(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 November 3, 2021 | |||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
ENCORE CAPITAL GROUP, INC. | ||||||||
Date: | November 3, 2021 | /s/ Jonathan C. Clark | ||||||
Jonathan C. Clark | ||||||||
Executive Vice President, Chief Financial Officer and Treasurer |
Exhibit Number | Description | ||||
Press release dated November 3, 2021 | |||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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Three Months Ended September 30, | |||||||||||||||||
(in thousands, except percentages and earnings per share) | 2021 | 2020 | Change | ||||||||||||||
Collections | $ | 566,690 | $ | 539,748 | 5% | ||||||||||||
Revenues | $ | 412,624 | $ | 403,676 | 2% | ||||||||||||
Portfolio purchases(1) | $ | 168,188 | $ | 170,131 | (1)% | ||||||||||||
Estimated Remaining Collections (ERC) | $ | 7,879,353 | $ | 8,459,739 | (7)% | ||||||||||||
Operating expenses | $ | 245,977 | $ | 261,221 | (6)% | ||||||||||||
GAAP net income attributable to Encore | $ | 83,566 | $ | 54,650 | 53% | ||||||||||||
GAAP earnings per share | $ | 2.66 | $ | 1.72 | 55% | ||||||||||||
LTM Pre-tax ROIC(2) | 15.2 | % | 12.7 | % | +250bps | ||||||||||||
Leverage Ratio(3) | 1.8x | 2.4x | -0.6x |
Nine Months Ended September 30, | |||||||||||||||||
(in thousands, except percentages and earnings per share) | 2021 | 2020 | Change | ||||||||||||||
Collections | $ | 1,785,578 | $ | 1,575,242 | 13% | ||||||||||||
Revenues | $ | 1,257,196 | $ | 1,118,790 | 12% | ||||||||||||
Portfolio purchases(1) | $ | 481,094 | $ | 532,183 | (10)% | ||||||||||||
Operating expenses | $ | 747,948 | $ | 709,441 | 5% | ||||||||||||
GAAP net income attributable to Encore | $ | 274,699 | $ | 174,528 | 57% | ||||||||||||
GAAP earnings per share | $ | 8.71 | $ | 5.51 | 58% |
September 30, 2021 | December 31, 2020 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 158,243 | $ | 189,184 | |||||||
Investment in receivable portfolios, net | 3,083,271 | 3,291,918 | |||||||||
Property and equipment, net | 121,097 | 127,297 | |||||||||
Other assets | 291,840 | 349,162 | |||||||||
Goodwill | 895,515 | 906,962 | |||||||||
Total assets | $ | 4,549,966 | $ | 4,864,523 | |||||||
Liabilities and Equity | |||||||||||
Liabilities: | |||||||||||
Accounts payable and accrued liabilities | $ | 214,486 | $ | 215,920 | |||||||
Borrowings | 2,796,224 | 3,281,634 | |||||||||
Other liabilities | 140,436 | 146,893 | |||||||||
Total liabilities | 3,151,146 | 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, 29,598 and 31,345 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively | 296 | 313 | |||||||||
Additional paid-in capital | 105,326 | 230,440 | |||||||||
Accumulated earnings | 1,352,825 | 1,055,668 | |||||||||
Accumulated other comprehensive loss | (59,627) | (68,813) | |||||||||
Total Encore Capital Group, Inc. stockholders’ equity | 1,398,820 | 1,217,608 | |||||||||
Noncontrolling interest | — | 2,468 | |||||||||
Total equity | 1,398,820 | 1,220,076 | |||||||||
Total liabilities and equity | $ | 4,549,966 | $ | 4,864,523 |
September 30, 2021 | December 31, 2020 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 718 | $ | 2,223 | |||||||
Investment in receivable portfolios, net | 500,304 | 553,621 | |||||||||
Other assets | 4,285 | 5,127 | |||||||||
Liabilities | |||||||||||
Borrowings | 471,570 | 478,131 | |||||||||
Other liabilities | 10 | 37 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Revenue from receivable portfolios | $ | 316,225 | $ | 342,489 | $ | 982,393 | $ | 1,035,141 | |||||||||||||||
Changes in recoveries | 65,913 | 30,451 | 176,628 | (2,203) | |||||||||||||||||||
Total debt purchasing revenue | 382,138 | 372,940 | 1,159,021 | 1,032,938 | |||||||||||||||||||
Servicing revenue | 29,321 | 29,787 | 93,901 | 82,417 | |||||||||||||||||||
Other revenues | 1,165 | 949 | 4,274 | 3,435 | |||||||||||||||||||
