Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 30, 2019 | |
Cover page. | ||
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001084961 | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 000-26489 | |
Entity Registrant Name | ENCORE CAPITAL GROUP, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 48-1090909 | |
Entity Address, Address Line One | 350 Camino De La Reina | |
Entity Address, Address Line Two | Suite 100 | |
Entity Address, City or Town | San Diego | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92108 | |
City Area Code | 877 | |
Local Phone Number | 445 - 4581 | |
Title of 12(b) Security | Common Stock, $0.01 Par Value Per Share | |
Trading Symbol | ECPG | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Small Business | false | |
Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 31,058,771 |
Consolidated Statements of Fina
Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Cash and cash equivalents | $ 186,677 | $ 157,418 |
Investment in receivable portfolios, net | 3,188,167 | 3,137,893 |
Deferred court costs, net | 94,011 | 95,918 |
Property and equipment, net | 116,633 | 115,518 |
Other assets | 291,018 | 257,002 |
Goodwill | 831,549 | 868,126 |
Total assets | 4,708,055 | 4,631,875 |
Liabilities: | ||
Accounts payable and accrued liabilities | 208,994 | 287,945 |
Other liabilities | 145,721 | 33,609 |
Total liabilities | 3,784,058 | 3,812,187 |
Commitments and contingencies | ||
Equity: | ||
Convertible preferred stock, $0.01 par value, 5,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $0.01 par value, 75,000 and 50,000 shares authorized, 31,059 and 30,884 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively | 311 | 309 |
Additional paid-in capital | 221,814 | 208,498 |
Accumulated earnings | 844,973 | 720,189 |
Accumulated other comprehensive loss | (146,158) | (110,987) |
Total Encore Capital Group, Inc. stockholders’ equity | 920,940 | 818,009 |
Noncontrolling interest | 3,057 | 1,679 |
Total equity | 923,997 | 819,688 |
Total liabilities and equity | 4,708,055 | 4,631,875 |
Borrowings | 3,429,343 | 3,490,633 |
Variable Interest Entities | ||
Assets | ||
Cash and cash equivalents | 186 | 448 |
Investment in receivable portfolios, net | 483,547 | 501,489 |
Other assets | 4,601 | 9,563 |
Liabilities: | ||
Accounts payable and accrued liabilities | 0 | 4,556 |
Other liabilities | 44 | 46 |
Equity: | ||
Borrowings | $ 430,217 | $ 445,837 |
Consolidated Statements of Fi_2
Consolidated Statements of Financial Condition (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Convertible preferred stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Convertible preferred stock authorized (shares) | 5,000,000 | 5,000,000 |
Convertible preferred stock issued (shares) | 0 | 0 |
Convertible preferred stock outstanding (shares) | 0 | 0 |
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock authorized (shares) | 75,000,000 | 50,000,000 |
Common stock issued (shares) | 31,059,000 | 30,884,000 |
Common stock outstanding (shares) | 31,059,000 | 30,884,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues | ||||
Revenue from receivable portfolios | $ 316,217 | $ 295,357 | $ 939,870 | $ 869,028 |
Other revenues | 31,204 | 37,388 | 98,072 | 112,809 |
Total revenues | 347,421 | 332,745 | 1,037,942 | 981,837 |
Allowance reversals on receivable portfolios, net | 8,515 | 4,029 | 11,945 | 31,472 |
Total revenues, adjusted by net allowances | 355,936 | 336,774 | 1,049,887 | 1,013,309 |
Operating expenses | ||||
Salaries and employee benefits | 96,638 | 95,634 | 284,699 | 275,853 |
Cost of legal collections | 48,971 | 50,473 | 149,446 | 155,583 |
Other operating expenses | 25,753 | 30,691 | 84,913 | 103,478 |
Collection agency commissions | 17,343 | 10,682 | 46,905 | 34,587 |
General and administrative expenses | 38,168 | 41,893 | 110,335 | 123,163 |
Depreciation and amortization | 10,000 | 9,873 | 29,736 | 31,232 |
Goodwill impairment | 10,718 | 0 | 10,718 | 0 |
Total operating expenses | 247,591 | 239,246 | 716,752 | 723,896 |
Income from operations | 108,345 | 97,528 | 333,135 | 289,413 |
Other expense | ||||
Interest expense | (54,365) | (65,094) | (173,245) | (183,092) |
Other expense | (11,546) | (2,539) | (15,766) | (4,961) |
Total other expense | (65,911) | (67,633) | (189,011) | (188,053) |
Income from operations before income taxes | 42,434 | 29,895 | 144,124 | 101,360 |
Provision for income taxes | (3,021) | (16,879) | (18,447) | (37,657) |
Net income | 39,413 | 13,016 | 125,677 | 63,703 |
Net (income) loss attributable to noncontrolling interest | (544) | 7,709 | (893) | 5,147 |
Net income attributable to Encore Capital Group, Inc. stockholders | $ 38,869 | $ 20,725 | $ 124,784 | $ 68,850 |
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Basic (USD per share) | $ 1.24 | $ 0.69 | $ 3.99 | $ 2.52 |
Diluted (USD per share) | $ 1.23 | $ 0.69 | $ 3.97 | $ 2.49 |
Weighted average shares outstanding: | ||||
Basic (shares) | 31,338 | 29,867 | 31,242 | 27,372 |
Diluted (shares) | 31,657 | 30,121 | 31,459 | 27,663 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 39,413 | $ 13,016 | $ 125,677 | $ 63,703 |
Change in unrealized gains/losses on derivative instruments: | ||||
Unrealized loss on derivative instruments | (799) | (1,152) | (6,561) | (3,306) |
Income tax effect | 169 | 284 | 1,190 | 823 |
Unrealized loss on derivative instruments, net of tax | (630) | (868) | (5,371) | (2,483) |
Change in foreign currency translation: | ||||
Unrealized loss on foreign currency translation | (28,050) | (6,919) | (29,315) | (23,436) |
Other comprehensive loss, net of tax | (28,680) | (7,787) | (34,686) | (25,919) |
Comprehensive income | 10,733 | 5,229 | 90,991 | 37,784 |
Comprehensive (income) loss attributable to noncontrolling interest: | ||||
Net (income) loss attributable to noncontrolling interest | (544) | 7,709 | (893) | 5,147 |
Unrealized (gain) loss on foreign currency translation | (51) | 1,293 | (485) | (119) |
Comprehensive (income) loss attributable to noncontrolling interest | (595) | 9,002 | (1,378) | 5,028 |
Comprehensive income attributable to Encore Capital Group, Inc. stockholders | $ 10,138 | $ 14,231 | $ 89,613 | $ 42,812 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interest |
Balance at beginning of period (shares) at Dec. 31, 2017 | 25,801 | |||||
Balance at beginning of period at Dec. 31, 2017 | $ 571,933 | $ 258 | $ 42,646 | $ 616,314 | $ (77,356) | $ (9,929) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 67,881 | 68,850 | (969) | |||
Other comprehensive (loss) gain, net of tax | (25,605) | (26,038) | 433 | |||
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes (shares) | 132 | |||||
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes | (1,933) | $ 1 | (1,934) | |||
Stock-based compensation | 10,452 | 10,452 | ||||
Issuance of convertible and exchangeable notes, net of repurchases | 14,009 | 14,009 | ||||
Change in fair value of redeemable noncontrolling interest | 7,419 | 19,430 | (12,011) | |||
Purchase of noncontrolling interest | 9,626 | 0 | 9,626 | |||
Issuance of common stock (in shares) | 4,920 | |||||
Issuance of common stock | 181,188 | $ 50 | 181,138 | |||
Exchangeable notes hedge transactions | (17,785) | (17,785) | ||||
Net equity adjustment on Cabot Transaction | (43,097) | (43,097) | ||||
Other | 3,126 | 3,126 | ||||
Balance at end of period (shares) at Sep. 30, 2018 | 30,853 | |||||
Balance at end of period at Sep. 30, 2018 | 777,214 | $ 309 | 207,985 | 673,153 | (103,394) | (839) |
Balance at beginning of period (shares) at Jun. 30, 2018 | 25,931 | |||||
Balance at beginning of period at Jun. 30, 2018 | 615,486 | $ 259 | 68,820 | 652,428 | (96,900) | (9,121) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 19,567 | 20,725 | (1,158) | |||
Other comprehensive (loss) gain, net of tax | (6,680) | (6,494) | (186) | |||
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes (shares) | 2 | |||||
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes | (18) | (18) | ||||
Stock-based compensation | 5,045 | 5,045 | ||||
Issuance of convertible and exchangeable notes, net of repurchases | 14,009 | 14,009 | ||||
Purchase of noncontrolling interest | (9,626) | (9,626) | ||||
Issuance of common stock (in shares) | 4,920 | |||||
Issuance of common stock | 181,188 | $ 50 | 181,138 | |||
Exchangeable notes hedge transactions | (17,785) | (17,785) | ||||
Net equity adjustment on Cabot Transaction | (43,097) | (43,097) | ||||
Other | (127) | (127) | ||||
Balance at end of period (shares) at Sep. 30, 2018 | 30,853 | |||||
Balance at end of period at Sep. 30, 2018 | 777,214 | $ 309 | 207,985 | 673,153 | (103,394) | (839) |
Balance at beginning of period (shares) at Dec. 31, 2018 | 30,884 | |||||
Balance at beginning of period at Dec. 31, 2018 | 819,688 | $ 309 | 208,498 | 720,189 | (110,987) | 1,679 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 125,677 | 124,784 | 893 | |||
Other comprehensive (loss) gain, net of tax | (34,686) | (35,171) | 485 | |||
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes (shares) | 175 | |||||
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes | (3,694) | $ 2 | (3,696) | |||
Stock-based compensation | 9,412 | 9,412 | ||||
Issuance of convertible and exchangeable notes, net of repurchases | 6,776 | 6,776 | ||||
Unwind of convertible notes hedge | 1,792 | 1,792 | ||||
Other | (968) | (968) | ||||
Balance at end of period (shares) at Sep. 30, 2019 | 31,059 | |||||
Balance at end of period at Sep. 30, 2019 | 923,997 | $ 311 | 221,814 | 844,973 | (146,158) | 3,057 |
Balance at beginning of period (shares) at Jun. 30, 2019 | 30,980 | |||||
Balance at beginning of period at Jun. 30, 2019 | 902,957 | $ 310 | 211,508 | 806,104 | (117,427) | 2,462 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 39,413 | 38,869 | 544 | |||
Other comprehensive (loss) gain, net of tax | (28,680) | (28,731) | 51 | |||
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes (shares) | 79 | |||||
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes | (2,266) | $ 1 | (2,267) | |||
Stock-based compensation | 4,005 | 4,005 | ||||
Issuance of convertible and exchangeable notes, net of repurchases | 6,776 | 6,776 | ||||
Unwind of convertible notes hedge | 1,792 | 1,792 | ||||
Balance at end of period (shares) at Sep. 30, 2019 | 31,059 | |||||
Balance at end of period at Sep. 30, 2019 | $ 923,997 | $ 311 | $ 221,814 | $ 844,973 | $ (146,158) | $ 3,057 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Operating activities: | ||
Net income | $ 125,677 | $ 63,703 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 29,736 | 31,232 |
Other non-cash interest expense, net | 24,049 | 30,453 |
Interest expense related to financing | 3,496 | 0 |
Stock-based compensation expense | 9,412 | 10,452 |
Loss on derivative instruments, net | 1,730 | 10,648 |
Deferred income taxes | 5,012 | 18,733 |
Goodwill impairment | 10,718 | 0 |
Allowance reversals on receivable portfolios, net | (11,945) | (31,472) |
Other, net | 18,488 | (9,690) |
Changes in operating assets and liabilities | ||
Deferred court costs and other assets | 45,415 | (19,537) |
Prepaid income tax and income taxes payable | (21,240) | 21,419 |
Accounts payable, accrued liabilities and other liabilities | (43,602) | (5,919) |
Net cash provided by operating activities | 196,946 | 120,022 |
Investing activities: | ||
Purchases of receivable portfolios, net of put-backs | (757,101) | (881,789) |
Collections applied to investment in receivable portfolios, net | 588,259 | 615,010 |
Purchases of property and equipment | (30,712) | (37,436) |
Payment for derivative instruments, net | 0 | (28,656) |
Other, net | 1,596 | 6,800 |
Net cash used in investing activities | (197,958) | (326,071) |
Financing activities: | ||
Payment of loan and debt refinancing costs | (8,777) | (6,440) |
Proceeds from credit facilities | 481,105 | 766,471 |
Repayment of credit facilities | (440,992) | (465,666) |
Proceeds from senior secured notes | 460,512 | 0 |
Repayment of senior secured notes | (460,455) | (1,029) |
Proceeds from issuance of convertible senior notes | 100,000 | 172,500 |
Repayment of convertible senior notes | (84,600) | 0 |
Proceeds from other debt | 16,236 | 9,090 |
Repayment of other debt | (24,205) | (23,450) |
Payment for the purchase of PECs and noncontrolling interest | 0 | (234,101) |
Payment of direct and incremental costs relating to Cabot Transaction | 0 | (8,622) |
Other, net | (7,511) | (3,826) |
Net cash provided by financing activities | 31,313 | 204,927 |
Net increase (decrease) in cash and cash equivalents | 30,301 | (1,122) |
Effect of exchange rate changes on cash and cash equivalents | (1,042) | (6,368) |
Cash and cash equivalents, beginning of period | 157,418 | 212,139 |
Cash and cash equivalents, end of period | 186,677 | 204,649 |
Supplemental cash information: | ||
Cash paid for interest | 131,873 | 163,842 |
Cash paid for taxes, net of refunds | $ 31,419 | $ (2,724) |
Ownership, Description of Busin
Ownership, Description of Business, and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Ownership, Description of Business, and Summary of Significant Accounting Policies | Ownership, Description of Business, and Summary of Significant Accounting Policies Encore Capital Group, Inc. (“Encore”), through its subsidiaries (collectively with Encore, the “Company”), is an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. The Company purchases portfolios of defaulted consumer receivables at deep discounts to face value and manages them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial commitments to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. The Company also provides debt servicing and other portfolio management services to credit originators for non-performing loans. Through Midland Credit Management, Inc. and its domestic affiliates (collectively, “MCM”), the Company is a market leader in portfolio purchasing and recovery in the United States. Through Cabot Credit Management Limited (“CCM”) and its subsidiaries and European affiliates (collectively, “Cabot”) the Company is one of the largest credit management services providers in Europe and a market leader in the United Kingdom and Ireland. These are the Company’s primary operations. The Company also has investments and operations in Latin America and Asia-Pacific, which the Company refers to as “LAAP.” In August 2019, the Company completed the sale (the “Baycorp Transaction”) of its wholly-owned subsidiary Encore Australia Holdings I PTY LTD (together with its subsidiaries “Baycorp”), which represented the Company’s investments and operations in Australia and New Zealand and was a component of LAAP. Financial Statement Preparation and Presentation The accompanying interim consolidated financial statements have been prepared by the Company, without audit, in accordance with the instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”) and, therefore, do not include all information and footnotes necessary for a fair presentation of its consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the Company’s consolidated financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 . Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in the Company’s financial statements and the accompanying notes. Actual results could materially differ from those estimates. Basis of Consolidation The consolidated financial statements have been prepared in conformity with GAAP and reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. The Company also consolidates variable interest entities for which it is the primary beneficiary. The primary beneficiary has both (1) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance, and (2) either the obligation to absorb losses or the right to receive benefits. Refer to Note 9 , “Variable Interest Entities,” for further details. All intercompany transactions and balances have been eliminated in consolidation. Translation of Foreign Currencies The financial statements of certain of the Company’s foreign subsidiaries are measured using their local currency as the functional currency. Assets and liabilities of foreign operations are translated into U.S. dollars using period-end exchange rates, and revenues and expenses are translated into U.S. dollars using average exchange rates in effect during each period. The resulting translation adjustments are recorded as a component of other comprehensive income or loss. Equity accounts are translated at historical rates, except for the change in retained earnings during the year which is the result of the income statement translation process. Intercompany transaction gains or losses at each period end arising from subsequent measurement of balances for which settlement is not planned or anticipated in the foreseeable future are included as translation adjustments and recorded within other comprehensive income or loss. Translation gains or losses are the material components of accumulated other comprehensive income or loss. Reclassifications Certain immaterial reclassifications have been made to the consolidated financial statements to conform to the current year’s presentation. Change in Accounting Principle The Company adopted Accounting Standard Codification 842 - Leases (“Topic 842”) as of January 1, 2019, using the transition method in accordance with ASU 2018-11, Leases: Targeted Improvements issued in July 2018. Under Topic 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures. Leases will continue to be classified as either finance or operating leases. The adoption of this new standard resulted in the recording of lease assets and lease liabilities for the Company’s operating leases of approximately $89.1 million and $102.7 million , respectively, as of January 1, 2019. The difference between the leased assets and lease liabilities primarily represents lease incentives. All periods prior to January 1, 2019 were presented in accordance with the previous lease accounting standard, and no retrospective adjustments were made to the comparative periods presented. The accounting for finance leases remains substantially unchanged. The adoption of this new standard did not materially impact the Company’s consolidated statements of operations or cash flows, or the Company’s compliance with debt covenants. Refer to Note 11 “Leases” for detailed information on the Company’s leases. Recent Accounting Pronouncements Other than the adoption of the standard discussed above, there have been no new accounting pronouncements made effective during the nine months ended September 30, 2019 that have significance, or potential significance, to the Company’s consolidated financial statements. Recent Accounting Pronouncements Not Yet Effective In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 applies a current expected credit loss model which is a new impairment model based on expected losses rather than incurred losses. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from, or added to, the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected. ASU 2016-13 eliminates the current accounting model for loans and debt securities acquired with deteriorated credit quality under ASC 310-30, which provides authoritative guidance for the accounting of the Company’s investment in receivable portfolios. ASU 2016-13 is effective for reporting periods beginning after December 15, 2019. The guidance will be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period in which ASU 2016-13 is adopted. However, the FASB has determined that financial assets for which the guidance in Subtopic 310-30, Receivables-Loans and Debt Securities Acquired with Deteriorated Credit Quality, has previously been applied should prospectively apply the guidance in ASU 2016-13 for purchased financial assets with credit deterioration. ASU 2016-13, including the effect of ongoing developments and amendments to the guidance , is expected to result in a significant change to the Company’s accounting for its receivable portfolios. The Company is in the process of implementing ASU 2016-13, including drafting accounting policies, assessing data needs for new reporting requirements, and developing software resources and financial models. In April 2019, the FASB issued ASU No. 2019‑04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-04”). The amendments in ASU 2019-04 clarify certain aspects of accounting for credit losses, hedging activities, and financial instruments. For clarifications around credit losses, the effective date will be the same as the effective date of ASU 2016-13. For entities that have adopted ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, ASU 2019-04 is effective the first annual reporting period beginning after the date of issuance of ASU 2019-04 and may be early adopted. The amendments in ASU 2019-04 that are related to financial instruments are effective for fiscal years beginning after December 15, 2019, and interim periods within those years, with early adoption permitted. The Company's adoption of ASU 2019-04 is not expected to have a material impact on its consolidated financial statements. With the exception of the standards discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2019 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share are calculated by dividing net earnings attributable to Encore by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are calculated based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options, restricted stock, and the dilutive effect of the convertible and exchangeable senior notes, if applicable. A reconciliation of shares used in calculating earnings per basic and diluted shares follows (in thousands, except per share amounts) : Three Months Ended Nine Months Ended 2019 2018 2019 2018 Net income attributable to Encore Capital Group, Inc. stockholders $ 38,869 $ 20,725 $ 124,784 $ 68,850 Total weighted-average basic shares outstanding 31,338 29,867 31,242 27,372 Dilutive effect of stock-based awards 319 254 217 291 Total weighted-average dilutive shares outstanding 31,657 30,121 31,459 27,663 Basic earnings per share $ 1.24 $ 0.69 $ 3.99 $ 2.52 Diluted earnings per share $ 1.23 $ 0.69 $ 3.97 $ 2.49 Anti-dilutive employee stock options outstanding were approximately 13,000 and 81,000 during the three and nine months ended September 30, 2019 , respectively. Anti-dilutive employee stock options outstanding were approximately 13,000 during each of the three and nine months ended September 30, 2018 , respectively. