 362,052 | (14) | % | |||||||||||
Operating expenses | $ | 501,971 | $ | 448,220 | 12 | % | |||||||||||
GAAP net income attributable to Encore | $ | 191,133 | $ | 119,878 | 59 | % | |||||||||||
GAAP earnings per share | $ | 6.04 | $ | 3.79 | 59 | % |
June 30, 2021 | December 31, 2020 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 198,516 | $ | 189,184 | |||||||
Investment in receivable portfolios, net | 3,154,001 | 3,291,918 | |||||||||
Property and equipment, net | 120,090 | 127,297 | |||||||||
Other assets | 292,078 | 349,162 | |||||||||
Goodwill | 915,067 | 906,962 | |||||||||
Total assets | $ | 4,679,752 | $ | 4,864,523 | |||||||
Liabilities and Equity | |||||||||||
Liabilities: | |||||||||||
Accounts payable and accrued liabilities | $ | 190,707 | $ | 215,920 | |||||||
Borrowings | 2,999,296 | 3,281,634 | |||||||||
Other liabilities | 135,399 | 146,893 | |||||||||
Total liabilities | 3,325,402 | 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, 30,413 and 31,345 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | 304 | 313 | |||||||||
Additional paid-in capital | 143,827 | 230,440 | |||||||||
Accumulated earnings | 1,269,259 | 1,055,668 | |||||||||
Accumulated other comprehensive loss | (59,040) | (68,813) | |||||||||
Total Encore Capital Group, Inc. stockholders’ equity | 1,354,350 | 1,217,608 | |||||||||
Noncontrolling interest | — | 2,468 | |||||||||
Total equity | 1,354,350 | 1,220,076 | |||||||||
Total liabilities and equity | $ | 4,679,752 | $ | 4,864,523 |
June 30, 2021 | December 31, 2020 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 678 | $ | 2,223 | |||||||
Investment in receivable portfolios, net | 516,048 | 553,621 | |||||||||
Other assets | 4,404 | 5,127 | |||||||||
Liabilities | |||||||||||
Borrowings | 484,078 | 478,131 | |||||||||
Other liabilities | 11 | 37 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Revenue from receivable portfolios | $ | 328,150 | $ | 335,287 | $ | 666,168 | $ | 692,652 | |||||||||||||||
Changes in expected current and future recoveries | 66,178 | 66,007 | 110,715 | (32,654) | |||||||||||||||||||
Servicing revenue | 32,064 | 23,950 | 64,580 | 52,630 | |||||||||||||||||||
Other revenues | 1,343 | 789 | 3,109 | 2,486 | |||||||||||||||||||
Total revenues | 427,735 | 426,033 | 844,572 | 715,114 | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Salaries and employee benefits | 97,774 | 90,867 | 194,230 | 183,965 | |||||||||||||||||||
Cost of legal collections | 66,900 | 37,356 | 134,042 | 103,635 | |||||||||||||||||||
General and administrative expenses | 34,823 | 28,618 | 66,971 | 60,495 | |||||||||||||||||||
Other operating expenses | 28,228 | 28,275 | 56,669 | 55,439 | |||||||||||||||||||
Collection agency commissions | 13,677 | 10,683 | 26,501 | 23,859 | |||||||||||||||||||
Depreciation and amortization | 12,046 | 10,542 | 23,558 | 20,827 | |||||||||||||||||||
Total operating expenses | 253,448 | 206,341 | 501,971 | 448,220 | |||||||||||||||||||
Income from operations | 174,287 | 219,692 | 342,601 | 266,894 | |||||||||||||||||||
Other (expense) income | |||||||||||||||||||||||
Interest expense | (44,159) | (50,327) | (90,685) | (104,989) | |||||||||||||||||||
Loss on extinguishment of debt | (9,300) | — | (9,300) | — | |||||||||||||||||||
Other income (expense) | 566 | (3,011) | 511 | (1,572) | |||||||||||||||||||
Total other expense | (52,893) | (53,338) | (99,474) | (106,561) | |||||||||||||||||||
Income before income taxes | 121,394 | 166,354 | 243,127 | 160,333 | |||||||||||||||||||
Provision for income taxes | (24,607) | (35,570) | (51,575) | (40,128) | |||||||||||||||||||
Net income | 96,787 | 130,784 | 191,552 | 120,205 | |||||||||||||||||||
Net income attributable to noncontrolling interest | (284) | (452) | (419) | (327) | |||||||||||||||||||
Net income attributable to Encore Capital Group, Inc. stockholders | $ | 96,503 | $ | 130,332 | $ | 191,133 | $ | 119,878 | |||||||||||||||
Earnings per share attributable to Encore Capital Group, Inc.: | |||||||||||||||||||||||
Basic | $ | 3.12 | $ | 4.15 | $ | 6.13 | $ | 3.82 | |||||||||||||||
Diluted | $ | 3.07 | $ | 4.13 | $ | 6.04 | $ | 3.79 | |||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||
Basic | 30,909 | 31,413 | 31,187 | 31,361 | |||||||||||||||||||
Diluted | 31,415 | 31,560 | 31,622 | 31,628 |
Six Months Ended June 30, | |||||||||||
2021 | 2020 | ||||||||||
Operating activities: | |||||||||||
Net income | $ | 191,552 | $ | 120,205 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 23,558 | 20,827 | |||||||||
Loss on extinguishment of debt | 9,300 | — | |||||||||
Other non-cash interest expense, net | 9,403 | 12,127 | |||||||||
Stock-based compensation expense | 9,056 | 9,305 | |||||||||
Deferred income taxes | (5,097) | (17,101) | |||||||||
Changes in expected current and future recoveries | (110,715) | 32,654 | |||||||||
Other, net | 12,006 | 4,923 | |||||||||