Total revenues | 412,624 | 403,676 | 1,257,196 | 1,118,790 | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Salaries and employee benefits | 94,662 | 95,979 | 288,892 | 279,944 | |||||||||||||||||||
Cost of legal collections | 64,170 | 60,383 | 198,212 | 164,018 | |||||||||||||||||||
General and administrative expenses | 35,819 | 53,459 | 102,790 | 113,954 | |||||||||||||||||||
Other operating expenses | 25,226 | 28,088 | 81,895 | 83,527 | |||||||||||||||||||
Collection agency commissions | 11,964 | 12,703 | 38,465 | 36,562 | |||||||||||||||||||
Depreciation and amortization | 14,136 | 10,609 | 37,694 | 31,436 | |||||||||||||||||||
Total operating expenses | 245,977 | 261,221 | 747,948 | 709,441 | |||||||||||||||||||
Income from operations | 166,647 | 142,455 | 509,248 | 409,349 | |||||||||||||||||||
Other expense | |||||||||||||||||||||||
Interest expense | (40,874) | (52,974) | (131,559) | (157,963) | |||||||||||||||||||
Loss on extinguishment of debt | — | (14,988) | (9,300) | (14,988) | |||||||||||||||||||
Other (expense) income | (17,504) | 361 | (16,993) | (1,211) | |||||||||||||||||||
Total other expense | (58,378) | (67,601) | (157,852) | (174,162) | |||||||||||||||||||
Income before income taxes | 108,269 | 74,854 | 351,396 | 235,187 | |||||||||||||||||||
Provision for income taxes | (24,703) | (19,747) | (76,278) | (59,875) | |||||||||||||||||||
Net income | 83,566 | 55,107 | 275,118 | 175,312 | |||||||||||||||||||
Net income attributable to noncontrolling interest | — | (457) | (419) | (784) | |||||||||||||||||||
Net income attributable to Encore Capital Group, Inc. stockholders | $ | 83,566 | $ | 54,650 | $ | 274,699 | $ | 174,528 | |||||||||||||||
Earnings per share attributable to Encore Capital Group, Inc.: | |||||||||||||||||||||||
Basic | $ | 2.76 | $ | 1.74 | $ | 8.90 | $ | 5.56 | |||||||||||||||
Diluted | $ | 2.66 | $ | 1.72 | $ | 8.71 | $ | 5.51 | |||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||
Basic | 30,225 | 31,484 | 30,863 | 31,402 | |||||||||||||||||||
Diluted | 31,362 | 31,826 | 31,531 | 31,672 |
Nine Months Ended September 30, | |||||||||||
2021 | 2020 | ||||||||||
Operating activities: | |||||||||||
Net income | $ | 275,118 | $ | 175,312 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 37,694 | 31,436 | |||||||||
Expense related to financing | 9,300 | 19,791 | |||||||||
Other non-cash interest expense, net | 13,677 | 22,725 | |||||||||
Stock-based compensation expense | 12,903 | 13,189 | |||||||||
Deferred income taxes | (8,504) | (15,070) | |||||||||
Changes in recoveries | (176,628) | 2,203 | |||||||||
Other, net | 18,003 | 24,469 | |||||||||
Changes in operating assets and liabilities | |||||||||||
Other assets | 13,320 | 14,267 | |||||||||
Prepaid income tax and income taxes payable | 40,590 | (11,226) | |||||||||
Accounts payable, accrued liabilities and other liabilities | (23,483) | (27,114) | |||||||||
Net cash provided by operating activities | 211,990 | 249,982 | |||||||||
Investing activities: | |||||||||||
Purchases of receivable portfolios, net of put-backs | (473,013) | (517,959) | |||||||||
Collections applied to investment in receivable portfolios, net | 803,185 | 540,101 | |||||||||
Purchases of property and equipment | (24,163) | (22,658) | |||||||||
Other, net | 6,799 | 8,091 | |||||||||
Net cash provided by investing activities | 312,808 | 7,575 | |||||||||
Financing activities: | |||||||||||
Payment of loan and debt refinancing costs | (11,667) | (48,676) | |||||||||
Proceeds from credit facilities | 418,941 | 1,695,914 | |||||||||
Repayment of credit facilities | (713,958) | (2,051,764) | |||||||||
Proceeds from senior secured notes | 353,747 | 410,820 | |||||||||
Repayment of senior secured notes | (349,355) | (152,430) | |||||||||
Repayment of convertible senior notes | (161,000) | (89,355) | |||||||||
Repurchase of common stock | (88,119) | — | |||||||||
Other, net | (13,262) | (32,400) | |||||||||
Net cash used in financing activities | (564,673) | (267,891) | |||||||||