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The authoritative guidance for fair value measurements defines fair value as the price that would be received upon sale of an asset or the price paid to transfer a liability, in an orderly transaction between market participants at the measurement date ( i.e., the “exit price”). The guidance utilizes a fair value hierarchy that prioritizes the inputs used in valuation techniques to measure fair value into three broad levels. The following is a brief description of each level: • Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. • Level 3: Unobservable inputs, including inputs that reflect the reporting entity’s own assumptions. Financial Instruments Required To Be Carried At Fair Value Financial assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands) : Fair Value Measurements as of Level 1 Level 2 Level 3 Total Assets Foreign currency exchange contracts $ — $ 634 $ — $ 634 Interest rate cap contracts — 166 — 166 Liabilities Foreign currency exchange contracts — (575 ) — (575 ) Interest rate swap agreements — (10,839 ) — (10,839 ) Contingent consideration — — (61 ) (61 ) Fair Value Measurements as of Level 1 Level 2 Level 3 Total Assets Interest rate cap contracts $ — $ 2,023 $ — $ 2,023 Liabilities Foreign currency exchange contracts — (237 ) — (237 ) Interest rate swap agreements — (4,881 ) — (4,881 ) Contingent consideration — — (6,198 ) (6,198 ) Derivative Contracts: The Company uses derivative instruments to manage its exposure to fluctuations in interest rates and foreign currency exchange rates. Fair values of these derivative instruments are estimated using industry standard valuation models. These models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign currency exchange rates, and forward and spot prices for currencies. Contingent Consideration: The Company carries certain contingent liabilities resulting from its mergers and acquisition activities. Certain sellers of the Company’s acquired entities could earn additional earn-out payments in cash based on the entities’ subsequent operating performance. The Company recorded the acquisition date fair values of these contingent liabilities, based on the likelihood of contingent earn-out payments, as part of the consideration transferred. The earn-out payments are subsequently remeasured to fair value at each reporting date based on actual and forecasted operating performance. The following table provides a roll forward of the fair value of contingent consideration for the nine months ended September 30, 2019 and year ended December 31, 2018 (in thousands) : Amount Balance at December 31, 2017 $ 10,612 Issuance of contingent consideration in connection with acquisition 1,728 Change in fair value of contingent consideration (5,664 ) Payment of contingent consideration (271 ) Effect of foreign currency translation (207 ) Balance at December 31, 2018 6,198 Change in fair value of contingent consideration (2,300 ) Payment of contingent consideration (3,684 ) Effect of foreign currency translation (153 ) Balance at September 30, 2019 $ 61 Non-Recurring Fair Value Measurement: Certain assets are measured at fair value on a nonrecurring basis. These assets include real estate-owned (“REO”) assets classified as held for sale at the lower of their carrying value or fair value less cost to sell. The fair value of the assets held for sale and estimated selling expenses were determined at the time of initial recognition using Level 2 measurements. The fair value estimate of the assets held for sale was approximately $40.9 million and $26.7 million as of September 30, 2019 and December 31, 2018 , respectively. Financial Instruments Not Required To Be Carried At Fair Value In accordance with the disclosure requirements of ASC Topic 825, Financial Instruments, the table below summarizes fair value estimates for the Company's financial instruments that are not required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company. The carrying amounts in the following table are recorded in the consolidated statements of financial condition at September 30, 2019 and December 31, 2018 (in thousands) : September 30, 2019 December 31, 2018 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Financial Assets Investment in receivable portfolios $ 3,188,167 $ 3,101,295 $ 3,137,893 $ 3,525,861 Deferred court costs 94,011 94,011 95,918 95,918 Financial Liabilities Encore convertible notes and exchangeable notes (1) 639,538 680,811 619,639 553,744 Cabot senior secured notes (2) 1,064,842 1,104,718 1,109,922 1,036,905 _______________________ (1) Carrying amount represents the portion of the convertible and exchangeable notes classified as debt, while estimated fair value pertains to the face amount of the notes. (2) Carrying amount represents historical cost, adjusted for any related debt discount or debt premium. Investment in Receivable Portfolios: The Company records its investment in receivable portfolios at cost, which represents a significant discount from the contractual receivable balance due. The Company computes the fair value of its investment in receivable portfolios using Level 3 inputs by discounting the estimated future cash flows generated by its proprietary forecasting models. The key inputs include the estimated future gross cash flow, average cost to collect, and discount rate. In accordance with authoritative guidance related to fair value measurements, the Company estimates the average cost to collect and discount rates based on its estimate of what a market participant might use in valuing these portfolios. The determination of such inputs requires significant judgment, including assessing the assumed market participant’s cost structure, its determination of whether to include fixed costs in its valuation, its collection strategies, and determining the appropriate weighted average cost of capital. The Company evaluates the use of these key inputs on an ongoing basis and refines the data as it continues to obtain better information from market participants in the debt recovery and purchasing business. In the Company’s current analysis, the fair value of investment in receivable portfolios was approximately $3,101.3 million and $3,525.9 million as of September 30, 2019 and December 31, 2018 , respectively, as compared to the carrying value of $3,188.2 million and $3,137.9 million as of September 30, 2019 and December 31, 2018 , respectively. A 100 basis point increase in the cost to collect and discount rate used would result in a decrease in the fair value of U.S. and European portfolios by approximately $62.8 million and $74.6 million , respectively, as of September 30, 2019 . This fair value calculation does not represent, and should not be construed to represent, the underlying value of the Company or the amount which could be realized if its investment in receivable portfolios were sold. Deferred Court Costs: The Company capitalizes deferred court costs and provides a reserve for those costs that it believes will ultimately be uncollectible. The carrying value of net deferred court costs was $94.0 million and $95.9 million as of September 30, 2019 and December 31, 2018 , respectively, and approximated fair value. Borrowings: The majority of the Company’s borrowings are carried at historical amounts, adjusted for additional borrowings less principal repayments, which approximate fair value. These borrowings include Encore’s senior secured notes and borrowings under its revolving credit and term loan facilities and Cabot’s borrowings under its revolving credit facility. The carrying value of the Company’s revolving credit and term loan facilities approximates fair value due to the short-term nature of the interest rate periods. The fair value of the Company’s senior secured notes was estimated using widely accepted valuation techniques, including discounted cash flow analyses using available market information on discount and borrowing rates with similar terms, maturities, and credit ratings. Accordingly, the Company used Level 2 inputs for these debt instrument fair value estimates. The Company’s borrowings also include finance lease liabilities for which the carrying value approximates fair value. Encore’s convertible notes and exchangeable notes are carried at historical cost, adjusted for the debt discount. The carrying value of the convertible notes and exchangeable notes was $639.5 million and $619.6 million , net of the debt discount of $33.3 million and $36.4 million as of September 30, 2019 and December 31, 2018 , respectively. The fair value estimate for these convertible notes and exchangeable notes, which incorporates quoted market prices using Level 2 inputs, was approximately $680.8 million and $553.7 million as of September 30, 2019 and December 31, 2018 , respectively. Cabot’s senior secured notes are carried at historical cost, adjusted for the debt discount. The carrying value of Cabot’s senior secured notes was $1,064.8 million and $1,109.9 million , net of the debt discount of $1.6 million and $1.5 million as of September 30, 2019 and December 31, 2018 , respectively. The fair value estimate for these senior notes, which incorporates quoted market prices using Level 2 inputs, was $1,104.7 million and $1,036.9 million as of September 30, 2019 and December 31, 2018 |
Derivatives and Hedging Instrum
Derivatives and Hedging Instruments | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging Instruments | Derivatives and Hedging Instruments The Company may periodically enter into derivative financial instruments to manage risks related to interest rates and foreign currency. Certain of the Company’s derivative financial instruments qualify for hedge accounting treatment under the authoritative guidance for derivatives and hedging. The following table summarizes the fair value of derivative instruments as recorded in the Company’s consolidated statements of financial condition (in thousands) : September 30, 2019 December 31, 2018 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Foreign currency exchange contracts Other assets $ 634 Other liabilities $ (237 ) Interest rate cap contracts Other assets 166 Other assets 2,023 Interest rate swap agreements Other liabilities (10,839 ) Other liabilities (4,881 ) Derivatives not designated as hedging instruments: Foreign currency exchange contracts Other liabilities (575 ) Other liabilities — Derivatives Designated as Hedging Instruments The Company has operations in foreign countries which expose the Company to foreign currency exchange rate fluctuations due to transactions denominated in foreign currencies. To mitigate a portion of this risk, the Company enters into derivative financial instruments, principally foreign currency forward contracts with financial counterparties. The Company adjusts the level and use of derivatives as soon as practicable after learning that an exposure has changed and reviews all exposures and derivative positions on an ongoing basis. Certain of the Company’s foreign currency forward contracts are designated as cash flow hedging instruments and qualify for hedge accounting treatment. Gains and losses arising from such contracts are recorded as a component of accumulated other comprehensive income (“OCI”) as gains and losses on derivative instruments, net of income taxes. The hedging gains and losses in OCI are subsequently reclassified into earnings in the same period in which the underlying transactions affect the Company’s earnings. If all or a portion of the forecasted transaction is cancelled, the accumulated gains or losses in OCI would be reclassified into earnings. As of September 30, 2019 , the total notional amount of the forward contracts that were designated as cash flow hedging instruments was $21.3 million . The Company estimates that approximately $0.6 million of net derivative gain included in OCI will be reclassified into earnings within the next 12 months. No gains or losses were reclassified from OCI into earnings as a result of forecasted transactions that failed to occur during the nine months ended September 30, 2019 and 2018 . The Company may periodically enter into interest rate swap agreements to reduce its exposure to fluctuations in interest rates on variable interest rate debt and their impact on earnings and cash flows. Under the swap agreements, the Company receives floating interest rate payments and makes interest payments based on fixed interest rates. In accordance with authoritative guidance relating to derivatives and hedging transactions, the Company designates its interest rate swap instruments as cash flow hedges. As of September 30, 2019 , there were four interest rate swap agreements outstanding with a total notional amount of $335.5 million . As of September 30, 2019 , the Company also held two interest rate cap contracts (the “2018 Caps”) with a notional amount of £350.0 million (approximately $430.2 million ) that are used to manage its risk related to interest rate fluctuations on the Company’s variable interest rate debt. The 2018 Caps mature in 2021 and are structured as a series of European call options (“Caplets”) such that if exercised, the Company will receive a payment equal to 3-months GBP-LIBOR on a notional amount equal to the hedged notional amount net of a fixed strike price. Each interest rate reset date, the Company will elect to exercise the Caplet or let it expire. The potential cash flows from each Caplet are expected to offset any variability in the cash flows of the interest payments to the extent GBP-LIBOR exceeds the strike price of the Caplets. The Company expects the hedge relationship to be highly effective and designates the 2018 Caps as cash flow hedge instruments. The following table summarizes the effects of derivatives in cash flow hedging relationships designated as hedging instruments on the Company’s consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018 (in thousands) : Derivatives Designated as Hedging Instruments Gain (Loss) Location of Gain (Loss) Reclassified from Gain (Loss) Reclassified from OCI into Income Three Months Ended Three Months Ended September 30, 2019 2018 2019 2018 Foreign currency exchange contracts $ (323 ) $ (916 ) Salaries and employee benefits $ 198 $ 95 Foreign currency exchange contracts (48 ) (130 ) General and administrative expenses 27 11 Interest rate swap agreements (800 ) 3 Interest expense (742 ) 4 Interest rate cap contracts (145 ) — Interest expense — — Derivatives Designated as Hedging Instruments Gain (Loss) Location of Gain (Loss) Reclassified from Gain (Loss) Reclassified from OCI into Income Nine Months Ended Nine Months Ended 2019 2018 2019 2018 Foreign currency exchange contracts $ 1,068 $ (1,990 ) Salaries and employee benefits $ 183 $ 1,078 Foreign currency exchange contracts (57 ) (206 ) General and administrative expenses (44 ) 46 Interest rate swap agreements (7,182 ) (9 ) Interest expense (1,606 ) 29 Interest rate cap contracts (1,857 ) — Interest expense — — Derivatives Not Designated as Hedging Instruments The Company enters into currency exchange forward contracts to reduce the effects of currency exchange rate fluctuations between the British Pound and Euro. These derivative contracts generally mature within one to three months and are not designated as hedge instruments for accounting purposes. The Company continues to monitor the level of exposure of the foreign currency exchange risk and may enter into additional short-term forward contracts on an ongoing basis. The gains or losses on these derivative contracts are recognized in other income or expense based on the changes in fair value. The following table summarizes the effects of derivatives in cash flow hedging relationships not designated as hedging instruments on the Company’s consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018 (in thousands) : Derivatives Not Designated as Hedging Instruments Location of Gain (Loss) Recognized in Income on Derivative Amount of Gain (Loss) Recognized in Income on Derivative Three Months Ended Nine Months Ended 2019 2018 2019 2018 Foreign currency exchange contracts Other expense $ (436 ) $ (2,281 ) $ (263 ) $ (9,221 ) Interest rate cap contracts Interest expense — 289 — (1,427 ) |
Investment in Receivable Portfo
Investment in Receivable Portfolios, Net | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Investment in Receivable Portfolios, Net | Investment in Receivable Portfolios, Net In accordance with the authoritative guidance for loans and debt securities acquired with deteriorated credit quality, discrete receivable portfolio purchases during the same fiscal quarter are aggregated into pools based on common risk characteristics. Common risk characteristics include risk ratings (e.g. FICO or similar scores), financial asset type, collateral type, size, interest rate, date of origination, term, and geographic location. The Company’s static pools are typically grouped into credit card, purchased consumer bankruptcy, and mortgage portfolios. The Company further groups these static pools by geographic region or location. Portfolios acquired in business combinations are also grouped into these pools. During any fiscal quarter in which the Company has an acquisition of an entity that has portfolio, the entire historical portfolio of the acquired company is aggregated into the pool groups for that quarter, based on common characteristics, resulting in pools for that quarter that may consist of several different vintages of portfolio. Once a static pool is established, the portfolios are permanently assigned to the pool. The discount (i.e. the difference between the cost of each static pool and the related aggregate contractual receivable balance) is not recorded because the Company expects to collect a relatively small percentage of each static pool’s contractual receivable balance. As a result, receivable portfolios are recorded at cost at the time of acquisition. The cost of the portfolios includes certain fees paid to third parties incurred in connection with the direct acquisition of the receivable portfolios. In compliance with the authoritative guidance, the Company accounts for its investments in receivable portfolios using either the interest method or the cost recovery method. The interest method applies an internal rate of return (“IRR”) to the cost basis of the pool, which remains unchanged throughout the life of the pool, unless there is a significant increase in subsequent expected cash flows. Subsequent increases in expected cash flows are recognized prospectively through an upward adjustment of the pool’s IRR over its remaining life. Subsequent decreases in expected cash flows do not change the IRR but are recognized as an allowance to the cost basis of the pool and are reflected in the consolidated statements of operations as a reduction in revenue, with a corresponding valuation allowance, offsetting the investment in receivable portfolios in the consolidated statements of financial condition. Due to the discounting of future cashflows using monthly IRRs, an allowance charge could still result even if substantially higher collections occurring later in the collection curve offset lower collections in the near term. The Company accounts for each static pool as a unit for the economic life of the pool (similar to one loan) for recognition of revenue from receivable portfolios, for collections applied to the cost basis of receivable portfolios and for provision for loss or allowance. Revenue from receivable portfolios is accrued based on each pool’s IRR applied to each pool’s adjusted cost basis. The cost basis of each pool is increased by revenue earned and portfolio allowance reversals and decreased by gross collections and portfolio allowances. If the amount or timing of future cash collections on a pool of receivables are not reasonably estimable, the Company accounts for such portfolios on the cost recovery method as Cost Recovery Portfolios. The accounts in these portfolios have different risk characteristics than those included in other portfolios acquired during the same quarter, or the necessary information was not available to estimate future cash flows and, accordingly, they were not aggregated with other portfolios. Under the cost recovery method of accounting, no revenue is recognized until the carrying value of a Cost Recovery Portfolio has been fully recovered. Accretable yield represents the amount of revenue the Company expects to generate over the remaining life of its existing investment in receivable portfolios based on estimated future cash flows. Total accretable yield is the difference between future estimated collections and the current carrying value of a portfolio. All estimated cash flows on portfolios where the cost basis has been fully recovered are classified as zero basis cash flows. The following table summarizes the Company’s accretable yield and an estimate of zero basis future cash flows at the beginning and end of the period presented (in thousands) : Accretable Yield Estimate of Zero Basis Cash Flows Total Balance at December 31, 2018 $ 3,773,171 $ 253,035 $ 4,026,206 Revenue from receivable portfolios (285,255 ) (25,903 ) (311,158 ) Allowance (reversals) on receivable portfolios, net 900 (2,267 ) (1,367 ) Additions (reductions) on existing portfolios, net 38,512 (199 ) 38,313 Additions for current purchases 285,637 — 285,637 Effect of foreign currency translation 26,244 217 26,461 Balance at March 31, 2019 3,839,209 224,883 4,064,092 Revenue from receivable portfolios (285,562 ) (26,933 ) (312,495 ) Allowance (reversals) on receivable portfolios, net 255 (2,318 ) (2,063 ) Additions on existing portfolios, net 113,074 32,285 145,359 Additions for current purchases 277,556 — 277,556 Effect of foreign currency translation (46,492 ) (34 ) (46,526 ) Balance at June 30, 2019 3,898,040 227,883 4,125,923 Revenue from receivable portfolios (300,047 ) (16,170 ) (316,217 ) Allowance reversals on receivable portfolios, net (6,471 ) (2,044 ) (8,515 ) Additions (reductions) on existing portfolios, net 153,807 (60,280 ) 93,527 Additions for current purchases 288,547 — 288,547 Effect of foreign currency translation (72,664 ) (1,146 ) (73,810 ) Balance at September 30, 2019 $ 3,961,212 $ 148,243 $ 4,109,455 Accretable Yield Estimate of Zero Basis Cash Flows Total Balance at December 31, 2017 $ 3,695,069 $ 369,632 $ 4,064,701 Revenue from receivable portfolios (249,821 ) (31,188 ) (281,009 ) Allowance reversals on receivable portfolios, net (8,082 ) (1,729 ) (9,811 ) Reductions on existing portfolios, net (24,945 ) (39,529 ) (64,474 ) Additions for current purchases 285,172 — 285,172 Effect of foreign currency translation 57,577 643 58,220 Balance at March 31, 2018 3,754,970 297,829 4,052,799 Revenue from receivable portfolios (258,698 ) (33,964 ) (292,662 ) Allowance reversals on receivable portfolios, net (15,411 ) (2,221 ) (17,632 ) Additions reductions on existing portfolios, net 136,267 5,824 142,091 Additions for current purchases 345,006 — 345,006 Effect of foreign currency translation (97,448 ) (597 ) (98,045 ) Balance at June 30, 2018 3,864,686 266,871 4,131,557 Revenue from receivable portfolios (263,109 ) (32,248 ) (295,357 ) Allowance reversals on receivable portfolios, net (1,196 ) (2,833 ) (4,029 ) Additions on existing portfolios, net 23,241 14,481 37,722 Additions for current purchases 262,751 — 262,751 Effect of foreign currency translation (20,483 ) (136 ) (20,619 ) Balance at September 30, 2018 $ 3,865,890 $ 246,135 $ 4,112,025 During the three months ended September 30, 2019 , the Company purchased receivable portfolios with a face value of $5.3 billion for $259.9 million , or a purchase price of 4.9% of face value. This low purchase price as a percentage of face value was attributable to the purchase of certain asset classes in Europe that were deeply discounted. The estimated future collections at acquisition for all portfolios purchased during the three months ended September 30, 2019 amounted to $548.5 million . During the three months ended September 30, 2018 , the Company purchased receivable portfolios with a face value of $1.6 billion for $248.7 million , or a purchase price of 15.9% of face value. The estimated future collections at acquisition for all portfolios purchased during the three months ended September 30, 2018 amounted to $512.3 million . During the nine months ended September 30, 2019 , the Company purchased receivable portfolios with a face value of $9.4 billion for $764.9 million , or a purchase price of 8.2% of face value. This low purchase price as a percentage of face value was attributable to the purchase of certain asset classes in Europe that were deeply discounted. The estimated future collections at acquisition for all portfolios purchased during the nine months ended September 30, 2019 amounted to $1,616.7 million . During the nine months ended September 30, 2018 , the Company purchased receivable portfolios with a face value of $6.2 billion for $885.0 million , or a purchase price of 14.2% of face value. The estimated future collections at acquisition for all portfolios purchased during the nine months ended September 30, 2018 amounted to $1,772.9 million . All collections realized after the net book value of a portfolio has been fully recovered (“Zero Basis Portfolios”) are recorded as revenue (“Zero Basis Revenue”). During the three months ended September 30, 2019 and 2018 , Zero Basis Revenue was approximately $16.2 million and $32.2 million , respectively. During the three months ended September 30, 2019 and 2018 , allowance reversals on Zero Basis Portfolios were $2.0 million and $2.8 million , respectively. During the nine months ended September 30, 2019 and 2018 , Zero Basis Revenue was approximately $69.0 million and $97.4 million , respectively. During the nine months ended September 30, 2019 and 2018 , allowance reversals on Zero Basis Portfolios were $6.6 million and $6.8 million , respectively. The following tables summarize the changes in the balance of the investment in receivable portfolios during the following periods ( in thousands, except percentages ): Three Months Ended September 30, 2019 Accrual Basis Portfolios Cost Recovery Portfolios Zero Basis Portfolios Total Balance, beginning of period $ 3,139,937 $ 84,631 $ — $ 3,224,568 Purchases of receivable portfolios 259,910 — — 259,910 Deconsolidation of receivable portfolios (1) (51,935 ) — — (51,935 ) Transfers to assets held for sale (657 ) (1,108 ) — (1,765 ) Collections on receivable portfolios (2) (480,089 ) (1,125 ) (18,181 ) (499,395 ) Put-Backs and Recalls (3) (2,734 ) — (12 ) (2,746 ) Foreign currency adjustments (62,595 ) (2,586 ) (21 ) (65,202 ) Revenue recognized 300,047 — 16,170 316,217 Portfolio allowance reversals, net 6,471 — 2,044 8,515 Balance, end of period $ 3,108,355 $ 79,812 $ — $ 3,188,167 Revenue as a percentage of collections (4) 62.5 % 0.0 % 88.9 % 63.3 % Three Months Ended September 30, 2018 Accrual Basis Portfolios Cost Recovery Portfolios Zero Basis Portfolios Total Balance, beginning of period $ 3,074,292 $ 10,329 $ — $ 3,084,621 Purchases of receivable portfolios 248,691 — — 248,691 Transfers to assets held for sale (4,253 ) (1,111 ) — (5,364 ) Collections on receivable portfolios (2) (463,474 ) (306 ) (35,063 ) (498,843 ) Put-Backs and Recalls (3) (2,056 ) — (18 ) (2,074 ) Foreign currency adjustments (17,208 ) (93 ) — (17,301 ) Revenue recognized 263,109 — 32,248 295,357 Portfolio allowance reversals, net 1,196 — 2,833 4,029 Balance, end of period $ 3,100,297 $ 8,819 $ — $ 3,109,116 Revenue as a percentage of collections (4) 56.8 % 0.0 % 92.0 % 59.2 % ________________________ (1) Deconsolidation of receivable portfolios as a result of the Baycorp Transaction. (2) Does not include amounts collected on behalf of others. (3) Put-backs (“Put-Backs”) and recalls (“Recalls”) represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreements. (4) Revenue as a percentage of collections excludes the effect of net portfolio allowances or net portfolio allowance reversals. Nine Months Ended September 30, 2019 Accrual Basis Portfolios Cost Recovery Portfolios Zero Basis Portfolios Total Balance, beginning of period $ 3,129,502 $ 8,391 $ — $ 3,137,893 Purchases of receivable portfolios 764,942 — — 764,942 Transfer of portfolios (1) (78,980 ) 78,980 — — Deconsolidation of receivable portfolios (2) (51,935 ) — — (51,935 ) Transfers to assets held for sale (4,615 ) (3,066 ) — (7,681 ) Collections on receivable portfolios (3) (1,449,705 ) (2,831 ) (75,593 ) (1,528,129 ) Put-Backs and Recalls (4) (7,820 ) — (21 ) (7,841 ) Foreign currency adjustments (69,214 ) (1,662 ) (21 ) (70,897 ) Revenue recognized 870,864 — 69,006 939,870 Portfolio allowance reversals, net 5,316 — 6,629 11,945 Balance, end of period $ 3,108,355 $ 79,812 $ — $ 3,188,167 Revenue as a percentage of collections (6) 60.1 % 0.0 % 91.3 % 61.5 % Nine Months Ended September 30, 2018 Accrual Basis Portfolios Cost Recovery Portfolios Zero Basis Portfolios Total Balance, beginning of period $ 2,879,170 $ 11,443 $ — $ 2,890,613 Purchases of receivable portfolios 885,033 — — 885,033 Transfers to assets held for sale (9,358 ) (1,373 ) — (10,731 ) Collections on receivable portfolios (3) (1,379,095 ) (1,729 ) (103,214 ) (1,484,038 ) Put-Backs and Recalls (4) (14,231 ) — (171 ) (14,402 ) Foreign currency adjustments (57,539 ) (320 ) — (57,859 ) Reclassification adjustments (5) — 798 (798 ) — Revenue recognized 771,628 — 97,400 869,028 Portfolio allowance reversals, net 24,689 — 6,783 31,472 Balance, end of period $ 3,100,297 $ 8,819 $ — $ 3,109,116 Revenue as a percentage of collections (6) 56.0 % 0.0 % 94.4 % 58.6 % ________________________ (1) Represents all portfolios in Mexico, which were transferred from accrual basis portfolios to cost recovery portfolios as the timing of future collections were determined to not be currently reasonably estimable, due to the changing political and economic conditions in Mexico. (2) Deconsolidation of receivable portfolios as a result of the Baycorp Transaction. (3) Does not include amounts collected on behalf of others. (4) Represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreements. (5) Reclassification relating to certain Zero Basis Revenue that was classified as collections in cost recovery portfolios in prior periods. (6) Revenue as a percentage of collections excludes the effect of net portfolio allowances or net portfolio allowance reversals. The following table summarizes the change in the valuation allowance for investment in receivable portfolios during the periods presented (in thousands) : Valuation Allowance Three Months Ended Nine Months Ended 2019 2018 2019 2018 Balance at beginning of period $ 57,204 $ 75,129 $ 60,631 $ 102,576 Provision for portfolio allowances 1,120 6,156 4,835 8,816 Reversal of prior allowances (9,635 ) (10,185 ) (16,780 ) (40,288 ) Baycorp Transaction (1,036 ) — (1,036 ) — Effect of foreign currency translation (554 ) (365 ) (551 ) (369 ) Balance at end of period $ 47,099 $ 70,735 $ 47,099 $ 70,735 |