Changes in operating assets and liabilities | |||||||||||
Other assets | 11,474 | 11,917 | |||||||||
Prepaid income tax and income taxes payable | 31,374 | 41,748 | |||||||||
Accounts payable, accrued liabilities and other liabilities | (32,946) | (26,890) | |||||||||
Net cash provided by operating activities | 148,965 | 209,715 | |||||||||
Investing activities: | |||||||||||
Purchases of receivable portfolios, net of put-backs | (306,549) | (350,658) | |||||||||
Collections applied to investment in receivable portfolios, net | 552,720 | 342,842 | |||||||||
Purchases of property and equipment | (10,351) | (13,028) | |||||||||
Other, net | 4,877 | 9,831 | |||||||||
Net cash provided by (used in) investing activities | 240,697 | (11,013) | |||||||||
Financing activities: | |||||||||||
Payment of loan and debt refinancing costs | (10,617) | — | |||||||||
Proceeds from credit facilities | 358,063 | 279,070 | |||||||||
Repayment of credit facilities | (511,200) | (315,622) | |||||||||
Proceeds from senior secured notes | 353,747 | — | |||||||||
Repayment of senior secured notes | (339,585) | (32,500) | |||||||||
Repayment of other debt | — | (14,882) | |||||||||
Repayment of convertible senior notes | (161,000) | — | |||||||||
Repurchase of common stock | (47,421) | — | |||||||||
Other, net | (11,634) | (3,634) | |||||||||
Net cash used in financing activities | (369,647) | (87,568) | |||||||||
Net increase in cash and cash equivalents | 20,015 | 111,134 | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (10,683) | (9,669) | |||||||||
Cash and cash equivalents, beginning of period | 189,184 | 192,335 | |||||||||
Cash and cash equivalents, end of period | $ | 198,516 | $ | 293,800 | |||||||
Supplemental disclosure of cash information: | |||||||||||
Cash paid for interest | $ | 69,152 | $ | 88,363 | |||||||
Cash paid for taxes, net of refunds | 24,273 | 16,292 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
GAAP net income, as reported | $ | 96,787 | $ | 130,784 | $ | 191,552 | $ | 120,205 | |||||||||||||||
Adjustments: | |||||||||||||||||||||||
Interest expense | 44,159 | 50,327 | 90,685 | 104,989 | |||||||||||||||||||
Interest income | (426) | (559) | (900) | (1,559) | |||||||||||||||||||
Provision for income taxes | 24,607 | 35,570 | 51,575 | 40,128 | |||||||||||||||||||
Depreciation and amortization | 12,046 | 10,542 | 23,558 | 20,827 | |||||||||||||||||||
Stock-based compensation expense | 5,651 | 4,778 | 9,056 | 9,305 | |||||||||||||||||||
Acquisition, integration and restructuring related expenses(1) | — | 4,776 | — | 4,963 | |||||||||||||||||||
Loss on extinguishment of debt | 9,300 | — | 9,300 | — | |||||||||||||||||||
Adjusted EBITDA | $ | 192,124 | $ | 236,218 | $ | 374,826 | $ | 298,858 | |||||||||||||||
Collections applied to principal balance(2) | $ | 224,074 | $ | 106,921 | $ | 453,584 | $ | 375,496 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
GAAP total operating expenses, as reported | $ | 253,448 | $ | 206,341 | $ | 501,971 | $ | 448,220 | |||||||||||||||
Adjustments: | |||||||||||||||||||||||
Operating expenses related to non-portfolio purchasing and recovery business(1) | (43,267) | (42,386) | (85,920) | (83,875) | |||||||||||||||||||
Stock-based compensation expense | (5,651) | (4,778) | (9,056) | (9,305) | |||||||||||||||||||
Acquisition, integration and restructuring related expenses(2) | — | 32 | — | (155) | |||||||||||||||||||
Adjusted operating expenses related to portfolio purchasing and recovery business | $ | 204,530 | $ | 159,209 | $ | 406,995 | $ | 354,885 |
Last Twelve Months Ended June 30, | |||||||||||
(in thousands, except percentages) | 2021 | 2020 | |||||||||
Numerator | |||||||||||
Income from operations | $ | 609,269 | $ | 488,449 | |||||||
Adjustments:(1) | |||||||||||
CFPB settlement fees | 15,009 | — | |||||||||
Acquisition, integration and restructuring related expenses | (1) | 4,678 | |||||||||
Amortization of certain acquired intangible assets(2) | 7,326 | 6,737 | |||||||||
Goodwill impairment | — | 10,718 | |||||||||
Net gain on fair value adjustments to contingent considerations | — | (101) | |||||||||
Adjusted income from operations | $ | 631,603 | $ | 510,481 | |||||||
Denominator | |||||||||||
Average Net Debt | $ | 3,016,599 | $ | 3,301,314 | |||||||
Average equity | 1,198,369 | 972,672 | |||||||||
Total average invested capital | $ | 4,214,968 | $ | 4,273,986 | |||||||
Pre-tax ROIC | 15.0 | % | 11.9 | % |
(in thousands) | June 30, 2021 | June 30, 2020 | June 30, 2019 | ||||||||||||||
GAAP Borrowings | $ | 2,999,296 | $ | 3,353,730 | $ | 3,529,717 | |||||||||||
Debt issuance costs and debt discounts | 64,468 | 63,017 | 73,248 | ||||||||||||||
Cash & cash equivalents | (198,516) | (293,800) | (168,565) | ||||||||||||||
Client cash(1) | 23,907 | 21,097 | 24,183 | ||||||||||||||
Net Debt | $ | 2,889,155 | $ | 3,144,044 | $ | 3,458,583 |
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