Net decrease in cash and cash equivalents | (39,875) | (10,334) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 8,934 | (12,018) | |||||||||
Cash and cash equivalents, beginning of period | 189,184 | 192,335 | |||||||||
Cash and cash equivalents, end of period | $ | 158,243 | $ | 169,983 | |||||||
Supplemental disclosure of cash information: | |||||||||||
Cash paid for interest | $ | 100,335 | $ | 148,059 | |||||||
Cash paid for taxes, net of refunds | 42,815 | 87,154 |
Three Months Ended September 30, | Nine Months Ended September 30, | Twelve Months Ended September 30, | |||||||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||
GAAP net income, as reported | $ | 83,566 | $ | 55,107 | $ | 275,118 | $ | 175,312 | $ | 312,329 | $ | 218,544 | |||||||||||||||||||||||
Adjustments: | |||||||||||||||||||||||||||||||||||
Interest expense | 40,874 | 52,974 | 131,559 | 157,963 | 182,952 | 211,478 | |||||||||||||||||||||||||||||
Interest income | (270) | (394) | (1,170) | (1,953) | (1,614) | (2,796) | |||||||||||||||||||||||||||||
Provision for income taxes | 24,703 | 19,747 | 76,278 | 59,875 | 86,778 | 73,761 | |||||||||||||||||||||||||||||
Depreciation and amortization | 14,136 | 10,609 | 37,694 | 31,436 | 49,038 | 42,729 | |||||||||||||||||||||||||||||
CFPB settlement fees(1) | — | 15,009 | — | 15,009 | — | 15,009 | |||||||||||||||||||||||||||||
Stock-based compensation expense | 3,847 | 3,884 | 12,903 | 13,189 | 16,274 | 16,334 | |||||||||||||||||||||||||||||
Acquisition, integration and restructuring related expenses(2) | 17,950 | (23) | 17,950 | 4,940 | 17,972 | 5,644 | |||||||||||||||||||||||||||||
Loss on extinguishment of debt | — | 14,988 | 9,300 | 14,988 | 35,263 | 14,988 | |||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 184,806 | $ | 171,901 | $ | 559,632 | $ | 470,759 | $ | 698,992 | $ | 595,691 | |||||||||||||||||||||||
Collections applied to principal balance(3) | $ | 188,181 | $ | 172,406 | $ | 641,765 | $ | 547,902 | $ | 834,213 | $ | 737,336 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
GAAP total operating expenses, as reported | $ | 245,977 | $ | 261,221 | $ | 747,948 | $ | 709,441 | |||||||||||||||
Adjustments: | |||||||||||||||||||||||
Operating expenses related to non-portfolio purchasing and recovery business(1) | (47,088) | (54,001) | (133,008) | (137,876) | |||||||||||||||||||
CFPB settlement fees(2) | — | (15,009) | — | (15,009) | |||||||||||||||||||
Stock-based compensation expense | (3,847) | (3,884) | (12,903) | (13,189) | |||||||||||||||||||
Acquisition, integration and restructuring related operating expenses(3) | — | 23 | — | (132) | |||||||||||||||||||
Adjusted operating expenses related to portfolio purchasing and recovery business | $ | 195,042 | $ | 188,350 | $ | 602,037 | $ | 543,235 |
Last Twelve Months Ended September 30, | |||||||||||
(in thousands, except percentages) | 2021 | 2020 | |||||||||
Numerator | |||||||||||
Income from operations | $ | 633,462 | $ | 522,559 | |||||||
Adjustments:(1) | |||||||||||
CFPB settlement fees | — | 15,009 | |||||||||
Acquisition, integration and restructuring related expenses | 2,670 | 836 | |||||||||
Amortization of certain acquired intangible assets(2) | 7,409 | 6,866 | |||||||||
Adjusted income from operations | $ | 643,541 | $ | 545,270 | |||||||
Denominator | |||||||||||
Average Net Debt | $ | 2,967,800 | $ | 3,274,692 | |||||||
Average equity | 1,263,038 | 1,025,627 | |||||||||
Total average invested capital | $ | 4,230,838 | $ | 4,300,319 | |||||||
Pre-tax ROIC | 15.2 | % | 12.7 | % |
(in thousands) | September 30, 2021 | September 30, 2020 | September 30, 2019 | ||||||||||||||
GAAP Borrowings | $ | 2,796,224 | $ | 3,252,101 | $ | 3,429,342 | |||||||||||
Debt issuance costs and debt discounts | 60,268 | 106,511 | 75,314 | ||||||||||||||
Cash & cash equivalents | (158,243) | (169,983) | (186,677) | ||||||||||||||
Client cash(1) | 28,343 | 20,379 | 22,397 | ||||||||||||||
Net Debt | $ | 2,726,592 | $ | 3,209,008 | $ | 3,340,376 |
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