Deferred Court Costs, Net
Deferred Court Costs, Net | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Deferred Court Costs, Net | Deferred Court Costs, Net The Company pursues legal collections using a network of attorneys that specialize in collection matters and through its internal legal channel. The Company generally pursues collections through legal means only when it believes a consumer has sufficient assets to repay their indebtedness but has, to date, been unwilling to pay. In order to pursue legal collections, the Company is required to pay certain upfront costs to the applicable courts that are recoverable from the consumer (“Deferred Court Costs”). The Company capitalizes Deferred Court Costs in its consolidated financial statements and provides a reserve for those costs that it believes will ultimately be uncollectible. The Company determines the reserve based on an estimated court cost recovery rate established based on its analysis of historical court costs recovery data. The Company estimates deferral periods for Deferred Court Costs based on jurisdiction and nature of litigation and writes off any Deferred Court Costs not recovered within the respective deferral period. Collections received from debtors are first applied against related court costs with the balance applied to the debtors’ account balance. Deferred Court Costs for the deferral period consist of the following as of the dates presented (in thousands) : September 30, December 31, Court costs advanced $ 867,032 $ 828,713 Court costs recovered (359,635 ) (336,335 ) Court costs reserve (413,386 ) (396,460 ) Deferred court costs $ 94,011 $ 95,918 A roll forward of the Company’s court cost reserve is as follows (in thousands) : Court Cost Reserve Three Months Ended Nine Months Ended 2019 2018 2019 2018 Balance at beginning of period $ (408,312 ) $ (381,125 ) $ (396,460 ) $ (364,015 ) Provision for court costs (20,866 ) (23,065 ) (60,214 ) (67,293 ) Charge-offs 13,679 13,603 40,934 38,990 Effect of foreign currency translation 2,113 960 2,354 2,691 Balance at end of period $ (413,386 ) $ (389,627 ) $ (413,386 ) $ (389,627 ) |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Other Assets Other assets consist of the following (in thousands) : September 30, December 31, Operating lease right-of-use asset $ 75,852 $ — Identifiable intangible assets, net 49,717 60,581 Assets held for sale 40,890 26,664 Service fee receivables 25,041 28,035 Deferred tax assets 21,378 24,910 Prepaid expenses 15,352 24,989 Other financial receivables 8,090 47,363 Other 54,698 44,460 Total $ 291,018 $ 257,002 |
Borrowings
Borrowings | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings The Company is in compliance in all material respects with all covenants under its financing arrangements as of September 30, 2019 . The components of the Company’s consolidated borrowings were as follows (in thousands) : September 30, December 31, Encore revolving credit facility $ 469,000 $ 429,000 Encore term loan facility 175,498 195,056 Encore senior secured notes 325,000 325,000 Encore convertible notes and exchangeable notes 672,855 656,000 Less: debt discount (33,317 ) (36,361 ) Cabot senior secured notes 1,066,434 1,111,399 Less: debt discount (1,592 ) (1,477 ) Cabot senior revolving credit facility 305,454 298,005 Cabot securitisation senior facilities 430,217 445,837 Other credit facilities — 43,354 Other 52,305 64,566 Finance lease liabilities 7,893 7,563 3,469,747 3,537,942 Less: debt issuance costs, net of amortization (40,404 ) (47,309 ) Total $ 3,429,343 $ 3,490,633 Encore Revolving Credit Facility and Term Loan Facility The Company has a revolving credit facility (the “Revolving Credit Facility”) and term loan facility (the “Term Loan Facility,” and together with the Revolving Credit Facility, the “Senior Secured Credit Facilities”) pursuant to a Third Amended and Restated Credit Agreement dated December 20, 2016 (as amended, the “Restated Credit Agreement”). Provisions of the Restated Credit Agreement as of September 30, 2019 include, but are not limited to: • Revolving Credit Facility commitments of $884.2 million that expire in December 2021 with interest at a floating rate equal to, at the Company’s option, either: (1) reserve adjusted London Interbank Offered Rate (“LIBOR”), plus a spread that ranges from 250 to 300 basis points depending on the cash flow leverage ratio of Encore and its restricted subsidiaries as defined in the Restated Credit Agreement; or (2) alternate base rate, plus a spread that ranges from 150 to 200 basis points, depending on the cash flow leverage ratio of Encore and its restricted subsidiaries. “Alternate base rate,” as defined in the Restated Credit Agreement, means the highest of (i) the per annum rate which the administrative agent publicly announces from time to time as its prime lending rate, (ii) the federal funds effective rate from time to time, plus 0.5% per annum, (iii) reserved adjusted LIBOR determined on a daily basis for a one month interest period, plus 1.0% per annum and (iv) zero; • A $194.6 million term loan maturing in December 2021, with interest at a floating rate equal to, at the Company’s option, either: (1) reserve adjusted LIBOR, plus a spread that ranges from 250 to 300 basis points, depending on the cash flow leverage ratio of Encore and its restricted subsidiaries; or (2) alternate base rate, plus a spread that ranges from 150 to 200 basis points, depending on the cash flow leverage ratio of Encore and its restricted subsidiaries. Principal amortizes $15.3 million in each of 2019 and 2020 with the remaining principal due in 2021; • A borrowing base under the Revolving Credit Facility equal to 35% of all eligible non-bankruptcy estimated remaining collections plus 55% of eligible estimated remaining collections for consumer receivables subject to bankruptcy; • A maximum cash flow leverage ratio permitted of 3.00 :1.00; • A maximum cash flow first-lien leverage ratio of 2.00 :1.00; • A minimum interest coverage ratio of 1.75 :1.00; • The allowance of indebtedness in the form of senior secured notes not to exceed $350.0 million ; • The allowance of additional unsecured or subordinated indebtedness not to exceed $1.1 billion , including junior lien indebtedness not to exceed $400.0 million ; • Restrictions and covenants, which limit the payment of dividends and the incurrence of additional indebtedness and liens, among other limitations; • Repurchases of up to $150.0 million of Encore’s common stock after July 9, 2015, subject to compliance with certain covenants and available borrowing capacity; • A change of control definition, that excludes acquisitions of stock by Red Mountain Capital Partners LLC, JCF FPK I, LP and their respective affiliates of up to 50% of the outstanding shares of Encore’s voting stock; • Events of default which, upon occurrence, may permit the lenders to terminate the facility and declare all amounts outstanding to be immediately due and payable; • A pre-approved acquisition limit of $225.0 million per fiscal year; • A basket to allow for investments not to exceed the greater of (1) 200% of the consolidated net worth of Encore and its restricted subsidiaries; and (2) an unlimited amount such that after giving effect to the making of any investment, the cash flow leverage ratio is less than 1.25 :1:00; • A basket to allow for investments in persons organized under the laws of Canada in the amount of $50.0 million ; • Collateralization by all assets of the Company, other than the assets of certain foreign subsidiaries and all unrestricted subsidiaries as defined in the Restated Credit Agreement. At September 30, 2019 , the outstanding balance under the Revolving Credit Facility was $469.0 million , which bore a weighted average interest rate of 5.25% and 5.09% for the three months ended September 30, 2019 and 2018 , respectively, and 5.40% and 4.90% for the nine months ended September 30, 2019 and 2018 , respectively. Available capacity under the Revolving Credit Facility, after taking into account borrowing base and applicable debt covenants, was $224.6 million as of September 30, 2019 . At September 30, 2019 , the outstanding balance under the Term Loan Facility was $175.5 million . Encore Senior Secured Notes In August 2017, Encore entered into $325.0 million in senior secured notes with a group of insurance companies (the “Senior Secured Notes”). The Senior Secured Notes bear an annual interest rate of 5.625% , mature in 2024 and beginning in November 2019 will require quarterly principal payments of $16.3 million . At September 30, 2019 , the outstanding balance of the Senior Secured Notes was $325.0 million . The Senior Secured Notes are guaranteed in full by certain of Encore’s subsidiaries. The Senior Secured Notes are pari passu with, and are collateralized by the same collateral as, the Senior Secured Credit Facilities. The Senior Secured Notes may be accelerated and become automatically and immediately due and payable upon certain events of default, including certain events related to insolvency, bankruptcy, or liquidation. Additionally, any series of the Senior Secured Notes may be accelerated at the election of the holder or holders of a majority in principal amount of such series of Senior Secured Notes upon certain events of default by Encore, including the breach of affirmative covenants regarding guarantors, collateral, minimum revolving credit facility commitment or the breach of any negative covenant. Encore may prepay the Senior Secured Notes at any time for any reason. If Encore prepays the Senior Secured Notes, payment will be at the higher of par or the present value of the remaining scheduled payments of principal and interest on the portion being prepaid. The discount rate used to determine the present value is 50 basis points over the then current Treasury Rate corresponding to the remaining average life of the Senior Secured Notes. The covenants and material terms in the purchase agreement for the Senior Secured Notes are substantially similar to those in the Restated Credit Agreement. The holders of the Senior Secured Notes and the administrative agent for the lenders of the Restated Credit Agreement have an intercreditor agreement related to their pro rata rights to the collateral, actionable default, powers and duties and remedies, among other topics. Encore Convertible Notes and Exchangeable Notes The following table provides a summary of the principal balance, maturity date and interest rate for the convertible and exchangeable senior notes ($ in thousands) : September 30, December 31, Maturity date Interest rate 2020 Convertible Notes $ 89,355 $ 172,500 July 2020 3.000 % 2021 Convertible Notes 161,000 161,000 March 2021 2.875 % 2022 Convertible Notes 150,000 150,000 March 2022 3.250 % Exchangeable Notes 172,500 172,500 September 2023 4.500 % 2025 Convertible Notes 100,000 — October 2025 3.250 % $ 672,855 $ 656,000 In June and July 2013, Encore issued $172.5 million aggregate principal amount of 3.000% convertible senior notes that mature on July 1, 2020 in private placement transactions (the “2020 Convertible Notes”). In March 2014, Encore issued $161.0 million aggregate principal amount of 2.875% convertible senior notes that mature on March 15, 2021 in private placement transactions (the “2021 Convertible Notes”). In March 2017, Encore issued $150.0 million aggregate principal amount of 3.250% convertible senior notes that mature on March 15, 2022 in private placement transactions (the “2022 Convertible Notes”). In July 2018, Encore Finance (defined below), a 100% owned finance subsidiary of Encore, issued $172.5 million aggregate principal amount of exchangeable senior notes due 2023 (the “Exchangeable Notes”) which are fully and unconditionally guaranteed by Encore. The Exchangeable Notes mature on September 1, 2023 and bear interest at a rate of 4.500% per year, payable semiannually in arrears on March 1 and September 1 of each year, beginning on March 1, 2019. Unless otherwise indicated in connection with a particular offering of debt securities, Encore will fully and unconditionally guarantee any debt securities issued by Encore Capital Europe Finance Limited (“Encore Finance”), a 100% owned finance subsidiary of Encore. Amounts related to Encore Finance are included in the consolidated financial statements of Encore subsequent to April 30, 2018 , the date of the incorporation of Encore Finance. In September 2019, Encore issued $100.0 million aggregate principal amount of 3.250% convertible senior notes that mature on October 1, 2025 in a private placement transaction (the “2025 Convertible Notes” and together with the 2020 Convertible Notes, the 2021 Convertible Notes and the 2022 Convertible Notes, the “Convertible Notes”). The interest on the Convertible Notes is payable semi-annually. The Company used a portion of the net proceeds from the issuance of the 2025 Convertible Notes to repurchase, in separate privately negotiated transactions, approximately $83.1 million aggregate principal amount of its 2020 Convertible Notes for approximately $85.0 million , including accrued and unpaid interest. Additionally, the Company received proceeds of $1.8 million from the unwind of the capped call options associated with the repurchased portion of the 2020 Convertible Notes. Based on the fair value allocated to the debt and equity components of the 2020 Convertible Notes at the time of repurchase, the Company recognized a pre-tax loss on the repurchase of approximately $1.7 million , which was recorded to other expense in the consolidated statements of operations during the three and nine months ended September 30, 2019. In addition, the Company recognized approximately $0.4 million of interest expense to record the write-off of unamortized debt issuance costs associated with the repurchase of the 2020 Convertible Notes in the consolidated statements of operations during the three and nine months ended September 30, 2019. Since the capped call options were determined to be equity instruments, the partial unwind of the capped call options was recorded as an increase in additional paid-in capital in the consolidated statements of financial condition as of September 30, 2019. Prior to the close of business on the business day immediately preceding their respective conversion or exchange date (listed below), holders may convert or exchange their Convertible Notes or Exchangeable Notes under certain circumstances set forth in the applicable indentures. On or after their respective conversion or exchange dates until the close of business on the scheduled trading day immediately preceding their respective maturity date, holders may convert or exchange their notes at any time. Certain key terms related to the convertible and exchangeable features as of September 30, 2019 are listed below. 2020 Convertible Notes 2021 Convertible Notes 2022 Convertible Notes 2023 Exchangeable Notes 2025 Convertible Notes Initial conversion or exchange price $ 45.72 $ 59.39 $ 45.57 $ 44.62 $ 40.00 Closing stock price at date of issuance $ 33.35 $ 47.51 $ 35.05 $ 36.45 $ 32.00 Closing stock price date Jun 24, 2013 Mar 5, 2014 Feb 27, 2017 Jul 20, 2018 Sep 4, 2019 Conversion or exchange rate (shares per $1,000 principal amount) 21.8718 16.8386 21.9467 22.4090 25.0000 Conversion or exchange date Jan 1, 2020 Sep 15, 2020 Sep 15, 2021 Mar 1, 2023 Jul 1, 2025 In the event of conversion or exchange, holders of the Company’s Convertible Notes or Exchangeable Notes will receive cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. The Company’s current intent is to settle conversions and exchanges through combination settlement ( i.e., convertible or exchangeable into cash up to the aggregate principal amount, and shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election and subject to certain restrictions contained in each of the indentures governing the Convertible Notes and Exchangeable Notes, for the remainder). As a result, and in accordance with authoritative guidance related to derivatives and hedging and earnings per share, only the conversion or exchange spread is included in the diluted earnings per share calculation, if dilutive. Under such method, the settlement of the conversion or exchange spread has a dilutive effect when, during any quarter, the average share price of the Company’s common stock exceeds the initial conversion or exchange prices listed in the above table. Authoritative guidance requires that issuers of convertible or exchangeable debt instruments which, upon conversion or exchange, may be settled fully or partially in cash, must separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible or nonexchangeable debt borrowing rate when interest cost is recognized in subsequent periods. Additionally, debt issuance costs are required to be allocated in proportion to the allocation of the liability and equity components and accounted for as debt issuance costs and equity issuance costs, respectively. As discussed above, upon exchange of the Exchangeable Notes, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. The debt and equity components, the issuance costs related to the equity component, the stated interest rate, and the effective interest rate for each of the Convertible Notes and Exchangeable Notes at the time of the original offering are listed below (in thousands, except percentages) : 2020 Convertible Notes (1) 2021 Convertible Notes 2022 Convertible Notes 2023 Exchangeable Notes 2025 Convertible Notes Debt component $ 140,247 $ 143,645 $ 137,266 $ 157,971 $ 91,024 Equity component $ 32,253 $ 17,355 $ 12,734 $ 14,009 $ 8,976 Equity issuance cost $ 1,106 $ 581 $ 398 $ — $ 224 Stated interest rate 3.000 % 2.875 % 3.250 % 4.500 % 3.250 % Effective interest rate 6.350 % 4.700 % 5.200 % 6.500 % 5.000 % ________________________ (1) The Company used a portion of the net proceeds from the issuance of the 2025 Convertible Notes to repurchase approximately $83.1 million aggregate principal amount of its 2020 Convertible Notes. As a result, the remaining principal amount of the 2020 Convertible Notes was $89.4 million as of September 30, 2019. The balances of the liability and equity components of all the Convertible Notes and Exchangeable Notes outstanding were as follows (in thousands) : September 30, December 31, Liability component—principal amount $ 672,855 $ 656,000 Unamortized debt discount (33,317 ) (36,361 ) Liability component—net carrying amount $ 639,538 $ 619,639 Equity component $ 83,127 $ 76,351 The debt discount is being amortized into interest expense over the remaining life of the Convertible Notes and Exchangeable Notes using the effective interest rates. Interest expense related to the Convertible Notes and Exchangeable Notes was as follows (in thousands) : Three Months Ended Nine Months Ended 2019 2018 2019 2018 Interest expense—stated coupon rate $ 6,754 $ 3,676 $ 17,662 $ 10,969 Interest expense—amortization of debt discount 3,405 2,518 9,770 7,410 Interest expense—Convertible Notes and Exchangeable Notes $ 10,159 $ 6,194 $ 27,432 $ 18,379 Hedge Transactions In order to reduce the risk related to the potential dilution and/or the potential cash payments the Company may be required to make in the event that the market price of the Company’s common stock becomes greater than the conversion or exchange prices of the Convertible Notes and the Exchangeable Notes, the Company maintains a hedge program, primarily through capped call options, that increases the effective conversion or exchange price for the 2020 Convertible Notes, the 2021 Convertible Notes and the Exchangeable Notes. The Company did not hedge the 2022 Convertible Notes or the 2025 Convertible Notes. As discussed above, the Company unwound the capped call options associated with the portion of the 2020 Convertible Notes repurchased by the Company in September 2019. The details of the hedge program are listed below (in thousands, except conversion price) : 2020 Convertible Notes 2021 Convertible Notes 2023 Exchangeable Notes Cost of the hedge transaction(s) $ 18,113 $ 19,545 $ 17,785 Initial conversion or exchange price $ 45.72 $ 59.39 $ 44.62 Effective conversion or exchange price $ 61.55 $ 83.14 $ 62.48 Cabot Senior Secured Notes The following table provides a summary of the Cabot senior secured notes ($ in thousands) : September 30, December 31, Maturity date Interest rate Floating rate senior secured notes due 2024 $ 435,960 $ — June 2024 EURIBOR +6.375% Floating rate senior secured notes due 2021 — 356,067 November 2021 EURIBOR +5.875% Senior secured notes due 2023 630,474 653,355 October 2023 7.500 % Senior secured notes due 2021 — 101,977 April 2021 6.500 % $ 1,066,434 $ 1,111,399 In June 2019, Cabot Financial (Luxembourg) II S.A. (“Cabot Financial II”), an indirect subsidiary of Encore, issued €400.0 million (approximately $452.0 million ) in aggregate principal amount of Senior Secured Floating Rate Notes due 2024 (the “Cabot 2024 Floating Rate Notes”). The Cabot 2024 Floating Rate Notes will mature in June 2024 and bear interest at a rate equal to the sum of (i) three-month EURIBOR (subject to a 0% floor) plus (ii) 6.375% , reset quarterly. Interest is payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year. The proceeds from the issuance of the Cabot 2024 Floating Rate Notes, together with cash on hand, were used to (1) fully redeem existing €310.0 million (approximately $350.3 million ) floating rate notes due in November 2021 and pay premium and accrued interest thereon, (2) fully redeem existing £80.0 million (approximately $101.6 million ) senior secured notes due in April 2021 and pay accrued interest thereon, and (3) pay commissions, fees and other expenses. The transaction was treated as a debt extinguishment and related fees of approximately $9.0 million were recorded as interest expense in the Company’s consolidated statements of operations during the nine months ended September 30, 2019. The Cabot 2024 Floating Rate Notes are fully and unconditionally guaranteed on a senior secured basis by the following indirect subsidiaries of the Company: CCM, Cabot Financial Limited and all material subsidiaries of Cabot Financial Limited (other than Cabot Financial II, Marlin Intermediate Holdings plc, Cabot Securitisation UK Limited and Cabot Securitisation (UK) II Limited). The Cabot 2024 Floating Rate Notes are secured by a first-ranking security interest in all the outstanding shares of Cabot Financial II and the guarantors (other than CCM and Marlin Midway Limited) and substantially all the assets of Cabot Financial II and the guarantors (other than CCM). Cabot Financial (Luxembourg) S.A. (“Cabot Financial”) has issued £512.9 million (approximately $651.3 million ) in aggregate principal amount of 7.500% Senior Secured Notes due 2023 (the “Cabot 2023 Notes”). The Cabot 2023 Notes mature in October 2023. Interest on the Cabot 2023 Notes is payable semi-annually, in arrears, on April 1 and October 1 of each year. The Cabot 2023 Notes are fully and unconditionally guaranteed on a senior secured basis by the following indirect subsidiaries of the Company: CCM, Cabot Financial Limited, and all material subsidiaries of Cabot Financial Limited (other than Cabot Financial, Marlin Intermediate Holdings plc, Cabot Securitisation UK Limited and Cabot Securitisation (UK) II Limited). The Cabot 2023 Notes are secured by a first ranking security interest in all the outstanding shares of Cabot Financial and the guarantors (other than CCM and Marlin Midway Limited) and substantially all the assets of Cabot Financial and the guarantors (other than CCM). Subject to the Intercreditor Agreement described below under “Cabot Senior Revolving Credit Facility”, the guarantees provided in respect of the Cabot 2023 Notes are pari passu with each such guarantee given in respect of the Cabot 2024 Floating Rate Notes and the Cabot Credit Facility described below. Interest expense related to the Cabot senior secured notes was as follows (in thousands) : Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Interest expense—stated coupon rate $ 18,434 $ 21,411 $ 57,291 $ 64,250 Interest expense—amortization of debt discount 1,522 1,684 5,091 4,579 Interest expense—Cabot senior secured notes $ 19,956 $ 23,095 $ 62,382 $ 68,829 Cabot Senior Revolving Credit Facilities In November 2018, Cabot Financial (UK) Limited (“Cabot Financial UK”) entered into an amended and restated senior secured revolving credit facility agreement (as amended and restated, the “Cabot Credit Facility”). At September 30, 2019 , the Cabot Credit Facility provides for a total committed facility of £385.0 million of which £375.0 million expires in September 2022 and £10.0 million expires in September 2021, and included the following key provisions: • Interest at LIBOR (or EURIBOR for any loan drawn in euro) plus 3.00% per annum for the £375.0 million facility, and interest at LIBOR (or EURIBOR for any loan drawn in euro) plus 3.25% per annum for the £10.0 million facility; • A restrictive covenant that limits the loan to value ratio to 0.75 in the event that the Cabot Credit Facility is more than 20% utilized; • A restrictive covenant that limits the super senior loan (i.e. the Cabot Credit Facility and any super priority hedging liabilities) to value ratio to 0.275 ; • Additional restrictions and covenants which limit, among other things, the payment of dividends and the incurrence of additional indebtedness and liens; and • Events of default which, upon occurrence, may permit the lenders to terminate the Cabot Credit Facility and declare all amounts outstanding to be immediately due and payable. The Cabot Credit Facility is unconditionally guaranteed by the following indirect subsidiaries of the Company: CCM, Cabot Financial Limited, and all material subsidiaries of Cabot Financial Limited. The Cabot Credit Facility is secured by first ranking security interests in all the outstanding shares of Cabot Financial UK and the guarantors (other than CCM) and substantially all the assets of Cabot Financial UK and the guarantors (other than CCM). Pursuant to the terms of intercreditor agreements entered into with respect to the relative positions of the Cabot 2023 Notes, the Cabot 2024 Floating Rate Notes, and the Cabot Credit Facility, any liabilities in respect of obligations under the Cabot Credit Facility that are secured by assets that also secure the Cabot 2023 Notes, the Cabot 2024 Floating Rate Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets. At September 30, 2019 , the outstanding borrowings under the Cabot Credit Facilities were £248.5 million (approximately $305.5 million ). The weighted average interest rate was 3.71% and 3.86% for the three months ended September 30, 2019 and 2018 , respectively, and 3.47% and 3.78% for the nine months ended September 30, 2019 and 2018 , respectively. Available capacity under the Cabot Credit Facility, after taking into account borrowing base and applicable debt covenants, was £136.5 million (approximately $167.8 million ) as of September 30, 2019 . Cabot Securitisation Senior Facility Cabot’s wholly owned subsidiary Cabot Securitisation UK Ltd (“Cabot Securitisation”) entered into a senior facility agreement (the “Senior Facility Agreement”) for a committed amount of £300.0 million , of which £300.0 million was drawn as of September 30, 2019 . The Senior Facility Agreement matures in September 2023. The obligations of Cabot Securitisation under the Senior Facility Agreement are secured by first ranking security interests over all of Cabot Securitisation’s property, assets and rights (including receivables purchased from Cabot Financial UK from time to time), the book value of which was approximately £329.3 million (approximately $404.8 million ) as of September 30, 2019 . Funds drawn under the Senior Facility Agreement will bear interest at a rate per annum equal to LIBOR plus a margin of 2.85% . In November 2018, Cabot’s wholly owned subsidiary Cabot Securitisation UK II Ltd (“Cabot Securitisation II”) entered into a new non-recourse asset backed senior facility of £50.0 million , of which £50.0 million was drawn as of September 30, 2019 . The senior facility matures in September 2023. The facility is secured by first ranking security interests over all of Cabot Securitisation II’s property, assets and rights (including receivables purchased from Cabot Financial UK from time to time), the book value of which was approximately £52.5 million (approximately $64.5 million ) as of September 30, 2019 . Funds drawn under this facility will bear interest at a rate per annum equal to LIBOR plus a margin of 4.075% . At September 30, 2019 , the outstanding borrowings under the Cabot Securitisation Senior Facility were £350.0 million (approximately $430.2 million ). The weighted average interest rate was 3.75% and 3.56% for the three months ended September 30, 2019 and 2018 respectively, and 3.74% and 3.42% for the nine months ended September 30, 2019 and 2018 , respectively. Cabot Securitisation and Cabot Securitisation II are securitized financing vehicles and are VIEs for consolidation purposes. Refer to Note 9 , “Variable Interest Entities,” for further details. Finance Lease Liabilities The Company has finance lease liabilities primarily for computer equipment. As of September 30, 2019 , the Company’s finance lease liabilities were approximately $7.9 million . Refer to “Note 11 : Leases” for further details. |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2019 | |
Variable Interest Entity, Measure of Activity [Abstract] | |
Variable Interest Entities | Variable Interest Entities A VIE is defined as a legal entity whose equity owners do not have sufficient equity at risk, or, as a group, the holders of the equity investment at risk lack any of the following three characteristics: decision-making rights, the obligation to absorb expected losses, or the right to receive expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and the obligation to absorb expected losses or the right to receive benefits from the entity that could potentially be significant to the VIE. The Company consolidates VIEs when it is the primary beneficiary. The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. A reconsideration event is significant if it changes the design of the entity or the entity’s equity investment at risk. Prior to the purchase of all of the outstanding equity of CCM not owned by the Company, CCM’s indirect holding Company Janus Holdings S.a r.l. (“Janus Holdings”) was a VIE. Upon completion of the Cabot Transaction on July 24, 2018 and the subsequent change in organizational structure, Janus Holdings no longer qualified as a VIE and CCM is consolidated via the voting interest model. As of September 30, 2019 , the Company’s VIEs include certain securitized financing vehicles and other immaterial special purpose entities that were created to purchase receivable portfolios in certain geographies. The Company is the primary beneficiary of these VIEs. Most assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the VIE. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense was $3.0 million and $16.9 million during the three months ended September 30, 2019 and 2018 , respectively, and $18.4 million and $37.7 million during the nine months ended September 30, 2019 and 2018 , respectively. The decrease s in income tax expense for the three and nine months ended September 30, 2019 as compared to the corresponding periods in 2018 were primarily attributable to a tax benefit recognized in relation to the Baycorp Transaction. Additionally, the decrease in income tax expense during the nine months ended September 30, 2019 as compared to the corresponding period in 2018 was also a result of a tax benefit recognized related to a tax accounting method change for revenue reporting approved by the Internal Revenue Service (“IRS”) during the first quarter of 2019. The effective tax rates for the respective periods are shown below: Three Months Ended Nine Months Ended 2019 2018 2019 2018 Federal provision 21.0 % 21.0 % 21.0 % 21.0 % State provision 5.3 % 1.7 % 3.7 % 1.5 % Tax benefit relating to Baycorp Transaction (1) (29.1 )% — % (8.6 )% — % Foreign income taxed at different rates (3.4 )% 13.0 % (2.6 )% (1.6 )% Audit assessment (2) 8.9 % — % 2.6 % — % Change in valuation allowance 1.9 % 18.1 % 2.1 % 16.3 % Change in tax accounting method (3) — % — % (6.3 )% — % Other 2.5 % 2.7 % 0.9 % (0.1 )% Effective rate 7.1 % 56.5 % 12.8 % 37.1 % ________________________ (1) In connection with the Baycorp Transaction that was completed on August 15, 2019, the Company recognized a total tax benefit of $17.5 million on the disposition of certain investments in Baycorp held by the Company and its subsidiaries in various jurisdictions during the three and nine months ended September 30, 2019. (2) Relates to an IRS audit assessment for tax years 2014-2017 currently under exam. (3) During the first quarter of 2019, the Company received IRS approval for a tax accounting method change related to revenue reporting. The revised tax accounting method more closely aligns with the Company’s book accounting method for revenue reporting. Each interim period is considered an integral part of the annual period and tax expense or benefit is measured using an estimated annual effective income tax rate. The estimated annual effective tax rate for the full year is applied to the respective interim period, taking into account year-to-date amounts and projected amounts for the year. Since the Company operates in foreign countries with varying tax rates, the impact of the results the international operations have on the Company’s quarterly effective tax rate is dependent on the level of income or loss from the international operations in the period. The Company’s subsidiary in Costa Rica is operating under a 100% tax holiday through December 31, 2026. The impact of the tax holiday in Costa Rica for the three and nine months ended September 30, 2019 and 2018 , was immaterial. The Company had gross unrecognized tax benefits, inclusive of penalties and interest, of $19.9 million at September 30, 2019 . These unrecognized tax benefits, if recognized, would result in a net tax benefit of $13.0 million as of September 30, 2019 . There were no material changes in gross unrecognized tax benefits from December 31, 2018 . Of the Company’s $186.7 million of cash and cash equivalents as of September 30, 2019 , $161.8 million was held outside of the United States. Following the enactment of the Tax Reform Act and the associated transition tax, in general, repatriation of cash to the United States can be completed with no incremental U.S. tax. However, repatriation of cash could subject the Company to non-U.S. jurisdictional taxes on distributions. The Company maintains non-U.S. funds in its foreign operations to (1) provide adequate working capital, (2) satisfy various regulatory requirements, and (3) take advantage of business expansion opportunities as they arise. The non-U.S. jurisdictional taxes applicable to foreign earnings are not readily determinable or practicable. The Company regularly evaluates its election to indefinitely reinvest its non-U.S. earnings. As of September 30, 2019 , management believes that it has sufficient liquidity to satisfy its cash needs, including its cash needs in the United States. |
Leases (Notes)
Leases (Notes) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases Effective January 1, 2019, the Company adopted Topic 842 using the modified retrospective method. As such, the Company recognized operating lease right-of-use (“ROU”) assets and operating lease liabilities in the consolidated statements of financial condition. Prior period financial statements were not adjusted under the new standard and therefore, those amounts are not presented below. The Company elected not to apply the recognition requirements to short-term leases, not to separate non-lease components from lease components, and elected the transition provisions available for existing contracts, which allowed the Company to carryforward its historical assessments of (1) whether contracts are or contain a lease, (2) lease classification, and (3) initial direct costs. ROU assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date based on the net present value of fixed lease payments over the lease term. The Company’s lease term includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option. ROU assets also include any advance lease payments made and are net of any lease incentives. As most of the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would expect to pay to borrow over a similar term, and on a collateralized basis, an amount equal to the lease payments in a similar economic environment . The majority of the Company’s leases are for corporate offices, various facilities and information technology equipment. The components of lease expense for the three and nine months ended September 30, 2019 were as follows (in thousands) : Three Months Ended Nine Months Ended 2019 2019 Operating lease costs (1) $ 6,739 $ 15,394 Finance lease costs Amortization of right-of-use assets 441 1,254 Interest on lease liabilities 51 466 Total lease costs $ 7,231 $ 17,114 ________________________ (1) Operating lease expenses are included in general and administrative expenses in the Company’s consolidated statements of operations. Costs include short-term and variable lease components which were not material for the periods. The following table provides supplemental consolidated balance sheet information related to leases as of September 30, 2019 (in thousands) : Classification September 30, Assets Operating lease right-of-use assets Other assets $ 75,852 Finance lease right-of-use assets Property and equipment, net 8,286 Total lease right-of-use assets $ 84,138 Liabilities Operating lease liabilities Other liabilities $ 94,154 Finance lease liabilities Debt, net 7,893 Total lease liabilities $ 102,047 Supplemental lease information is summarized below (in thousands, except rate and lease term) : Three Months Ended Nine Months Ended 2019 2019 Right-of-use assets obtained in exchange for new operating lease obligations $ 4,232 $ 114,484 Right-of-use assets obtained in exchange for new finance lease obligations 3,862 6,795 Cash paid for amounts included in the measurement of lease liabilities Operating leases - operating cash flows 4,022 10,883 Finance leases - operating cash flows 51 466 Finance leases - financing cash flows 454 1,419 September 30, Weighted-average remaining lease term (in years) Operating leases 8.2 Finance leases 3.2 Weighted-average discount rate Operating leases (1) 5.4 % Finance leases 4.7 % ________________________ (1) Upon adoption of the new lease standard, discount rates used for existing operating leases were established at January 1, 2019. Minimum future payments on noncancelable operating leases as of September 30, 2019 are summarized as follows ( in thousands ): Finance Leases Operating Leases Total 2019 (1) $ 662 $ 3,812 $ 4,474 2020 2,646 17,233 19,879 2021 2,508 16,352 18,860 2022 2,281 13,288 15,569 2023 433 12,145 12,578 Thereafter — 54,566 54,566 Total undiscounted lease payments 8,530 117,396 125,926 Less: imputed interest (637 ) (23,242 ) (23,879 ) Lease obligations $ 7,893 $ 94,154 $ 102,047 ________________________ (1) 2019 amount consists of three months data from October 1, 2019 to December 31, 2019 . As previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and under the previous lease accounting standard, minimum future payments on noncancelable operating leases as of December 31, 2018 are summarized as follows ( in thousands ): Finance Leases Operating Leases Total 2019 $ 2,507 $ 16,538 $ 19,045 2020 1,983 13,850 15,833 2021 1,844 13,044 14,888 2022 1,630 11,737 13,367 2023 204 9,741 9,945 Thereafter — 37,997 37,997 Total minimal leases payments 8,168 $ 102,907 $ 111,075 Less: Interest (605 ) Present value of minimal lease payments $ 7,563 |
Leases | Leases Effective January 1, 2019, the Company adopted Topic 842 using the modified retrospective method. As such, the Company recognized operating lease right-of-use (“ROU”) assets and operating lease liabilities in the consolidated statements of financial condition. Prior period financial statements were not adjusted under the new standard and therefore, those amounts are not presented below. The Company elected not to apply the recognition requirements to short-term leases, not to separate non-lease components from lease components, and elected the transition provisions available for existing contracts, which allowed the Company to carryforward its historical assessments of (1) whether contracts are or contain a lease, (2) lease classification, and (3) initial direct costs. ROU assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date based on the net present value of fixed lease payments over the lease term. The Company’s lease term includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option. ROU assets also include any advance lease payments made and are net of any lease incentives. As most of the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would expect to pay to borrow over a similar term, and on a collateralized basis, an amount equal to the lease payments in a similar economic environment . The majority of the Company’s leases are for corporate offices, various facilities and information technology equipment. The components of lease expense for the three and nine months ended September 30, 2019 were as follows (in thousands) : Three Months Ended Nine Months Ended 2019 2019 Operating lease costs (1) $ 6,739 $ 15,394 Finance lease costs Amortization of right-of-use assets 441 1,254 Interest on lease liabilities 51 466 Total lease costs $ 7,231 $ 17,114 ________________________ (1) Operating lease expenses are included in general and administrative expenses in the Company’s consolidated statements of operations. Costs include short-term and variable lease components which were not material for the periods. The following table provides supplemental consolidated balance sheet information related to leases as of September 30, 2019 (in thousands) : Classification September 30, Assets Operating lease right-of-use assets Other assets $ 75,852 Finance lease right-of-use assets Property and equipment, net 8,286 Total lease right-of-use assets $ 84,138 Liabilities Operating lease liabilities Other liabilities $ 94,154 Finance lease liabilities Debt, net 7,893 Total lease liabilities $ 102,047 Supplemental lease information is summarized below (in thousands, except rate and lease term) : Three Months Ended Nine Months Ended 2019 2019 Right-of-use assets obtained in exchange for new operating lease obligations $ 4,232 $ 114,484 Right-of-use assets obtained in exchange for new finance lease obligations 3,862 6,795 Cash paid for amounts included in the measurement of lease liabilities Operating leases - operating cash flows 4,022 10,883 Finance leases - operating cash flows 51 466 Finance leases - financing cash flows 454 1,419 September 30, Weighted-average remaining lease term (in years) Operating leases 8.2 Finance leases 3.2 Weighted-average discount rate Operating leases (1) 5.4 % Finance leases 4.7 % ________________________ (1) Upon adoption of the new lease standard, discount rates used for existing operating leases were established at January 1, 2019. Minimum future payments on noncancelable operating leases as of September 30, 2019 are summarized as follows ( in thousands ): Finance Leases Operating Leases Total 2019 (1) $ 662 $ 3,812 $ 4,474 2020 2,646 17,233 19,879 2021 2,508 16,352 18,860 2022 2,281 13,288 15,569 2023 433 12,145 12,578 Thereafter — 54,566 54,566 Total undiscounted lease payments 8,530 117,396 125,926 Less: imputed interest (637 ) (23,242 ) (23,879 ) Lease obligations $ 7,893 $ 94,154 $ 102,047 ________________________ (1) 2019 amount consists of three months data from October 1, 2019 to December 31, 2019 . As previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and under the previous lease accounting standard, minimum future payments on noncancelable operating leases as of December 31, 2018 are summarized as follows ( in thousands ): Finance Leases Operating Leases Total 2019 $ 2,507 $ 16,538 $ 19,045 2020 1,983 13,850 15,833 2021 1,844 13,044 14,888 2022 1,630 11,737 13,367 2023 204 9,741 9,945 Thereafter — 37,997 37,997 Total minimal leases payments 8,168 $ 102,907 $ 111,075 Less: Interest (605 ) Present value of minimal lease payments $ 7,563 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation and Regulatory The Company is involved in disputes, legal actions, regulatory investigations, inquiries, and other actions from time to time in the ordinary course of business. The Company, along with others in its industry, is routinely subject to legal actions based on the Fair Debt Collection Practices Act (“FDCPA”), comparable state statutes, the Telephone Consumer Protection Act (“TCPA”), state and federal unfair competition statutes, and common law causes of action. The violations of law investigated or alleged in these actions often include claims that the Company lacks specified licenses to conduct its business, attempts to collect debts on which the statute of limitations has run, has made inaccurate or unsupported assertions of fact in support of its collection actions and/or has acted improperly in connection with its efforts to contact consumers. Such litigation and regulatory actions could involve potential compensatory or punitive damage claims, fines, sanctions, injunctive relief, or changes in business practices. Many continue on for some length of time and involve substantial investigation, litigation, negotiation, and other expense and effort before a result is achieved, and during the process the Company often cannot determine the substance or timing of any eventual outcome. At September 30, 2019 , there were no material developments in any of the legal proceedings disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 . In certain legal proceedings, the Company may have recourse to insurance or third party contractual indemnities to cover all or portions of its litigation expenses, judgments, or settlements. The Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. The Company continuously assesses the potential liability related to its pending litigation and regulatory matters and revises its estimates when additional information becomes available. The Company’s legal costs are recorded to expense as incurred. As of September 30, 2019 , the Company has no material reserves for legal matters. Purchase Commitments In the normal course of business, the Company enters into forward flow purchase agreements and other purchase commitment agreements. As of September 30, 2019 , the Company had entered into agreements to purchase receivable portfolios with a face value of approximately $2.6 billion for a purchase price of approximately $306.0 million . Most purchase commitments do not extend past one year . |
Segment and Geographic Informat
Segment and Geographic Information | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information The Company conducts business through several operating segments that have similar economic and other qualitative characteristics and have been aggregated in accordance with authoritative guidance into one reportable segment, portfolio purchasing and recovery. Since the Company operates in one reportable segment, all required segment information can be found in the consolidated financial statements. The Company has operations in the United States, Europe and other foreign countries. The following table presents the Company’s total revenues, adjusted by net allowances by geographic areas in which the Company operates (in thousands) : Three Months Ended Nine Months Ended 2019 2018 2019 2018 Revenues, adjusted by net allowances (1) : United States $ 211,193 $ 178,892 $ 599,953 $ 530,679 International Europe (2) 130,868 137,331 397,063 412,407 Other geographies 13,875 20,551 52,871 70,223 144,743 157,882 449,934 482,630 Total $ 355,936 $ 336,774 $ 1,049,887 $ 1,013,309 ________________________ (1) Revenues, adjusted by net allowances, are attributed to countries based on consumer location. Revenues primarily include portfolio revenues and fee-based income earned on accounts collected on behalf of others. (2) Based on the financial information that is used to produce the general-purpose financial statements, providing further geographic information is impracticable. |
Goodwill and Identifiable Intan
Goodwill and Identifiable Intangible Assets | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Identifiable Intangible Assets | Goodwill and Identifiable Intangible Assets Goodwill is tested for impairment at the reporting unit level annually and in interim periods if certain events occur that indicate that the fair value of a reporting unit may be below its carrying value. Determining the number of reporting units and the fair value of a reporting unit requires the Company to make judgments and involves the use of significant estimates and assumptions. On August 15, 2019, the Company completed the sale of Baycorp. The Company concluded that the fair value of Baycorp immediately prior to the Baycorp Transaction was less than its recorded book value and, as a result, the entire goodwill balance carried at the Baycorp reporting unit of $10.7 million was impaired. The goodwill impairment is included in operating expenses in the Company’s consolidated statements of operations during the three and nine months ended September 30, 2019. The annual goodwill testing date for the reporting units that are included in the portfolio purchasing and recovery reportable segment is October 1st. Other than the impairment charge discussed above, there have been no events or circumstances during the nine months ended September 30, 2019 that have required the Company to perform an interim assessment of goodwill carried at these reporting units. Management continues to evaluate and monitor all key factors impacting the carrying value of the Company’s recorded goodwill and long-lived assets. Adverse changes in the Company’s actual or expected operating results, market capitalization, business climate, economic factors or other negative events that may be outside the control of management could result in a material non-cash impairment charge in the future. The Company’s goodwill is attributable to reporting units included in its portfolio purchasing and recovery segment. The following table summarizes the activity in the Company’s goodwill balance (in thousands): Total Balance, December 31, 2018 $ 868,126 Effect of foreign currency translation 14,758 Balance, March 31, 2019 882,884 Effect of foreign currency translation (17,357 ) Balance, June 30, 2019 865,527 Goodwill impairment (10,718 ) Effect of foreign currency translation (23,260 ) Balance, September 30, 2019 $ 831,549 The Company’s acquired intangible assets are summarized as follows (in thousands) : As of September 30, 2019 As of December 31, 2018 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 63,464 $ (15,309 ) $ 48,155 $ 73,458 $ (17,025 ) $ 56,433 Developed technologies 5,842 (5,161 ) 681 7,461 (6,446 ) 1,015 Trade name and other 5,557 (4,676 ) 881 8,346 (5,213 ) 3,133 Total intangible assets $ 74,863 $ (25,146 ) $ 49,717 $ 89,265 $ (28,684 ) $ 60,581 |
Ownership, Description of Bus_2
Ownership, Description of Business, and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The accompanying interim consolidated financial statements have been prepared by the Company, without audit, in accordance with the instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”) and, therefore, do not include all information and footnotes necessary for a fair presentation of its consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the Company’s consolidated financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 . Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in the Company’s financial statements and the accompanying notes. Actual results could materially differ from those estimates. |
Basis of Consolidation | The consolidated financial statements have been prepared in conformity with GAAP and reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. The Company also consolidates variable interest entities for which it is the primary beneficiary. The primary beneficiary has both (1) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance, and (2) either the obligation to absorb losses or the right to receive benefits. Refer to Note 9 , “Variable Interest Entities,” for further details. All intercompany transactions and balances have been eliminated in consolidation. |
Translation of Foreign Currencies | The financial statements of certain of the Company’s foreign subsidiaries are measured using their local currency as the functional currency. Assets and liabilities of foreign operations are translated into U.S. dollars using period-end exchange rates, and revenues and expenses are translated into U.S. dollars using average exchange rates in effect during each period. The resulting translation adjustments are recorded as a component of other comprehensive income or loss. Equity accounts are translated at historical rates, except for the change in retained earnings during the year which is the result of the income statement translation process. Intercompany transaction gains or losses at each period end arising from subsequent measurement of balances for which settlement is not planned or anticipated in the foreseeable future are included as translation adjustments and recorded within other comprehensive income or loss. Translation gains or losses are the material components of accumulated other comprehensive income or loss. |
Reclassifications | Certain immaterial reclassifications have been made to the consolidated financial statements to conform to the current year’s presentation. |
Change in Accounting Principle and Recent Accounting Pronouncements | The Company adopted Accounting Standard Codification 842 - Leases (“Topic 842”) as of January 1, 2019, using the transition method in accordance with ASU 2018-11, Leases: Targeted Improvements issued in July 2018. Under Topic 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced disclosures. Leases will continue to be classified as either finance or operating leases. The adoption of this new standard resulted in the recording of lease assets and lease liabilities for the Company’s operating leases of approximately $89.1 million and $102.7 million , respectively, as of January 1, 2019. The difference between the leased assets and lease liabilities primarily represents lease incentives. All periods prior to January 1, 2019 were presented in accordance with the previous lease accounting standard, and no retrospective adjustments were made to the comparative periods presented. The accounting for finance leases remains substantially unchanged. The adoption of this new standard did not materially impact the Company’s consolidated statements of operations or cash flows, or the Company’s compliance with debt covenants. Refer to Note 11 “Leases” for detailed information on the Company’s leases. Recent Accounting Pronouncements Other than the adoption of the standard discussed above, there have been no new accounting pronouncements made effective during the nine months ended September 30, 2019 that have significance, or potential significance, to the Company’s consolidated financial statements. Recent Accounting Pronouncements Not Yet Effective In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 applies a current expected credit loss model which is a new impairment model based on expected losses rather than incurred losses. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from, or added to, the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the amount expected to be collected. ASU 2016-13 eliminates the current accounting model for loans and debt securities acquired with deteriorated credit quality under ASC 310-30, which provides authoritative guidance for the accounting of the Company’s investment in receivable portfolios. ASU 2016-13 is effective for reporting periods beginning after December 15, 2019. The guidance will be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period in which ASU 2016-13 is adopted. However, the FASB has determined that financial assets for which the guidance in Subtopic 310-30, Receivables-Loans and Debt Securities Acquired with Deteriorated Credit Quality, has previously been applied should prospectively apply the guidance in ASU 2016-13 for purchased financial assets with credit deterioration. ASU 2016-13, including the effect of ongoing developments and amendments to the guidance , is expected to result in a significant change to the Company’s accounting for its receivable portfolios. The Company is in the process of implementing ASU 2016-13, including drafting accounting policies, assessing data needs for new reporting requirements, and developing software resources and financial models. In April 2019, the FASB issued ASU No. 2019‑04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-04”). The amendments in ASU 2019-04 clarify certain aspects of accounting for credit losses, hedging activities, and financial instruments. For clarifications around credit losses, the effective date will be the same as the effective date of ASU 2016-13. For entities that have adopted ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, ASU 2019-04 is effective the first annual reporting period beginning after the date of issuance of ASU 2019-04 and may be early adopted. The amendments in ASU 2019-04 that are related to financial instruments are effective for fiscal years beginning after December 15, 2019, and interim periods within those years, with early adoption permitted. The Company's adoption of ASU 2019-04 is not expected to have a material impact on its consolidated financial statements. With the exception of the standards discussed above, there have been no other recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2019 |
Earnings Per Share | Basic earnings per share are calculated by dividing net earnings attributable to Encore by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share are calculated based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options, restricted stock, and the dilutive effect of the convertible and exchangeable senior notes, if applicable. |
Fair Value Measurements | The authoritative guidance for fair value measurements defines fair value as the price that would be received upon sale of an asset or the price paid to transfer a liability, in an orderly transaction between market participants at the measurement date ( i.e., the “exit price”). The guidance utilizes a fair value hierarchy that prioritizes the inputs used in valuation techniques to measure fair value into three broad levels. The following is a brief description of each level: • Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. • Level 3: Unobservable inputs, including inputs that reflect the reporting entity’s own assumptions. |
Derivatives | The Company may periodically enter into derivative financial instruments to manage risks related to interest rates and foreign currency. Certain of the Company’s derivative financial instruments qualify for hedge accounting treatment under the authoritative guidance for derivatives and hedging. The Company has operations in foreign countries which expose the Company to foreign currency exchange rate fluctuations due to transactions denominated in foreign currencies. To mitigate a portion of this risk, the Company enters into derivative financial instruments, principally foreign currency forward contracts with financial counterparties. The Company adjusts the level and use of derivatives as soon as practicable after learning that an exposure has changed and reviews all exposures and derivative positions on an ongoing basis. Certain of the Company’s foreign currency forward contracts are designated as cash flow hedging instruments and qualify for hedge accounting treatment. Gains and losses arising from such contracts are recorded as a component of accumulated other comprehensive income (“OCI”) as gains and losses on derivative instruments, net of income taxes. The hedging gains and losses in OCI are subsequently reclassified into earnings in the same period in which the underlying transactions affect the Company’s earnings. If all or a portion of the forecasted transaction is cancelled, the accumulated gains or losses in OCI would be reclassified into earnings. |
Investment in Receivable Portfolios, Net | In accordance with the authoritative guidance for loans and debt securities acquired with deteriorated credit quality, discrete receivable portfolio purchases during the same fiscal quarter are aggregated into pools based on common risk characteristics. Common risk characteristics include risk ratings (e.g. FICO or similar scores), financial asset type, collateral type, size, interest rate, date of origination, term, and geographic location. The Company’s static pools are typically grouped into credit card, purchased consumer bankruptcy, and mortgage portfolios. The Company further groups these static pools by geographic region or location. Portfolios acquired in business combinations are also grouped into these pools. During any fiscal quarter in which the Company has an acquisition of an entity that has portfolio, the entire historical portfolio of the acquired company is aggregated into the pool groups for that quarter, based on common characteristics, resulting in pools for that quarter that may consist of several different vintages of portfolio. Once a static pool is established, the portfolios are permanently assigned to the pool. The discount (i.e. the difference between the cost of each static pool and the related aggregate contractual receivable balance) is not recorded because the Company expects to collect a relatively small percentage of each static pool’s contractual receivable balance. As a result, receivable portfolios are recorded at cost at the time of acquisition. The cost of the portfolios includes certain fees paid to third parties incurred in connection with the direct acquisition of the receivable portfolios. In compliance with the authoritative guidance, the Company accounts for its investments in receivable portfolios using either the interest method or the cost recovery method. The interest method applies an internal rate of return (“IRR”) to the cost basis of the pool, which remains unchanged throughout the life of the pool, unless there is a significant increase in subsequent expected cash flows. Subsequent increases in expected cash flows are recognized prospectively through an upward adjustment of the pool’s IRR over its remaining life. Subsequent decreases in expected cash flows do not change the IRR but are recognized as an allowance to the cost basis of the pool and are reflected in the consolidated statements of operations as a reduction in revenue, with a corresponding valuation allowance, offsetting the investment in receivable portfolios in the consolidated statements of financial condition. Due to the discounting of future cashflows using monthly IRRs, an allowance charge could still result even if substantially higher collections occurring later in the collection curve offset lower collections in the near term. The Company accounts for each static pool as a unit for the economic life of the pool (similar to one loan) for recognition of revenue from receivable portfolios, for collections applied to the cost basis of receivable portfolios and for provision for loss or allowance. Revenue from receivable portfolios is accrued based on each pool’s IRR applied to each pool’s adjusted cost basis. The cost basis of each pool is increased by revenue earned and portfolio allowance reversals and decreased by gross collections and portfolio allowances. If the amount or timing of future cash collections on a pool of receivables are not reasonably estimable, the Company accounts for such portfolios on the cost recovery method as Cost Recovery Portfolios. The accounts in these portfolios have different risk characteristics than those included in other portfolios acquired during the same quarter, or the necessary information was not available to estimate future cash flows and, accordingly, they were not aggregated with other portfolios. Under the cost recovery method of accounting, no revenue is recognized until the carrying value of a Cost Recovery Portfolio has been fully recovered. Accretable yield represents the amount of revenue the Company expects to generate over the remaining life of its existing investment in receivable portfolios based on estimated future cash flows. Total accretable yield is the difference between future estimated collections and the current carrying value of a portfolio. All estimated cash flows on portfolios where the cost basis has been fully recovered are classified as zero basis cash flows. |
Variable Interest Entities | A VIE is defined as a legal entity whose equity owners do not have sufficient equity at risk, or, as a group, the holders of the equity investment at risk lack any of the following three characteristics: decision-making rights, the obligation to absorb expected losses, or the right to receive expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and the obligation to absorb expected losses or the right to receive benefits from the entity that could potentially be significant to the VIE. The Company consolidates VIEs when it is the primary beneficiary. The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. A reconsideration event is significant if it changes the design of the entity or the entity’s equity investment at risk. Prior to the purchase of all of the outstanding equity of CCM not owned by the Company, CCM’s indirect holding Company Janus Holdings S.a r.l. (“Janus Holdings”) was a VIE. Upon completion of the Cabot Transaction on July 24, 2018 and the subsequent change in organizational structure, Janus Holdings no longer qualified as a VIE and CCM is consolidated via the voting interest model. As of September 30, 2019 , the Company’s VIEs include certain securitized financing vehicles and other immaterial special purpose entities that were created to purchase receivable portfolios in certain geographies. The Company is the primary beneficiary of these VIEs. Most assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the VIE. |
Segment Reporting | The Company conducts business through several operating segments that have similar economic and other qualitative characteristics and have been aggregated in accordance with authoritative guidance into one reportable segment, portfolio purchasing and recovery. Since the Company operates in one reportable segment, all required segment information can be found in the consolidated financial statements. |
Goodwill | The annual goodwill testing date for the reporting units that are included in the portfolio purchasing and recovery reportable segment is October 1st. Other than the impairment charge discussed above, there have been no events or circumstances during the nine months ended September 30, 2019 that have required the Company to perform an interim assessment of goodwill carried at these reporting units. Management continues to evaluate and monitor all key factors impacting the carrying value of the Company’s recorded goodwill and long-lived assets. Adverse changes in the Company’s actual or expected operating results, market capitalization, business climate, economic factors or other negative events that may be outside the control of management could result in a material non-cash impairment charge in the future. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Shares Used in Calculating Earnings Per Basic and Diluted Shares | A reconciliation of shares used in calculating earnings per basic and diluted shares follows (in thousands, except per share amounts) : Three Months Ended Nine Months Ended 2019 2018 2019 2018 Net income attributable to Encore Capital Group, Inc. stockholders $ 38,869 $ 20,725 $ 124,784 $ 68,850 Total weighted-average basic shares outstanding 31,338 29,867 31,242 27,372 Dilutive effect of stock-based awards 319 254 217 291 Total weighted-average dilutive shares outstanding 31,657 30,121 31,459 27,663 Basic earnings per share $ 1.24 $ 0.69 $ 3.99 $ 2.52 Diluted earnings per share $ 1.23 $ 0.69 $ 3.97 $ 2.49 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | Financial assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands) : Fair Value Measurements as of Level 1 Level 2 Level 3 Total Assets Foreign currency exchange contracts $ — $ 634 $ — $ 634 Interest rate cap contracts — 166 — 166 Liabilities Foreign currency exchange contracts — (575 ) — (575 ) Interest rate swap agreements — (10,839 ) — (10,839 ) Contingent consideration — — (61 ) (61 ) Fair Value Measurements as of Level 1 Level 2 Level 3 Total Assets Interest rate cap contracts $ — $ 2,023 $ — $ 2,023 Liabilities Foreign currency exchange contracts — (237 ) — (237 ) Interest rate swap agreements — (4,881 ) — (4,881 ) Contingent consideration — — (6,198 ) (6,198 ) |
Schedule of Roll forward of the Fair Value of Contingent Consideration | The following table provides a roll forward of the fair value of contingent consideration for the nine months ended September 30, 2019 and year ended December 31, 2018 (in thousands) : Amount Balance at December 31, 2017 $ 10,612 Issuance of contingent consideration in connection with acquisition 1,728 Change in fair value of contingent consideration (5,664 ) Payment of contingent consideration (271 ) Effect of foreign currency translation (207 ) Balance at December 31, 2018 6,198 Change in fair value of contingent consideration (2,300 ) Payment of contingent consideration (3,684 ) Effect of foreign currency translation (153 ) Balance at September 30, 2019 $ 61 |
Schedule Of Financial Instruments Not Required To Be Carried At Fair Value | The carrying amounts in the following table are recorded in the consolidated statements of financial condition at September 30, 2019 and December 31, 2018 (in thousands) : September 30, 2019 December 31, 2018 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Financial Assets Investment in receivable portfolios $ 3,188,167 $ 3,101,295 $ 3,137,893 $ 3,525,861 Deferred court costs 94,011 94,011 95,918 95,918 Financial Liabilities Encore convertible notes and exchangeable notes (1) 639,538 680,811 619,639 553,744 Cabot senior secured notes (2) 1,064,842 1,104,718 1,109,922 1,036,905 _______________________ (1) Carrying amount represents the portion of the convertible and exchangeable notes classified as debt, while estimated fair value pertains to the face amount of the notes. (2) Carrying amount represents historical cost, adjusted for any related debt discount or debt premium. |
Derivatives and Hedging Instr_2
Derivatives and Hedging Instruments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Value of Derivative Instruments | The following table summarizes the fair value of derivative instruments as recorded in the Company’s consolidated statements of financial condition (in thousands) : September 30, 2019 December 31, 2018 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Foreign currency exchange contracts Other assets $ 634 Other liabilities $ (237 ) Interest rate cap contracts Other assets 166 Other assets 2,023 Interest rate swap agreements Other liabilities (10,839 ) Other liabilities (4,881 ) Derivatives not designated as hedging instruments: Foreign currency exchange contracts Other liabilities (575 ) Other liabilities — |
Effects of Derivatives in Cash Flow Hedging Relationships | The following table summarizes the effects of derivatives in cash flow hedging relationships not designated as hedging instruments on the Company’s consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018 (in thousands) : Derivatives Not Designated as Hedging Instruments Location of Gain (Loss) Recognized in Income on Derivative Amount of Gain (Loss) Recognized in Income on Derivative Three Months Ended Nine Months Ended 2019 2018 2019 2018 Foreign currency exchange contracts Other expense $ (436 ) $ (2,281 ) $ (263 ) $ (9,221 ) Interest rate cap contracts Interest expense — 289 — (1,427 ) The following table summarizes the effects of derivatives in cash flow hedging relationships designated as hedging instruments on the Company’s consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018 (in thousands) : Derivatives Designated as Hedging Instruments Gain (Loss) Location of Gain (Loss) Reclassified from Gain (Loss) Reclassified from OCI into Income Three Months Ended Three Months Ended September 30, 2019 2018 2019 2018 Foreign currency exchange contracts $ (323 ) $ (916 ) Salaries and employee benefits $ 198 $ 95 Foreign currency exchange contracts (48 ) (130 ) General and administrative expenses 27 11 Interest rate swap agreements (800 ) 3 Interest expense (742 ) 4 Interest rate cap contracts (145 ) — Interest expense — — Derivatives Designated as Hedging Instruments Gain (Loss) Location of Gain (Loss) Reclassified from Gain (Loss) Reclassified from OCI into Income Nine Months Ended Nine Months Ended 2019 2018 2019 2018 Foreign currency exchange contracts $ 1,068 $ (1,990 ) Salaries and employee benefits $ 183 $ 1,078 Foreign currency exchange contracts (57 ) (206 ) General and administrative expenses (44 ) 46 Interest rate swap agreements (7,182 ) (9 ) Interest expense (1,606 ) 29 Interest rate cap contracts (1,857 ) — Interest expense — — |
Investment in Receivable Port_2
Investment in Receivable Portfolios, Net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Receivables [Abstract] | |
Schedule of Accretable Yield and an Estimate of Zero Basis Future Cash Flows | The following table summarizes the Company’s accretable yield and an estimate of zero basis future cash flows at the beginning and end of the period presented (in thousands) : Accretable Yield Estimate of Zero Basis Cash Flows Total Balance at December 31, 2018 $ 3,773,171 $ 253,035 $ 4,026,206 Revenue from receivable portfolios (285,255 ) (25,903 ) (311,158 ) Allowance (reversals) on receivable portfolios, net 900 (2,267 ) (1,367 ) Additions (reductions) on existing portfolios, net 38,512 (199 ) 38,313 Additions for current purchases 285,637 — 285,637 Effect of foreign currency translation 26,244 217 26,461 Balance at March 31, 2019 3,839,209 224,883 4,064,092 Revenue from receivable portfolios (285,562 ) (26,933 ) (312,495 ) Allowance (reversals) on receivable portfolios, net 255 (2,318 ) (2,063 ) Additions on existing portfolios, net 113,074 32,285 145,359 Additions for current purchases 277,556 — 277,556 Effect of foreign currency translation (46,492 ) (34 ) (46,526 ) Balance at June 30, 2019 3,898,040 227,883 4,125,923 Revenue from receivable portfolios (300,047 ) (16,170 ) (316,217 ) Allowance reversals on receivable portfolios, net (6,471 ) (2,044 ) (8,515 ) Additions (reductions) on existing portfolios, net 153,807 (60,280 ) 93,527 Additions for current purchases 288,547 — 288,547 Effect of foreign currency translation (72,664 ) (1,146 ) (73,810 ) Balance at September 30, 2019 $ 3,961,212 $ 148,243 $ 4,109,455 Accretable Yield Estimate of Zero Basis Cash Flows Total Balance at December 31, 2017 $ 3,695,069 $ 369,632 $ 4,064,701 Revenue from receivable portfolios (249,821 ) (31,188 ) (281,009 ) Allowance reversals on receivable portfolios, net (8,082 ) (1,729 ) (9,811 ) Reductions on existing portfolios, net (24,945 ) (39,529 ) (64,474 ) Additions for current purchases 285,172 — 285,172 Effect of foreign currency translation 57,577 643 58,220 Balance at March 31, 2018 3,754,970 297,829 4,052,799 Revenue from receivable portfolios (258,698 ) (33,964 ) (292,662 ) Allowance reversals on receivable portfolios, net (15,411 ) (2,221 ) (17,632 ) Additions reductions on existing portfolios, net 136,267 5,824 142,091 Additions for current purchases 345,006 — 345,006 Effect of foreign currency translation (97,448 ) (597 ) (98,045 ) Balance at June 30, 2018 3,864,686 266,871 4,131,557 Revenue from receivable portfolios (263,109 ) (32,248 ) (295,357 ) Allowance reversals on receivable portfolios, net (1,196 ) (2,833 ) (4,029 ) Additions on existing portfolios, net 23,241 14,481 37,722 Additions for current purchases 262,751 — 262,751 Effect of foreign currency translation (20,483 ) (136 ) (20,619 ) Balance at September 30, 2018 $ 3,865,890 $ 246,135 $ 4,112,025 |
Schedule of Investment in Receivable Portfolios | The following tables summarize the changes in the balance of the investment in receivable portfolios during the following periods ( in thousands, except percentages ): Three Months Ended September 30, 2019 Accrual Basis Portfolios Cost Recovery Portfolios Zero Basis Portfolios Total Balance, beginning of period $ 3,139,937 $ 84,631 $ — $ 3,224,568 Purchases of receivable portfolios 259,910 — — 259,910 Deconsolidation of receivable portfolios (1) (51,935 ) — — (51,935 ) Transfers to assets held for sale (657 ) (1,108 ) — (1,765 ) Collections on receivable portfolios (2) (480,089 ) (1,125 ) (18,181 ) (499,395 ) Put-Backs and Recalls (3) (2,734 ) — (12 ) (2,746 ) Foreign currency adjustments (62,595 ) (2,586 ) (21 ) (65,202 ) Revenue recognized 300,047 — 16,170 316,217 Portfolio allowance reversals, net 6,471 — 2,044 8,515 Balance, end of period $ 3,108,355 $ 79,812 $ — $ 3,188,167 Revenue as a percentage of collections (4) 62.5 % 0.0 % 88.9 % 63.3 % Three Months Ended September 30, 2018 Accrual Basis Portfolios Cost Recovery Portfolios Zero Basis Portfolios Total Balance, beginning of period $ 3,074,292 $ 10,329 $ — $ 3,084,621 Purchases of receivable portfolios 248,691 — — 248,691 Transfers to assets held for sale (4,253 ) (1,111 ) — (5,364 ) Collections on receivable portfolios (2) (463,474 ) (306 ) (35,063 ) (498,843 ) Put-Backs and Recalls (3) (2,056 ) — (18 ) (2,074 ) Foreign currency adjustments (17,208 ) (93 ) — (17,301 ) Revenue recognized 263,109 — 32,248 295,357 Portfolio allowance reversals, net 1,196 — 2,833 4,029 Balance, end of period $ 3,100,297 $ 8,819 $ — $ 3,109,116 Revenue as a percentage of collections (4) 56.8 % 0.0 % 92.0 % 59.2 % ________________________ (1) Deconsolidation of receivable portfolios as a result of the Baycorp Transaction. (2) Does not include amounts collected on behalf of others. (3) Put-backs (“Put-Backs”) and recalls (“Recalls”) represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreements. (4) Revenue as a percentage of collections excludes the effect of net portfolio allowances or net portfolio allowance reversals. Nine Months Ended September 30, 2019 Accrual Basis Portfolios Cost Recovery Portfolios Zero Basis Portfolios Total Balance, beginning of period $ 3,129,502 $ 8,391 $ — $ 3,137,893 Purchases of receivable portfolios 764,942 — — 764,942 Transfer of portfolios (1) (78,980 ) 78,980 — — Deconsolidation of receivable portfolios (2) (51,935 ) — — (51,935 ) Transfers to assets held for sale (4,615 ) (3,066 ) — (7,681 ) Collections on receivable portfolios (3) (1,449,705 ) (2,831 ) (75,593 ) (1,528,129 ) Put-Backs and Recalls (4) (7,820 ) — (21 ) (7,841 ) Foreign currency adjustments (69,214 ) (1,662 ) (21 ) (70,897 ) Revenue recognized 870,864 — 69,006 939,870 Portfolio allowance reversals, net 5,316 — 6,629 11,945 Balance, end of period $ 3,108,355 $ 79,812 $ — $ 3,188,167 Revenue as a percentage of collections (6) 60.1 % 0.0 % 91.3 % 61.5 % Nine Months Ended September 30, 2018 Accrual Basis Portfolios Cost Recovery Portfolios Zero Basis Portfolios Total Balance, beginning of period $ 2,879,170 $ 11,443 $ — $ 2,890,613 Purchases of receivable portfolios 885,033 — — 885,033 Transfers to assets held for sale (9,358 ) (1,373 ) — (10,731 ) Collections on receivable portfolios (3) (1,379,095 ) (1,729 ) (103,214 ) (1,484,038 ) Put-Backs and Recalls (4) (14,231 ) — (171 ) (14,402 ) Foreign currency adjustments (57,539 ) (320 ) — (57,859 ) Reclassification adjustments (5) — 798 (798 ) — Revenue recognized 771,628 — 97,400 869,028 Portfolio allowance reversals, net 24,689 — 6,783 31,472 Balance, end of period $ 3,100,297 $ 8,819 $ — $ 3,109,116 Revenue as a percentage of collections (6) 56.0 % 0.0 % 94.4 % 58.6 % ________________________ (1) Represents all portfolios in Mexico, which were transferred from accrual basis portfolios to cost recovery portfolios as the timing of future collections were determined to not be currently reasonably estimable, due to the changing political and economic conditions in Mexico. (2) Deconsolidation of receivable portfolios as a result of the Baycorp Transaction. (3) Does not include amounts collected on behalf of others. (4) Represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreements. (5) Reclassification relating to certain Zero Basis Revenue that was classified as collections in cost recovery portfolios in prior periods. (6) Revenue as a percentage of collections excludes the effect of net portfolio allowances or net portfolio allowance reversals. |
Schedule of Valuation Allowance for Investment in Receivable Portfolios | The following table summarizes the change in the valuation allowance for investment in receivable portfolios during the periods presented (in thousands) : Valuation Allowance Three Months Ended Nine Months Ended 2019 2018 2019 2018 Balance at beginning of period $ 57,204 $ 75,129 $ 60,631 $ 102,576 Provision for portfolio allowances 1,120 6,156 4,835 8,816 Reversal of prior allowances (9,635 ) (10,185 ) (16,780 ) (40,288 ) Baycorp Transaction (1,036 ) — (1,036 ) — Effect of foreign currency translation (554 ) (365 ) (551 ) (369 ) Balance at end of period $ 47,099 $ 70,735 $ 47,099 $ 70,735 |
Deferred Court Costs, Net (Tabl
Deferred Court Costs, Net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Deferred Court Costs | Deferred Court Costs for the deferral period consist of the following as of the dates presented (in thousands) : September 30, December 31, Court costs advanced $ 867,032 $ 828,713 Court costs recovered (359,635 ) (336,335 ) Court costs reserve (413,386 ) (396,460 ) Deferred court costs $ 94,011 $ 95,918 |
Schedule of Court Cost Reserve | A roll forward of the Company’s court cost reserve is as follows (in thousands) : Court Cost Reserve Three Months Ended Nine Months Ended 2019 2018 2019 2018 Balance at beginning of period $ (408,312 ) $ (381,125 ) $ (396,460 ) $ (364,015 ) Provision for court costs (20,866 ) (23,065 ) (60,214 ) (67,293 ) Charge-offs 13,679 13,603 40,934 38,990 Effect of foreign currency translation 2,113 960 2,354 2,691 Balance at end of period $ (413,386 ) $ (389,627 ) $ (413,386 ) $ (389,627 ) |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Components of Other Assets | Other assets consist of the following (in thousands) : September 30, December 31, Operating lease right-of-use asset $ 75,852 $ — Identifiable intangible assets, net 49,717 60,581 Assets held for sale 40,890 26,664 Service fee receivables 25,041 28,035 Deferred tax assets 21,378 24,910 Prepaid expenses 15,352 24,989 Other financial receivables 8,090 47,363 Other 54,698 44,460 Total $ 291,018 $ 257,002 |
Borrowings (Tables)
Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Consolidated Debt and Capital Lease Obligations | The components of the Company’s consolidated borrowings were as follows (in thousands) : September 30, December 31, Encore revolving credit facility $ 469,000 $ 429,000 Encore term loan facility 175,498 195,056 Encore senior secured notes 325,000 325,000 Encore convertible notes and exchangeable notes 672,855 656,000 Less: debt discount (33,317 ) (36,361 ) Cabot senior secured notes 1,066,434 1,111,399 Less: debt discount (1,592 ) (1,477 ) Cabot senior revolving credit facility 305,454 298,005 Cabot securitisation senior facilities 430,217 445,837 Other credit facilities — 43,354 Other 52,305 64,566 Finance lease liabilities 7,893 7,563 3,469,747 3,537,942 Less: debt issuance costs, net of amortization (40,404 ) (47,309 ) Total $ 3,429,343 $ 3,490,633 |
Schedule of Notes | The following table provides a summary of the principal balance, maturity date and interest rate for the convertible and exchangeable senior notes ($ in thousands) : September 30, December 31, Maturity date Interest rate 2020 Convertible Notes $ 89,355 $ 172,500 July 2020 3.000 % 2021 Convertible Notes 161,000 161,000 March 2021 2.875 % 2022 Convertible Notes 150,000 150,000 March 2022 3.250 % Exchangeable Notes 172,500 172,500 September 2023 4.500 % 2025 Convertible Notes 100,000 — October 2025 3.250 % $ 672,855 $ 656,000 The following table provides a summary of the Cabot senior secured notes ($ in thousands) : September 30, December 31, Maturity date Interest rate Floating rate senior secured notes due 2024 $ 435,960 $ — June 2024 EURIBOR +6.375% Floating rate senior secured notes due 2021 — 356,067 November 2021 EURIBOR +5.875% Senior secured notes due 2023 630,474 653,355 October 2023 7.500 % Senior secured notes due 2021 — 101,977 April 2021 6.500 % $ 1,066,434 $ 1,111,399 |
Schedule of Hedge Program for Convertible Notes | Certain key terms related to the convertible and exchangeable features as of September 30, 2019 are listed below. 2020 Convertible Notes 2021 Convertible Notes 2022 Convertible Notes 2023 Exchangeable Notes 2025 Convertible Notes Initial conversion or exchange price $ 45.72 $ 59.39 $ 45.57 $ 44.62 $ 40.00 Closing stock price at date of issuance $ 33.35 $ 47.51 $ 35.05 $ 36.45 $ 32.00 Closing stock price date Jun 24, 2013 Mar 5, 2014 Feb 27, 2017 Jul 20, 2018 Sep 4, 2019 Conversion or exchange rate (shares per $1,000 principal amount) 21.8718 16.8386 21.9467 22.4090 25.0000 Conversion or exchange date Jan 1, 2020 Sep 15, 2020 Sep 15, 2021 Mar 1, 2023 Jul 1, 2025 The details of the hedge program are listed below (in thousands, except conversion price) : 2020 Convertible Notes 2021 Convertible Notes 2023 Exchangeable Notes Cost of the hedge transaction(s) $ 18,113 $ 19,545 $ 17,785 Initial conversion or exchange price $ 45.72 $ 59.39 $ 44.62 Effective conversion or exchange price $ 61.55 $ 83.14 $ 62.48 |
Schedule of Balances of the Liability and Equity Components | The debt and equity components, the issuance costs related to the equity component, the stated interest rate, and the effective interest rate for each of the Convertible Notes and Exchangeable Notes at the time of the original offering are listed below (in thousands, except percentages) : 2020 Convertible Notes (1) 2021 Convertible Notes 2022 Convertible Notes 2023 Exchangeable Notes 2025 Convertible Notes Debt component $ 140,247 $ 143,645 $ 137,266 $ 157,971 $ 91,024 Equity component $ 32,253 $ 17,355 $ 12,734 $ 14,009 $ 8,976 Equity issuance cost $ 1,106 $ 581 $ 398 $ — $ 224 Stated interest rate 3.000 % 2.875 % 3.250 % 4.500 % 3.250 % Effective interest rate 6.350 % 4.700 % 5.200 % 6.500 % 5.000 % ________________________ (1) The Company used a portion of the net proceeds from the issuance of the 2025 Convertible Notes to repurchase approximately $83.1 million aggregate principal amount of its 2020 Convertible Notes. As a result, the remaining principal amount of the 2020 Convertible Notes was $89.4 million as of September 30, 2019. The balances of the liability and equity components of all the Convertible Notes and Exchangeable Notes outstanding were as follows (in thousands) : September 30, December 31, Liability component—principal amount $ 672,855 $ 656,000 Unamortized debt discount (33,317 ) (36,361 ) Liability component—net carrying amount $ 639,538 $ 619,639 Equity component $ 83,127 $ 76,351 |
Schedule of Interest Expense | Interest expense related to the Convertible Notes and Exchangeable Notes was as follows (in thousands) : Three Months Ended Nine Months Ended 2019 2018 2019 2018 Interest expense—stated coupon rate $ 6,754 $ 3,676 $ 17,662 $ 10,969 Interest expense—amortization of debt discount 3,405 2,518 9,770 7,410 Interest expense—Convertible Notes and Exchangeable Notes $ 10,159 $ 6,194 $ 27,432 $ 18,379 Interest expense related to the Cabot senior secured notes was as follows (in thousands) : Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Interest expense—stated coupon rate $ 18,434 $ 21,411 $ 57,291 $ 64,250 Interest expense—amortization of debt discount 1,522 1,684 5,091 4,579 Interest expense—Cabot senior secured notes $ 19,956 $ 23,095 $ 62,382 $ 68,829 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Tax Rates | The effective tax rates for the respective periods are shown below: Three Months Ended Nine Months Ended 2019 2018 2019 2018 Federal provision 21.0 % 21.0 % 21.0 % 21.0 % State provision 5.3 % 1.7 % 3.7 % 1.5 % Tax benefit relating to Baycorp Transaction (1) (29.1 )% — % (8.6 )% — % Foreign income taxed at different rates (3.4 )% 13.0 % (2.6 )% (1.6 )% Audit assessment (2) 8.9 % — % 2.6 % — % Change in valuation allowance 1.9 % 18.1 % 2.1 % 16.3 % Change in tax accounting method (3) — % — % (6.3 )% — % Other 2.5 % 2.7 % 0.9 % (0.1 )% Effective rate 7.1 % 56.5 % 12.8 % 37.1 % ________________________ (1) In connection with the Baycorp Transaction that was completed on August 15, 2019, the Company recognized a total tax benefit of $17.5 million on the disposition of certain investments in Baycorp held by the Company and its subsidiaries in various jurisdictions during the three and nine months ended September 30, 2019. (2) Relates to an IRS audit assessment for tax years 2014-2017 currently under exam. (3) During the first quarter of 2019, the Company received IRS approval for a tax accounting method change related to revenue reporting. The revised tax accounting method more closely aligns with the Company’s book accounting method for revenue reporting. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Lease Cost | Supplemental lease information is summarized below (in thousands, except rate and lease term) : Three Months Ended Nine Months Ended 2019 2019 Right-of-use assets obtained in exchange for new operating lease obligations $ 4,232 $ 114,484 Right-of-use assets obtained in exchange for new finance lease obligations 3,862 6,795 Cash paid for amounts included in the measurement of lease liabilities Operating leases - operating cash flows 4,022 10,883 Finance leases - operating cash flows 51 466 Finance leases - financing cash flows 454 1,419 three and nine months ended September 30, 2019 were as follows (in thousands) : Three Months Ended Nine Months Ended 2019 2019 Operating lease costs (1) $ 6,739 $ 15,394 Finance lease costs Amortization of right-of-use assets 441 1,254 Interest on lease liabilities 51 466 Total lease costs $ 7,231 $ 17,114 ________________________ (1) Operating lease expenses are included in general and administrative expenses in the Company’s consolidated statements of operations. Costs include short-term and variable lease components which were not material for the periods. |
Supplemental Balance Sheet Information | September 30, Weighted-average remaining lease term (in years) Operating leases 8.2 Finance leases 3.2 Weighted-average discount rate Operating leases (1) 5.4 % Finance leases 4.7 % ________________________ (1) Upon adoption of the new lease standard, discount rates used for existing operating leases were established at January 1, 2019. The following table provides supplemental consolidated balance sheet information related to leases as of September 30, 2019 (in thousands) : Classification September 30, Assets Operating lease right-of-use assets Other assets $ 75,852 Finance lease right-of-use assets Property and equipment, net 8,286 Total lease right-of-use assets $ 84,138 Liabilities Operating lease liabilities Other liabilities $ 94,154 Finance lease liabilities Debt, net 7,893 Total lease liabilities $ 102,047 |
Minimum Future Payments on Noncancelable Operating Leases | Minimum future payments on noncancelable operating leases as of September 30, 2019 are summarized as follows ( in thousands ): Finance Leases Operating Leases Total 2019 (1) $ 662 $ 3,812 $ 4,474 2020 2,646 17,233 19,879 2021 2,508 16,352 18,860 2022 2,281 13,288 15,569 2023 433 12,145 12,578 Thereafter — 54,566 54,566 Total undiscounted lease payments 8,530 117,396 125,926 Less: imputed interest (637 ) (23,242 ) (23,879 ) Lease obligations $ 7,893 $ 94,154 $ 102,047 ________________________ (1) 2019 amount consists of three months data from October 1, 2019 to December 31, 2019 . |
Operating Lease Payments as of Prior Year End | As previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and under the previous lease accounting standard, minimum future payments on noncancelable operating leases as of December 31, 2018 are summarized as follows ( in thousands ): Finance Leases Operating Leases Total 2019 $ 2,507 $ 16,538 $ 19,045 2020 1,983 13,850 15,833 2021 1,844 13,044 14,888 2022 1,630 11,737 13,367 2023 204 9,741 9,945 Thereafter — 37,997 37,997 Total minimal leases payments 8,168 $ 102,907 $ 111,075 Less: Interest (605 ) Present value of minimal lease payments $ 7,563 |
Capital Lease Payments as of Prior Year End | As previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and under the previous lease accounting standard, minimum future payments on noncancelable operating leases as of December 31, 2018 are summarized as follows ( in thousands ): Finance Leases Operating Leases Total 2019 $ 2,507 $ 16,538 $ 19,045 2020 1,983 13,850 15,833 2021 1,844 13,044 14,888 2022 1,630 11,737 13,367 2023 204 9,741 9,945 Thereafter — 37,997 37,997 Total minimal leases payments 8,168 $ 102,907 $ 111,075 Less: Interest (605 ) Present value of minimal lease payments $ 7,563 |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Geographical Areas of Operations | The Company has operations in the United States, Europe and other foreign countries. The following table presents the Company’s total revenues, adjusted by net allowances by geographic areas in which the Company operates (in thousands) : Three Months Ended Nine Months Ended 2019 2018 2019 2018 Revenues, adjusted by net allowances (1) : United States $ 211,193 $ 178,892 $ 599,953 $ 530,679 International Europe (2) 130,868 137,331 397,063 412,407 Other geographies 13,875 20,551 52,871 70,223 144,743 157,882 449,934 482,630 Total $ 355,936 $ 336,774 $ 1,049,887 $ 1,013,309 ________________________ (1) Revenues, adjusted by net allowances, are attributed to countries based on consumer location. Revenues primarily include portfolio revenues and fee-based income earned on accounts collected on behalf of others. (2) Based on the financial information that is used to produce the general-purpose financial statements, providing further geographic information is impracticable. |
Goodwill and Identifiable Int_2
Goodwill and Identifiable Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Activity in the Goodwill Balance | The Company’s goodwill is attributable to reporting units included in its portfolio purchasing and recovery segment. The following table summarizes the activity in the Company’s goodwill balance (in thousands): Total Balance, December 31, 2018 $ 868,126 Effect of foreign currency translation 14,758 Balance, March 31, 2019 882,884 Effect of foreign currency translation (17,357 ) Balance, June 30, 2019 865,527 Goodwill impairment (10,718 ) Effect of foreign currency translation (23,260 ) Balance, September 30, 2019 $ 831,549 |
Schedule of Acquired Intangible Assets | The Company’s acquired intangible assets are summarized as follows (in thousands) : As of September 30, 2019 As of December 31, 2018 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 63,464 $ (15,309 ) $ 48,155 $ 73,458 $ (17,025 ) $ 56,433 Developed technologies 5,842 (5,161 ) 681 7,461 (6,446 ) 1,015 Trade name and other 5,557 (4,676 ) 881 8,346 (5,213 ) 3,133 Total intangible assets $ 74,863 $ (25,146 ) $ 49,717 $ 89,265 $ (28,684 ) $ 60,581 |
Ownership, Description of Bus_3
Ownership, Description of Business, and Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use asset | $ 75,852 | |
Operating lease liability | $ 94,154 | |
Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use asset | $ 89,100 | |
Operating lease liability | $ 102,700 |
Earnings Per Share - Summary (D
Earnings Per Share - Summary (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings Per Share [Abstract] | ||||
Net income attributable to Encore Capital Group, Inc. stockholders | $ 38,869 | $ 20,725 | $ 124,784 | $ 68,850 |
Total weighted-average basic shares outstanding (shares) | 31,338 | 29,867 | 31,242 | 27,372 |
Dilutive effect of stock-based awards (shares) | 319 | 254 | 217 | 291 |
Total weighted-average dilutive shares outstanding (shares) | 31,657 | 30,121 | 31,459 | 27,663 |
Basic earnings per share (USD per share) | $ 1.24 | $ 0.69 | $ 3.99 | $ 2.52 |
Diluted earnings per share (USD per share) | $ 1.23 | $ 0.69 | $ 3.97 | $ 2.49 |
Antidilutive securities excluded from computation of earnings per share (shares) | 13 | 13 | 81 | 13 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments Required to be Carried at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Liabilities | ||
Contingent consideration | $ (61) | $ (6,198) |
Foreign currency exchange contracts | ||
Assets | ||
Foreign currency exchange contracts | 634 | |
Liabilities | ||
Foreign currency exchange contracts | (575) | (237) |
Interest rate cap contracts | ||
Assets | ||
Interest rate cap contracts | 166 | 2,023 |
Interest rate swap agreements | ||
Liabilities | ||
Interest rate swap agreements | (10,839) | (4,881) |
Level 1 | ||
Liabilities | ||
Contingent consideration | 0 | 0 |
Level 1 | Foreign currency exchange contracts | ||
Assets | ||
Foreign currency exchange contracts | 0 | |
Liabilities | ||
Foreign currency exchange contracts | 0 | 0 |
Level 1 | Interest rate cap contracts | ||
Assets | ||
Interest rate cap contracts | 0 | 0 |
Level 1 | Interest rate swap agreements | ||
Liabilities | ||
Interest rate swap agreements | 0 | 0 |
Level 2 | ||
Liabilities | ||
Contingent consideration | 0 | 0 |
Level 2 | Foreign currency exchange contracts | ||
Assets | ||
Foreign currency exchange contracts | 634 | |
Liabilities | ||
Foreign currency exchange contracts | (575) | (237) |
Level 2 | Interest rate cap contracts | ||
Assets | ||
Interest rate cap contracts | 166 | 2,023 |
Level 2 | Interest rate swap agreements | ||
Liabilities | ||
Interest rate swap agreements | (10,839) | (4,881) |
Level 3 | ||
Liabilities | ||
Contingent consideration | (61) | (6,198) |
Level 3 | Foreign currency exchange contracts | ||
Assets | ||
Foreign currency exchange contracts | 0 | |
Liabilities | ||
Foreign currency exchange contracts | 0 | 0 |
Level 3 | Interest rate cap contracts | ||
Assets | ||
Interest rate cap contracts | 0 | 0 |
Level 3 | Interest rate swap agreements | ||
Liabilities | ||
Interest rate swap agreements | $ 0 | $ 0 |
- Contingent Consideration Roll
- Contingent Consideration Roll Forward (Details) - Contingent Consideration - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at beginning of period | $ 6,198 | $ 10,612 |
Issuance of contingent consideration in connection with acquisition | 1,728 | |
Change in fair value of contingent consideration | (2,300) | (5,664) |
Payment of contingent consideration | (3,684) | (271) |
Effect of foreign currency translation | (153) | (207) |
Balance at end of period | $ 61 | $ 6,198 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | |||||
Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Assets held for sale | $ 40,890 | $ 26,664 | ||||
Investment in receivable portfolios, carrying value | $ 3,188,167 | $ 3,224,568 | 3,137,893 | $ 3,109,116 | $ 3,084,621 | $ 2,890,613 |
Fair value inputs, fluctuation in cost to collect and discount rate | 1.00% | |||||
Deferred court costs, net | $ 94,011 | 95,918 | ||||
Convertible senior notes, carrying value | 672,855 | 656,000 | ||||
Debt discount | 33,317 | 36,361 | ||||
Senior secured notes, carrying value | 325,000 | 325,000 | ||||
Senior Notes | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Convertible senior notes, carrying value | 639,538 | 619,639 | ||||
Debt discount | 33,317 | 36,361 | ||||
Senior Notes | Level 2 | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Fair value estimate of convertible senior notes incorporates quoted market prices | 680,800 | 553,700 | ||||
Secured Debt | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Senior secured notes, carrying value | 1,066,434 | 1,111,399 | ||||
United States | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Increase or decrease of the fair value (100 basis points) | 62,800 | |||||
Europe | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Increase or decrease of the fair value (100 basis points) | 74,600 | |||||
Fair Value | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Deferred court costs, net | 94,011 | 95,918 | ||||
Fair Value | Senior Notes | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Fair value estimate of convertible senior notes incorporates quoted market prices | 680,811 | 553,744 | ||||
Fair Value | Certain Loans Acquired in Transfer Not Accounted for as Debt Securities | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Fair value of investment receivable portfolios | 3,101,295 | 3,525,861 | ||||
Cabot Senior Secured Notes | Senior Notes | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Debt discount | 1,592 | 1,477 | ||||
Senior secured notes, carrying value | 1,066,434 | 1,111,399 | ||||
Cabot Senior Secured Notes | Secured Debt | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Debt discount | 1,600 | 1,500 | ||||
Senior secured notes, carrying value | 1,064,842 | 1,109,922 | ||||
Cabot Senior Secured Notes | Secured Debt | Level 2 | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Fair value of senior notes | 1,104,700 | 1,036,900 | ||||
Cabot Senior Secured Notes | Fair Value | Secured Debt | ||||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||
Fair value of senior notes | $ 1,104,718 | $ 1,036,905 |
Fair Value Measurements - Fin_2
Fair Value Measurements - Financial Instruments Not Required to be Carried at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Financial Assets | ||||||
Investment in receivable portfolios, carrying value | $ 3,188,167 | $ 3,224,568 | $ 3,137,893 | $ 3,109,116 | $ 3,084,621 | $ 2,890,613 |
Deferred court costs, net | 94,011 | 95,918 | ||||
Financial Liabilities | ||||||
Convertible senior notes, carrying value | 672,855 | 656,000 | ||||
Senior secured notes, carrying value | 325,000 | 325,000 | ||||
Senior Notes | ||||||
Financial Liabilities | ||||||
Convertible senior notes, carrying value | 639,538 | 619,639 | ||||
Secured Debt | ||||||
Financial Liabilities | ||||||
Senior secured notes, carrying value | 1,066,434 | 1,111,399 | ||||
Cabot Senior Secured Notes | Senior Notes | ||||||
Financial Liabilities | ||||||
Senior secured notes, carrying value | 1,066,434 | 1,111,399 | ||||
Cabot Senior Secured Notes | Secured Debt | ||||||
Financial Liabilities | ||||||
Senior secured notes, carrying value | 1,064,842 | 1,109,922 | ||||
Fair Value | ||||||
Financial Assets | ||||||
Deferred court costs, net | 94,011 | 95,918 | ||||
Fair Value | Senior Notes | ||||||
Financial Liabilities | ||||||
Convertible senior notes, fair value | 680,811 | 553,744 | ||||
Fair Value | Cabot Senior Secured Notes | Secured Debt | ||||||
Financial Liabilities | ||||||
Senior secured notes, fair value | 1,104,718 | 1,036,905 | ||||
Fair Value | Certain Loans Acquired in Transfer Not Accounted for as Debt Securities | ||||||
Financial Assets | ||||||
Investment in receivable portfolios, fair value | $ 3,101,295 | $ 3,525,861 |
Derivatives and Hedging Instr_3
Derivatives and Hedging Instruments - Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Foreign currency exchange contracts | ||
Derivative [Line Items] | ||
Foreign currency exchange contracts - assets | $ 634 | |
Foreign currency exchange contracts - liabilities | (575) | $ (237) |
Interest rate cap contracts | ||
Derivative [Line Items] | ||
Interest rate derivative - assets | 166 | 2,023 |
Interest rate swap agreements | ||
Derivative [Line Items] | ||
Interest rate derivative - liabilities | (10,839) | (4,881) |
Derivatives Designated as Hedging Instruments | Foreign currency exchange contracts | Other assets | ||
Derivative [Line Items] | ||
Foreign currency exchange contracts - assets | 634 | |
Derivatives Designated as Hedging Instruments | Foreign currency exchange contracts | Other liabilities | ||
Derivative [Line Items] | ||
Foreign currency exchange contracts - liabilities | (237) | |
Derivatives Designated as Hedging Instruments | Interest rate cap contracts | Other assets | ||
Derivative [Line Items] | ||
Interest rate derivative - assets | 166 | 2,023 |
Derivatives Designated as Hedging Instruments | Interest rate swap agreements | Other liabilities | ||
Derivative [Line Items] | ||
Interest rate derivative - liabilities | (10,839) | (4,881) |
Not Designated as Hedging Instrument | Foreign currency exchange contracts | Other liabilities | ||
Derivative [Line Items] | ||
Foreign currency exchange contracts - liabilities | $ (575) | $ 0 |
Derivatives and Hedging Instr_4
Derivatives and Hedging Instruments - Narrative (Details) £ in Millions | 9 Months Ended | ||
Sep. 30, 2019USD ($)instrument | Sep. 30, 2018USD ($) | Sep. 30, 2019GBP (£)instrument | |
Forward contracts | |||
Derivative [Line Items] | |||
Net derivative gain (loss) included in OCI expected to be reclassified into earnings | $ 600,000 | ||
Gains or losses were reclassified from OCI into earnings | 0 | $ 0 | |
Forward contracts | Derivatives Designated as Hedging Instruments | |||
Derivative [Line Items] | |||
Derivative instrument, notional amount | 21,300,000 | ||
Interest rate swap agreements | Cash Flow Hedging | |||
Derivative [Line Items] | |||
Derivative instrument, notional amount | $ 335,500,000 | ||
Number of interest rate derivative held | instrument | 4 | 4 | |
Interest rate cap contracts | |||
Derivative [Line Items] | |||
Derivative instrument, notional amount | $ 430,200,000 | £ 350 | |
Interest rate cap contracts | Cash Flow Hedging | |||
Derivative [Line Items] | |||
Number of interest rate derivative held | instrument | 2 | 2 | |
Minimum | Not Designated as Hedging Instrument | Cash Flow Hedging | |||
Derivative [Line Items] | |||
Term of contract (years) | 1 month | ||
Maximum | Not Designated as Hedging Instrument | Cash Flow Hedging | |||
Derivative [Line Items] | |||
Term of contract (years) | 3 months |
Derivatives and Hedging Instr_5
Derivatives and Hedging Instruments - Effects of Derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Derivative [Line Items] | ||||
Gain (Loss) Recognized in OCI | $ (630) | $ (868) | $ (5,371) | $ (2,483) |
Foreign currency exchange contracts | Cash Flow Hedging | Other expense | ||||
Derivative [Line Items] | ||||
Amount of Gain (Loss) Recognized in Income on Derivative | (436) | (2,281) | (263) | (9,221) |
Interest rate cap contracts | Cash Flow Hedging | Interest expense | ||||
Derivative [Line Items] | ||||
Amount of Gain (Loss) Recognized in Income on Derivative | 0 | 289 | 0 | (1,427) |
Derivatives Designated as Hedging Instruments | Foreign currency exchange contracts | Cash Flow Hedging | Salaries and employee benefits | ||||
Derivative [Line Items] | ||||
Gain (Loss) Recognized in OCI | (323) | (916) | 1,068 | (1,990) |
Gain (Loss) Reclassified from OCI into Income | 198 | 95 | 183 | 1,078 |
Derivatives Designated as Hedging Instruments | Foreign currency exchange contracts | Cash Flow Hedging | General and administrative expenses | ||||
Derivative [Line Items] | ||||
Gain (Loss) Recognized in OCI | (48) | (130) | (57) | (206) |
Gain (Loss) Reclassified from OCI into Income | 27 | 11 | (44) | 46 |
Derivatives Designated as Hedging Instruments | Interest rate swap agreements | Cash Flow Hedging | Interest expense | ||||
Derivative [Line Items] | ||||
Gain (Loss) Recognized in OCI | (800) | 3 | (7,182) | (9) |
Gain (Loss) Reclassified from OCI into Income | (742) | 4 | (1,606) | 29 |
Derivatives Designated as Hedging Instruments | Interest rate cap contracts | Cash Flow Hedging | Interest expense | ||||
Derivative [Line Items] | ||||
Gain (Loss) Recognized in OCI | (145) | 0 | (1,857) | 0 |
Gain (Loss) Reclassified from OCI into Income | $ 0 | $ 0 | $ 0 | $ 0 |
Investment in Receivable Port_3
Investment in Receivable Portfolios, Net - Accretable Yield and an Estimate of Zero Basis Future Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Investment in Receivables Portfolio [Roll Forward] | ||||||||
Balance at beginning of period | $ 4,125,923 | $ 4,064,092 | $ 4,026,206 | $ 4,131,557 | $ 4,052,799 | $ 4,064,701 | $ 4,026,206 | $ 4,064,701 |
Revenue from receivable portfolios | (316,217) | (312,495) | (311,158) | (295,357) | (292,662) | (281,009) | (939,870) | (869,028) |
Allowance (reversals) on receivable portfolios, net | (8,515) | (2,063) | (1,367) | (4,029) | (17,632) | (9,811) | (11,945) | (31,472) |
Additions (reductions) on existing portfolios, net | 93,527 | 145,359 | 38,313 | 37,722 | 142,091 | (64,474) | ||
Additions for current purchases | 288,547 | 277,556 | 285,637 | 262,751 | 345,006 | 285,172 | ||
Effect of foreign currency translation | (73,810) | (46,526) | 26,461 | (20,619) | (98,045) | 58,220 | ||
Balance at end of period | 4,109,455 | 4,125,923 | 4,064,092 | 4,112,025 | 4,131,557 | 4,052,799 | 4,109,455 | 4,112,025 |
Accretable Yield | ||||||||
Investment in Receivables Portfolio [Roll Forward] | ||||||||
Balance at beginning of period | 3,898,040 | 3,839,209 | 3,773,171 | 3,864,686 | 3,754,970 | 3,695,069 | 3,773,171 | 3,695,069 |
Revenue from receivable portfolios | (300,047) | (285,562) | (285,255) | (263,109) | (258,698) | (249,821) | ||
Allowance (reversals) on receivable portfolios, net | (6,471) | 255 | 900 | (1,196) | (15,411) | (8,082) | ||
Additions (reductions) on existing portfolios, net | 153,807 | 113,074 | 38,512 | 23,241 | 136,267 | (24,945) | ||
Additions for current purchases | 288,547 | 277,556 | 285,637 | 262,751 | 345,006 | 285,172 | ||
Effect of foreign currency translation | (72,664) | (46,492) | 26,244 | (20,483) | (97,448) | 57,577 | ||
Balance at end of period | 3,961,212 | 3,898,040 | 3,839,209 | 3,865,890 | 3,864,686 | 3,754,970 | 3,961,212 | 3,865,890 |
Estimate of Zero Basis Cash Flows | ||||||||
Investment in Receivables Portfolio [Roll Forward] | ||||||||
Balance at beginning of period | 227,883 | 224,883 | 253,035 | 266,871 | 297,829 | 369,632 | 253,035 | 369,632 |
Revenue from receivable portfolios | (16,170) | (26,933) | (25,903) | (32,248) | (33,964) | (31,188) | (69,000) | (97,400) |
Allowance (reversals) on receivable portfolios, net | (2,044) | (2,318) | (2,267) | (2,833) | (2,221) | (1,729) | ||
Additions (reductions) on existing portfolios, net | (60,280) | 32,285 | (199) | 14,481 | 5,824 | (39,529) | ||
Additions for current purchases | 0 | 0 | 0 | 0 | 0 | 0 | ||
Effect of foreign currency translation | (1,146) | (34) | 217 | (136) | (597) | 643 | ||
Balance at end of period | $ 148,243 | $ 227,883 | $ 224,883 | $ 246,135 | $ 266,871 | $ 297,829 | $ 148,243 | $ 246,135 |
Investment in Receivable Port_4
Investment in Receivable Portfolios, Net - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items] | ||||||||
Face value of receivable portfolios | $ 5,300,000,000 | $ 1,600,000,000 | $ 9,400,000,000 | $ 6,200,000,000 | ||||
Purchases of receivable portfolios | $ 259,910,000 | $ 248,691,000 | $ 764,942,000 | $ 885,033,000 | ||||
Face value on purchase cost (as a percent) | 4.90% | 15.90% | 8.20% | 14.20% | ||||
Estimated future collections at acquisition for receivable portfolios | $ 548,500,000 | $ 512,300,000 | $ 1,616,700,000 | $ 1,772,900,000 | ||||
Revenue from receivable portfolios | 316,217,000 | $ 312,495,000 | $ 311,158,000 | 295,357,000 | $ 292,662,000 | $ 281,009,000 | 939,870,000 | 869,028,000 |
Allowance reversal on receivable portfolios, net | 8,515,000 | 2,063,000 | 1,367,000 | 4,029,000 | 17,632,000 | 9,811,000 | 11,945,000 | 31,472,000 |
Estimate of Zero Basis Cash Flows | ||||||||
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items] | ||||||||
Revenue from receivable portfolios | 16,170,000 | 26,933,000 | 25,903,000 | 32,248,000 | 33,964,000 | 31,188,000 | 69,000,000 | 97,400,000 |
Allowance reversal on receivable portfolios, net | 2,044,000 | $ 2,318,000 | $ 2,267,000 | 2,833,000 | $ 2,221,000 | $ 1,729,000 | ||
Zero Basis Portfolios | ||||||||
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items] | ||||||||
Purchases of receivable portfolios | 0 | 0 | 0 | 0 | ||||
Revenue from receivable portfolios | 16,170,000 | 32,248,000 | 69,006,000 | 97,400,000 | ||||
Allowance reversal on receivable portfolios, net | $ 2,044,000 | $ 2,833,000 | $ 6,629,000 | $ 6,783,000 |
Investment in Receivable Port_5
Investment in Receivable Portfolios, Net - Change in the Balance of the Investment in Receivable Portfolios (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Investment in Receivables Portfolio [Roll Forward] | ||||||||
Balance, beginning of period | $ 3,224,568 | $ 3,137,893 | $ 3,084,621 | $ 2,890,613 | $ 3,137,893 | $ 2,890,613 | ||
Purchases of receivable portfolios | 259,910 | 248,691 | 764,942 | 885,033 | ||||
Deconsolidation of receivable portfolios | (51,935) | (51,935) | ||||||
Transfers to assets held for sale | (1,765) | (5,364) | (7,681) | (10,731) | ||||
Collections on receivable portfolios | (499,395) | (498,843) | (1,528,129) | (1,484,038) | ||||
Put-Backs and Recalls | (2,746) | (2,074) | (7,841) | (14,402) | ||||
Foreign currency adjustments | (65,202) | (17,301) | (70,897) | (57,859) | ||||
Revenue recognized | 316,217 | $ 312,495 | 311,158 | 295,357 | $ 292,662 | 281,009 | 939,870 | 869,028 |
Portfolio allowance reversals, net | 8,515 | 2,063 | 1,367 | 4,029 | 17,632 | 9,811 | 11,945 | 31,472 |
Transfer of portfolios | 0 | |||||||
Reclassification adjustments | 0 | |||||||
Balance, end of period | $ 3,188,167 | 3,224,568 | $ 3,109,116 | 3,084,621 | $ 3,188,167 | $ 3,109,116 | ||
Revenue as a percentage of collections | 63.30% | 59.20% | 61.50% | 58.60% | ||||
Accrual Basis Portfolios | ||||||||
Investment in Receivables Portfolio [Roll Forward] | ||||||||
Balance, beginning of period | $ 3,139,937 | 3,129,502 | $ 3,074,292 | 2,879,170 | $ 3,129,502 | $ 2,879,170 | ||
Purchases of receivable portfolios | 259,910 | 248,691 | 764,942 | 885,033 | ||||
Deconsolidation of receivable portfolios | (51,935) | (51,935) | ||||||
Transfers to assets held for sale | (657) | (4,253) | (4,615) | (9,358) | ||||
Collections on receivable portfolios | (480,089) | (463,474) | (1,449,705) | (1,379,095) | ||||
Put-Backs and Recalls | (2,734) | (2,056) | (7,820) | (14,231) | ||||
Foreign currency adjustments | (62,595) | (17,208) | (69,214) | (57,539) | ||||
Revenue recognized | 300,047 | 263,109 | 870,864 | 771,628 | ||||
Portfolio allowance reversals, net | 6,471 | 1,196 | 5,316 | 24,689 | ||||
Transfer of portfolios | (78,980) | |||||||
Reclassification adjustments | 0 | |||||||
Balance, end of period | $ 3,108,355 | 3,139,937 | $ 3,100,297 | 3,074,292 | $ 3,108,355 | $ 3,100,297 | ||
Revenue as a percentage of collections | 62.50% | 56.80% | 60.10% | 56.00% | ||||
Cost Recovery Portfolios | ||||||||
Investment in Receivables Portfolio [Roll Forward] | ||||||||
Balance, beginning of period | $ 84,631 | 8,391 | $ 10,329 | 11,443 | $ 8,391 | $ 11,443 | ||
Purchases of receivable portfolios | 0 | 0 | 0 | 0 | ||||
Deconsolidation of receivable portfolios | 0 | 0 | ||||||
Transfers to assets held for sale | (1,108) | (1,111) | (3,066) | (1,373) | ||||
Collections on receivable portfolios | (1,125) | (306) | (2,831) | (1,729) | ||||
Put-Backs and Recalls | 0 | 0 | 0 | 0 | ||||
Foreign currency adjustments | (2,586) | (93) | (1,662) | (320) | ||||
Revenue recognized | 0 | 0 | 0 | 0 | ||||
Portfolio allowance reversals, net | 0 | 0 | 0 | 0 | ||||
Transfer of portfolios | 78,980 | |||||||
Reclassification adjustments | 798 | |||||||
Balance, end of period | $ 79,812 | 84,631 | $ 8,819 | 10,329 | $ 79,812 | $ 8,819 | ||
Revenue as a percentage of collections | 0.00% | 0.00% | 0.00% | 0.00% | ||||
Zero Basis Portfolios | ||||||||
Investment in Receivables Portfolio [Roll Forward] | ||||||||
Balance, beginning of period | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | ||
Purchases of receivable portfolios | 0 | 0 | 0 | 0 | ||||
Deconsolidation of receivable portfolios | 0 | 0 | ||||||
Transfers to assets held for sale | 0 | 0 | 0 | 0 | ||||
Collections on receivable portfolios | (18,181) | (35,063) | (75,593) | (103,214) | ||||
Put-Backs and Recalls | (12) | (18) | (21) | (171) | ||||
Foreign currency adjustments | (21) | 0 | (21) | 0 | ||||
Revenue recognized | 16,170 | 32,248 | 69,006 | 97,400 | ||||
Portfolio allowance reversals, net | 2,044 | 2,833 | 6,629 | 6,783 | ||||
Transfer of portfolios | 0 | |||||||
Reclassification adjustments | (798) | |||||||
Balance, end of period | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | ||
Revenue as a percentage of collections | 88.90% | 92.00% | 91.30% | 94.40% |
- Change in the Valuation Allow
- Change in the Valuation Allowance for Investment in Receivable Portfolios (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Balance at beginning of period | $ 57,204 | $ 75,129 | $ 60,631 | $ 102,576 |
Provision for portfolio allowances | 1,120 | 6,156 | 4,835 | 8,816 |
Reversal of prior allowances | (9,635) | (10,185) | (16,780) | (40,288) |
Baycorp Transaction | (1,036) | 0 | (1,036) | 0 |
Effect of foreign currency translation | (554) | (365) | (551) | (369) |
Balance at end of period | $ 47,099 | $ 70,735 | $ 47,099 | $ 70,735 |
Deferred Court Costs, Net - Sum
Deferred Court Costs, Net - Summary (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Court costs advanced | $ 867,032 | $ 828,713 | ||||
Court costs recovered | (359,635) | (336,335) | ||||
Court costs reserve | (413,386) | $ (408,312) | (396,460) | $ (389,627) | $ (381,125) | $ (364,015) |
Deferred court costs | $ 94,011 | $ 95,918 |
Deferred Court Costs, Net - Cou
Deferred Court Costs, Net - Court Cost Reserve (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets [Roll Forward] | ||||
Balance at beginning of period | $ (408,312) | $ (381,125) | $ (396,460) | $ (364,015) |
Provision for court costs | (20,866) | (23,065) | (60,214) | (67,293) |
Charge-offs | 13,679 | 13,603 | 40,934 | 38,990 |
Effect of foreign currency translation | 2,113 | 960 | 2,354 | 2,691 |
Balance at end of period | $ (413,386) | $ (389,627) | $ (413,386) | $ (389,627) |
Other Assets - Summary (Details
Other Assets - Summary (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Operating lease right-of-use asset | $ 75,852 | |
Identifiable intangible assets, net | 49,717 | $ 60,581 |
Assets held for sale | 40,890 | 26,664 |
Service fee receivables | 25,041 | 28,035 |
Deferred tax assets | 21,378 | 24,910 |
Prepaid expenses | 15,352 | 24,989 |
Other financial receivables | 8,090 | 47,363 |
Other | 54,698 | 44,460 |
Total | $ 291,018 | $ 257,002 |
Borrowings - Consolidated Debt
Borrowings - Consolidated Debt and Capital Lease Obligations (Details) $ in Thousands, £ in Millions | Sep. 30, 2019USD ($) | Sep. 30, 2019GBP (£) | Dec. 31, 2018USD ($) |
Debt Instrument [Line Items] | |||
Senior secured notes | $ 325,000 | $ 325,000 | |
Encore convertible notes and exchangeable notes | 672,855 | 656,000 | |
Less: debt discount | (33,317) | (36,361) | |
Finance lease liabilities | 7,893 | ||
Finance lease liabilities | 7,563 | ||
Debt and capital lease obligations, gross | 3,469,747 | 3,537,942 | |
Less: debt issuance costs, net of amortization | (40,404) | (47,309) | |
Total | 3,429,343 | 3,490,633 | |
Other | |||
Debt Instrument [Line Items] | |||
Other | 52,305 | 64,566 | |
Cabot securitisation senior facilities | |||
Debt Instrument [Line Items] | |||
Revolving credit facility | 430,200 | £ 350 | 445,837 |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Revolving credit facility | 469,000 | 429,000 | |
Cabot credit facility | |||
Debt Instrument [Line Items] | |||
Revolving credit facility | 305,454 | £ 248.5 | 298,005 |
Other Credit Facility | |||
Debt Instrument [Line Items] | |||
Revolving credit facility | 0 | 43,354 | |
Term Loan | |||
Debt Instrument [Line Items] | |||
Encore term loan facility | 175,498 | 195,056 | |
Senior Notes | |||
Debt Instrument [Line Items] | |||
Encore convertible notes and exchangeable notes | 639,538 | 619,639 | |
Less: debt discount | (33,317) | (36,361) | |
Senior Notes | Cabot senior secured notes | |||
Debt Instrument [Line Items] | |||
Senior secured notes | 1,066,434 | 1,111,399 | |
Less: debt discount | $ (1,592) | $ (1,477) |
Borrowings - Encore Revolving C
Borrowings - Encore Revolving Credit Facility and Term Loan Facility - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | |||||
Percentage to be added to base rate for alternate base rate (as a percent) | 0.50% | ||||
Percentage to be added to adjusted base rate for alternate base rate (as a percent) | 1.00% | ||||
Borrowing base as percentage of eligible estimated collection range end (as a percent) | 35.00% | ||||
Eligible estimated remaining collections for consumer receivables (as a percent) | 55.00% | ||||
Maximum cash flow leverage ratio | 300.00% | ||||
Maximum cash flow secured leverage ratio | 200.00% | ||||
Minimum interest coverage ratio | 175.00% | ||||
Maximum senior secured notes | $ 350,000,000 | $ 350,000,000 | |||
Allowance of additional unsecured indebtedness (not to exceed) | 1,100,000,000 | 1,100,000,000 | |||
Company's repurchases, common stock (up to) | $ 150,000,000 | ||||
Maximum acquisitions excluded (as a percent) | 50.00% | ||||
Acquisition limit | 225,000,000 | $ 225,000,000 | |||
Credit facility, provision, investments not to exceed maximum percentage of consolidated net worth (as a percent) | 200.00% | ||||
Basket allowed for investments under laws of Canada | 50,000,000 | $ 50,000,000 | |||
Minimum | |||||
Debt Instrument [Line Items] | |||||
Maximum cash flow leverage ratio | 125.00% | ||||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Term loan facility | 175,498,000 | $ 175,498,000 | $ 195,056,000 | ||
Term Loan One | |||||
Debt Instrument [Line Items] | |||||
Term loan facility | 194,600,000 | 194,600,000 | |||
Principal amortization, 2019 | 15,300,000 | 15,300,000 | |||
Principal amortization, 2020 | 15,300,000 | 15,300,000 | |||
Junior Lien Portion | |||||
Debt Instrument [Line Items] | |||||
Allowance of additional unsecured indebtedness (not to exceed) | 400,000,000 | 400,000,000 | |||
Revolving Credit Facility One | |||||
Debt Instrument [Line Items] | |||||
Revolving credit facility | 884,200,000 | 884,200,000 | |||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Revolving credit facility | $ 469,000,000 | $ 469,000,000 | $ 429,000,000 | ||
Weighted average interest rate (as a percent) | 5.25% | 5.09% | 5.40% | 4.90% | |
Revolving Credit Facility | Restated Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Current borrowing capacity | $ 224,600,000 | $ 224,600,000 | |||
LIBOR | Term Loan One | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (as a percent) | 2.50% | ||||
LIBOR | Term Loan One | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (as a percent) | 3.00% | ||||
LIBOR | Revolving Credit Facility | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (as a percent) | 2.50% | ||||
LIBOR | Revolving Credit Facility | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (as a percent) | 3.00% | ||||
Base Rate | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (as a percent) | 1.50% | ||||
Base Rate | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (as a percent) | 2.00% | ||||
Base Rate | Term Loan One | Minimum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (as a percent) | 1.50% | ||||
Base Rate | Term Loan One | Maximum | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (as a percent) | 2.00% |
Borrowings - Encore Senior Secu
Borrowings - Encore Senior Secured Notes - Narrative (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2019 | Dec. 31, 2018 | Aug. 31, 2017 | |
Debt Instrument [Line Items] | |||
Debt issued | $ 672,855,000 | $ 656,000,000 | |
Senior secured notes | $ 325,000,000 | $ 325,000,000 | |
Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Discount rate spread (as a percent) | 0.50% | ||
2017 Senior Secured Notes | Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Debt issued | $ 325,000,000 | ||
Stated interest rate (as a percent) | 5.625% | ||
Senior secured notes, periodic principal repayment | $ 16,300,000 |
Borrowings - Encore Convertible
Borrowings - Encore Convertible Notes and Exchangeable Notes (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2019USD ($)$ / shares | Sep. 30, 2019USD ($)$ / shares | Sep. 30, 2019USD ($)$ / shares | Dec. 31, 2018USD ($) | Jul. 31, 2018USD ($) | Mar. 31, 2017USD ($) | Mar. 31, 2014USD ($) | Jul. 31, 2013USD ($) | |
Debt Instrument [Line Items] | ||||||||
Debt issued | $ 672,855,000 | $ 672,855,000 | $ 672,855,000 | $ 656,000,000 | ||||
Convertible Notes | 2020 Convertible Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt issued | $ 89,355,000 | $ 89,355,000 | $ 89,355,000 | 172,500,000 | ||||
Stated interest rate (as a percent) | 3.00% | 3.00% | 3.00% | 3.00% | ||||
Extinguishment of debt | $ 83,100,000 | |||||||
Payment for Debt Extinguishment or Debt Prepayment Cost | $ 85,000,000 | |||||||
Gain (Loss) on Extinguishment of Debt | $ 1,700,000 | $ 1,700,000 | ||||||
Write off of Deferred Debt Issuance Cost | $ 400,000 | $ 400,000 | ||||||
Initial conversion price (USD per share) | $ / shares | $ 45.72 | $ 45.72 | $ 45.72 | |||||
Closing stock price at date of issuance (in dollars per share) | $ / shares | $ 33.35 | $ 33.35 | $ 33.35 | |||||
Conversion rate (shares per $1,000 principal amount) | 0.0219 | |||||||
Convertible Notes | 2021 Convertible Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt issued | $ 161,000,000 | $ 161,000,000 | $ 161,000,000 | 161,000,000 | $ 161,000,000 | |||
Stated interest rate (as a percent) | 2.875% | 2.875% | 2.875% | 2.875% | ||||
Initial conversion price (USD per share) | $ / shares | $ 59.39 | $ 59.39 | $ 59.39 | |||||
Closing stock price at date of issuance (in dollars per share) | $ / shares | $ 47.51 | $ 47.51 | $ 47.51 | |||||
Conversion rate (shares per $1,000 principal amount) | 0.0168 | |||||||
Convertible Notes | 2022 Convertible Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt issued | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 | 150,000,000 | $ 150,000,000 | |||
Stated interest rate (as a percent) | 3.25% | 3.25% | 3.25% | 3.25% | ||||
Initial conversion price (USD per share) | $ / shares | $ 45.57 | $ 45.57 | $ 45.57 | |||||
Closing stock price at date of issuance (in dollars per share) | $ / shares | $ 35.05 | $ 35.05 | $ 35.05 | |||||
Conversion rate (shares per $1,000 principal amount) | 0.0219 | |||||||
Convertible Notes | 2023 Exchangeable Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated interest rate (as a percent) | 4.50% | 4.50% | 4.50% | |||||
Initial conversion price (USD per share) | $ / shares | $ 44.62 | $ 44.62 | $ 44.62 | |||||
Closing stock price at date of issuance (in dollars per share) | $ / shares | $ 36.45 | $ 36.45 | $ 36.45 | |||||
Conversion rate (shares per $1,000 principal amount) | 0.0224 | |||||||
Convertible Notes | 2025 Convertible Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt issued | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | 0 | ||||
Stated interest rate (as a percent) | 3.25% | 3.25% | 3.25% | |||||
Initial conversion price (USD per share) | $ / shares | $ 40 | $ 40 | $ 40 | |||||
Closing stock price at date of issuance (in dollars per share) | $ / shares | $ 32 | $ 32 | $ 32 | |||||
Conversion rate (shares per $1,000 principal amount) | 0.0250 | |||||||
Call Option | 2020 Convertible Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from convertible hedge instruments | $ 1,800,000 | |||||||
Term Loan Facility | 2023 Exchangeable Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt issued | $ 172,500,000 | $ 172,500,000 | $ 172,500,000 | $ 172,500,000 | ||||
Stated interest rate (as a percent) | 4.50% | 4.50% | 4.50% | |||||
Encore Finance | Convertible Notes | 2020 Convertible Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt issued | $ 172,500,000 | |||||||
Encore Finance | Convertible Notes | 2025 Convertible Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt issued | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | |||||
Encore Finance | Term Loan Facility | 2023 Exchangeable Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt issued | $ 172,500,000 | |||||||
Stated interest rate (as a percent) | 4.50% | |||||||
Subsidiaries | Encore Finance | ||||||||
Debt Instrument [Line Items] | ||||||||
Ownership interest (as a percent) | 100.00% |
Borrowings - Debt and Equity Co
Borrowings - Debt and Equity Components and Issuance Costs of Convertible Notes (Details) - USD ($) | 1 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | Mar. 31, 2017 | Mar. 31, 2014 | Jul. 31, 2013 | |
Debt Instrument [Line Items] | ||||||
Equity component | $ 83,127,000 | $ 83,127,000 | $ 76,351,000 | |||
Debt issued | 672,855,000 | 672,855,000 | 656,000,000 | |||
2020 Convertible Notes | Convertible Notes | ||||||
Debt Instrument [Line Items] | ||||||
Debt component | 140,247,000 | 140,247,000 | ||||
Equity component | $ 32,253,000 | 32,253,000 | ||||
Equity issuance cost | $ 1,106,000 | |||||
Stated interest rate (as a percent) | 3.00% | 3.00% | 3.00% | |||
Effective interest rate (as a percent) | 6.35% | 6.35% | ||||
Extinguishment of debt | $ 83,100,000 | |||||
Debt issued | 89,355,000 | $ 89,355,000 | 172,500,000 | |||
2021 Convertible Notes | Convertible Notes | ||||||
Debt Instrument [Line Items] | ||||||
Debt component | 143,645,000 | 143,645,000 | ||||
Equity component | $ 17,355,000 | 17,355,000 | ||||
Equity issuance cost | $ 581,000 | |||||
Stated interest rate (as a percent) | 2.875% | 2.875% | 2.875% | |||
Effective interest rate (as a percent) | 4.70% | 4.70% | ||||
Debt issued | $ 161,000,000 | $ 161,000,000 | 161,000,000 | $ 161,000,000 | ||
2022 Convertible Notes | Convertible Notes | ||||||
Debt Instrument [Line Items] | ||||||
Debt component | 137,266,000 | 137,266,000 | ||||
Equity component | $ 12,734,000 | 12,734,000 | ||||
Equity issuance cost | $ 398,000 | |||||
Stated interest rate (as a percent) | 3.25% | 3.25% | 3.25% | |||
Effective interest rate (as a percent) | 5.20% | 5.20% | ||||
Debt issued | $ 150,000,000 | $ 150,000,000 | 150,000,000 | $ 150,000,000 | ||
2023 Exchangeable Notes | Convertible Notes | ||||||
Debt Instrument [Line Items] | ||||||
Debt component | 157,971,000 | 157,971,000 | ||||
Equity component | $ 14,009,000 | 14,009,000 | ||||
Equity issuance cost | $ 0 | |||||
Stated interest rate (as a percent) | 4.50% | 4.50% | ||||
Effective interest rate (as a percent) | 6.50% | 6.50% | ||||
2025 Convertible Notes | Convertible Notes | ||||||
Debt Instrument [Line Items] | ||||||
Debt component | $ 91,024,000 | $ 91,024,000 | ||||
Equity component | $ 8,976,000 | 8,976,000 | ||||
Equity issuance cost | $ 224,000 | |||||
Stated interest rate (as a percent) | 3.25% | 3.25% | ||||
Effective interest rate (as a percent) | 5.00% | 5.00% | ||||
Debt issued | $ 100,000,000 | $ 100,000,000 | $ 0 |
Borrowings - Balances of Liabil
Borrowings - Balances of Liability and Equity Components (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Liability component—principal amount | $ 672,855 | $ 656,000 |
Unamortized debt discount | (33,317) | (36,361) |
Liability component—net carrying amount | 639,538 | 619,639 |
Equity component | $ 83,127 | $ 76,351 |
Borrowings - Interest Expense (
Borrowings - Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Convertible Notes | ||||
Debt Instrument [Line Items] | ||||
Interest expense—stated coupon rate | $ 6,754 | $ 3,676 | $ 17,662 | $ 10,969 |
Interest expense—amortization of debt discount | 3,405 | 2,518 | 9,770 | 7,410 |
Total interest expense | 10,159 | 6,194 | 27,432 | 18,379 |
Cabot senior secured notes | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Total interest expense | 19,956 | 23,095 | 62,382 | 68,829 |
Interest expense | Cabot senior secured notes | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Interest expense—stated coupon rate | 18,434 | 21,411 | 57,291 | 64,250 |
Interest expense—amortization of debt discount | $ 1,522 | $ 1,684 | $ 5,091 | $ 4,579 |
Borrowings - Conversion and EPS
Borrowings - Conversion and EPS Impact of Convertible Notes Hedging Transactions (Details) - Convertible Notes $ / shares in Units, $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($)$ / shares | |
2020 Convertible Notes | |
Debt Instrument [Line Items] | |
Cost of the hedge transaction(s) | $ | $ 18,113 |
Conversion price (USD per share) | $ 45.72 |
2020 Convertible Notes | Hedging of Convertible Debt Instrument | |
Debt Instrument [Line Items] | |
Conversion price (USD per share) | $ 61.55 |
2021 Convertible Notes | |
Debt Instrument [Line Items] | |
Cost of the hedge transaction(s) | $ | $ 19,545 |
Conversion price (USD per share) | $ 59.39 |
2021 Convertible Notes | Hedging of Convertible Debt Instrument | |
Debt Instrument [Line Items] | |
Conversion price (USD per share) | $ 83.14 |
2023 Exchangeable Notes | |
Debt Instrument [Line Items] | |
Cost of the hedge transaction(s) | $ | $ 17,785 |
Conversion price (USD per share) | $ 44.62 |
2023 Exchangeable Notes | Hedging of Convertible Debt Instrument | |
Debt Instrument [Line Items] | |
Conversion price (USD per share) | $ 62.48 |
Borrowings - Cabot Senior Secur
Borrowings - Cabot Senior Secured Notes - Table and Narrative (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||||||
Jun. 30, 2019USD ($) | Jun. 30, 2019EUR (€) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019EUR (€) | Jun. 30, 2019EUR (€) | Dec. 31, 2018USD ($) | |
Debt Instrument [Line Items] | |||||||||||
Senior secured notes | $ 325,000 | $ 325,000 | $ 325,000 | ||||||||
Debt issued | 672,855 | 672,855 | 656,000 | ||||||||
Debt extinguishment fees | $ 9,000 | $ 9,000 | |||||||||
Secured Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Senior secured notes | 1,066,434 | 1,066,434 | 1,111,399 | ||||||||
Floating rate senior secured notes due 2024 | Secured Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Senior secured notes | 435,960 | 435,960 | 0 | ||||||||
Floating rate senior secured notes due 2024 | Senior Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Stated interest rate (as a percent) | 6.375% | 6.375% | 6.375% | 6.375% | |||||||
Debt issued | $ 452,000 | $ 452,000 | $ 452,000 | € 400,000,000 | |||||||
Floating rate senior secured notes due 2021 | Secured Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Senior secured notes | 0 | 0 | 356,067 | ||||||||
Extinguishment of debt | 350,300 | € 310,000,000 | |||||||||
Senior secured notes due 2023 | Secured Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Senior secured notes | $ 630,474 | $ 630,474 | 653,355 | ||||||||
Stated interest rate (as a percent) | 7.50% | 7.50% | 7.50% | ||||||||
Debt issued | $ 651,300 | $ 651,300 | € 512,900,000 | ||||||||
Senior secured notes due 2023 | Senior Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Stated interest rate (as a percent) | 7.50% | 7.50% | 7.50% | ||||||||
Senior secured notes due 2021 | Secured Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Senior secured notes | $ 0 | $ 0 | 101,977 | ||||||||
Stated interest rate (as a percent) | 6.50% | 6.50% | 6.50% | ||||||||
Extinguishment of debt | $ 101,600 | € 80,000,000 | |||||||||
Cabot Senior Secured Notes | Secured Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Senior secured notes | $ 1,064,842 | $ 1,064,842 | 1,109,922 | ||||||||
Cabot Senior Secured Notes | Senior Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Senior secured notes | 1,066,434 | 1,066,434 | $ 1,111,399 | ||||||||
Total interest expense | $ 19,956 | $ 23,095 | $ 62,382 | $ 68,829 | |||||||
Euro Interbank Offered Rate (EURIBOR) | Floating rate senior secured notes due 2024 | Secured Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate (as a percent) | 6.375% | ||||||||||
Euro Interbank Offered Rate (EURIBOR) | Floating rate senior secured notes due 2021 | Secured Debt | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Basis spread on variable rate (as a percent) | 5.875% |
Borrowings - Cabot Senior Revol
Borrowings - Cabot Senior Revolving Credit Facility - Narrative (Details) - Cabot credit facility $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019USD ($) | Sep. 30, 2018 | Sep. 30, 2019USD ($) | Sep. 30, 2018 | Sep. 30, 2019GBP (£) | Dec. 31, 2018USD ($) | |
Debt Instrument [Line Items] | ||||||
Revolving credit facility | £ 385,000,000 | |||||
Maximum loan to value ratio | 75.00% | |||||
Credit facility, outstanding amount | $ 305,454 | $ 305,454 | 248,500,000 | $ 298,005 | ||
Weighted average interest rate (as a percent) | 3.71% | 3.86% | 3.47% | 3.78% | ||
Remaining borrowing capacity | $ 167,800 | $ 167,800 | 136,500,000 | |||
Secured Debt | Cabot Credit Agreement, Tranche with Expiration in September 2022 | ||||||
Debt Instrument [Line Items] | ||||||
Revolving credit facility | 375,000,000 | |||||
Secured Debt | Cabot Credit Agreement, Tranche with Expiration in September 2022 | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percent) | 3.00% | |||||
Secured Debt | Tranche with Expiration in September 2021 | ||||||
Debt Instrument [Line Items] | ||||||
Revolving credit facility | £ 10,000,000 | |||||
Secured Debt | Tranche with Expiration in September 2021 | LIBOR | ||||||
Debt Instrument [Line Items] | ||||||
Basis spread on variable rate (as a percent) | 3.25% | |||||
Senior Loans | ||||||
Debt Instrument [Line Items] | ||||||
Maximum loan to value ratio | 27.50% |
Borrowings - Cabot Securitisati
Borrowings - Cabot Securitisation Senior Facility (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2019USD ($) | Sep. 30, 2018 | Sep. 30, 2019USD ($) | Sep. 30, 2018 | Sep. 30, 2019GBP (£) | Dec. 31, 2018USD ($) | Nov. 30, 2018GBP (£) | |
Debt Instrument [Line Items] | |||||||
Book value | $ | $ 4,708,055 | $ 4,708,055 | $ 4,631,875 | ||||
Cabot securitisation senior facilities | |||||||
Debt Instrument [Line Items] | |||||||
Facility agreement, borrowing capacity | £ 300,000,000 | ||||||
Current borrowing capacity | 300,000,000 | ||||||
Book value | 404,800 | 404,800 | 329,300,000 | ||||
Credit facility, outstanding amount | $ 430,200 | $ 430,200 | 350,000,000 | $ 445,837 | |||
Weighted average interest rate (as a percent) | 3.75% | 3.56% | 3.74% | 3.42% | |||
Cabot securitisation senior facilities | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate (as a percent) | 2.85% | ||||||
Cabot Securitisation Non-Recourse Asset-Backed Senior Facility | |||||||
Debt Instrument [Line Items] | |||||||
Facility agreement, borrowing capacity | £ 50,000,000 | ||||||
Current borrowing capacity | 50,000,000 | ||||||
Book value | $ 64,500 | $ 64,500 | £ 52,500,000 | ||||
Cabot Securitisation Non-Recourse Asset-Backed Senior Facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate (as a percent) | 4.075% |
Borrowings - Finance Lease Liab
Borrowings - Finance Lease Liabilities - Narrative (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Debt Disclosure [Abstract] | |
Finance lease liabilities | $ 7,893 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Income Tax Contingency [Line Items] | |||||
Provision for income taxes | $ (3,021) | $ (16,879) | $ (18,447) | $ (37,657) | |
Unrecognized tax benefit | 19,900 | 19,900 | |||
Net tax benefit from unrecognized tax benefits, if recognized | 13,000 | 13,000 | |||
Cash and cash equivalents | 186,677 | $ 186,677 | $ 157,418 | ||
Costa Rica | Tax holiday through December 31, 2018 | |||||
Income Tax Contingency [Line Items] | |||||
Holiday tax rate | 100.00% | ||||
International | |||||
Income Tax Contingency [Line Items] | |||||
Cash and cash equivalents | $ 161,800 | $ 161,800 |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rates (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||||
Federal provision (as a percent) | 21.00% | 21.00% | 21.00% | 21.00% |
Tax benefit relating to Baycorp Transaction (as a percent) | (29.10%) | 0.00% | (8.60%) | 0.00% |
State provision (as a percent) | 5.30% | 1.70% | 3.70% | 1.50% |
Change in valuation allowance (as a percent) | 1.90% | 18.10% | 2.10% | 16.30% |
International provision (benefit) (as a percent) | (3.40%) | 13.00% | (2.60%) | (1.60%) |
Audit assessment (as a percent) | 8.90% | 0.00% | 2.60% | 0.00% |
Change in tax accounting method (as a percent) | 0.00% | 0.00% | (6.30%) | 0.00% |
Other (as a percent) | 2.50% | 2.70% | 0.90% | (0.10%) |
Effective rate (as a percent) | 7.10% | 56.50% | 12.80% | 37.10% |
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Baycorp | ||||
Effective Income Tax Rate Reconciliation, Percent [Abstract] | ||||
Tax benefit | $ 17.5 | $ 17.5 |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Leases [Abstract] | ||
Operating lease costs | $ 6,739 | $ 15,394 |
Amortization of right-of-use assets | 441 | 1,254 |
Interest on lease liabilities | 51 | 466 |
Total lease costs | $ 7,231 | $ 17,114 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
Operating lease right-of-use assets | $ 75,852 |
Finance lease right-of-use assets | 8,286 |
Total lease right-of-use assets | 84,138 |
Operating lease liability | 94,154 |
Finance lease liabilities | 7,893 |
Total lease liabilities | $ 102,047 |
Leases - Operating Information
Leases - Operating Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($) | |
Leases [Abstract] | ||
Right-of-use assets obtained in exchange for new operating lease obligations | $ 4,232 | $ 114,484 |
Right-of-use assets obtained in exchange for new finance lease obligations | 3,862 | 6,795 |
Operating leases - operating cash flows | 4,022 | 10,883 |
Finance leases - operating cash flows | 51 | 466 |
Finance leases - financing cash flows | $ 454 | $ 1,419 |
Operating leases, weighted-average remaining lease term (in years) | 8 years 2 months 12 days | 8 years 2 months 12 days |
Finance leases, weighted-average remaining lease term (in years) | 3 years 2 months 12 days | 3 years 2 months 12 days |
Operating leases, weighted-average discount rate (percent) | 5.40% | 5.40% |
Finance leases, weighted-average discount rate (percent) | 4.70% | 4.70% |
Leases - Schedule of Lease Paym
Leases - Schedule of Lease Payments (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Finance Lease, Liability, Payment, Due [Abstract] | |
2019 | $ 662 |
2020 | 2,646 |
2021 | 2,508 |
2022 | 2,281 |
2023 | 433 |
Thereafter | 0 |
Total undiscounted lease payments | 8,530 |
Less: imputed interest | (637) |
Lease obligations | 7,893 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2019 | 3,812 |
2020 | 17,233 |
2021 | 16,352 |
2022 | 13,288 |
2023 | 12,145 |
Thereafter | 54,566 |
Total undiscounted lease payments | 117,396 |
Less: imputed interest | (23,242) |
Lease obligations | 94,154 |
2019 | 4,474 |
2020 | 19,879 |
2021 | 18,860 |
2022 | 15,569 |
2023 | 12,578 |
Thereafter | 54,566 |
Total undiscounted lease payments | 125,926 |
Less: imputed interest | (23,879) |
Total lease liabilities | $ 102,047 |
Leases - Schedule of Lease Pa_2
Leases - Schedule of Lease Payments as of Prior Year End (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Capital Lease Obligations [Abstract] | |
2019 | $ 2,507 |
2020 | 1,983 |
2021 | 1,844 |
2022 | 1,630 |
2023 | 204 |
Thereafter | 0 |
Total minimal leases payments | 8,168 |
Less: Interest | (605) |
Present value of minimal lease payments | 7,563 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2019 | 16,538 |
2020 | 13,850 |
2021 | 13,044 |
2022 | 11,737 |
2023 | 9,741 |
Thereafter | 37,997 |
Total minimal leases payments | 102,907 |
2019 | 19,045 |
2020 | 15,833 |
2021 | 14,888 |
2022 | 13,367 |
2023 | 9,945 |
Thereafter | 37,997 |
Total minimal leases payments | $ 111,075 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Long-term Purchase Commitment [Line Items] | |
Material reserves for litigation | $ 0 |
Purchase price of receivable portfolios | 2,600,000,000 |
Purchase price | $ 306,000,000 |
Maximum | |
Long-term Purchase Commitment [Line Items] | |
Purchase commitment term (years) | 1 year |
Segment and Geographic Inform_3
Segment and Geographic Information - Summary (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)Segment | Sep. 30, 2018USD ($) | |
Segment Reporting [Abstract] | ||||
Number of reportable segments | Segment | 1 | |||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 355,936 | $ 336,774 | $ 1,049,887 | $ 1,013,309 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 211,193 | 178,892 | 599,953 | 530,679 |
International | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 144,743 | 157,882 | 449,934 | 482,630 |
Europe | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 130,868 | 137,331 | 397,063 | 412,407 |
Other geographies | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 13,875 | $ 20,551 | $ 52,871 | $ 70,223 |
Goodwill and Identifiable Int_3
Goodwill and Identifiable Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Aug. 15, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Goodwill [Line Items] | |||||
Goodwill | $ 831,549 | $ 865,527 | $ 882,884 | $ 868,126 | |
Baycorp | |||||
Goodwill [Line Items] | |||||
Goodwill | $ 10,700 |
Goodwill and Identifiable Int_4
Goodwill and Identifiable Intangible Assets - Activity in Goodwill Balance (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill [Roll Forward] | ||||||
Balance at beginning of period | $ 865,527 | $ 882,884 | $ 868,126 | $ 868,126 | ||
Effect of foreign currency translation | (23,260) | (17,357) | 14,758 | |||
Goodwill impairment | (10,718) | $ 0 | (10,718) | $ 0 | ||
Balance at end of period | $ 831,549 | $ 865,527 | $ 882,884 | $ 831,549 |
Goodwill and Identifiable Int_5
Goodwill and Identifiable Intangible Assets - Acquired Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 74,863 | $ 89,265 |
Accumulated Amortization | (25,146) | (28,684) |
Net Carrying Amount | 49,717 | 60,581 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 63,464 | 73,458 |
Accumulated Amortization | (15,309) | (17,025) |
Net Carrying Amount | 48,155 | 56,433 |
Developed technologies | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 5,842 | 7,461 |
Accumulated Amortization | (5,161) | (6,446) |
Net Carrying Amount | 681 | 1,015 |
Trade name and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 5,557 | 8,346 |
Accumulated Amortization | (4,676) | (5,213) |
Net Carrying Amount | $ 881 | $ 3,133 |