Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 27, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
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, $0.01 Par Value Per Share | |
Trading Symbol | ECPG | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 23,481,868 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001084961 | |
Current Fiscal Year End Date | --12-31 |
Consolidated Statements of Fina
Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Assets | ||
Cash and cash equivalents | $ 158,774 | $ 143,912 |
Investment in receivable portfolios, net | 3,214,792 | 3,088,261 |
Property and equipment, net | 110,184 | 113,900 |
Other assets | 368,041 | 341,073 |
Goodwill | 834,174 | 821,214 |
Total assets | 4,685,965 | 4,508,360 |
Liabilities: | ||
Accounts payable and accrued liabilities | 179,971 | 198,217 |
Borrowings | 3,081,786 | 2,898,821 |
Other liabilities | 240,052 | 231,695 |
Total liabilities | 3,501,809 | 3,328,733 |
Commitments and Contingencies (Note 11) | ||
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 shares authorized, 23,482 and 23,323 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 235 | 233 |
Additional paid-in capital | 0 | 0 |
Accumulated earnings | 1,274,289 | 1,278,210 |
Accumulated other comprehensive loss | (90,368) | (98,816) |
Total stockholders’ equity | 1,184,156 | 1,179,627 |
Total liabilities and stockholders’ equity | 4,685,965 | 4,508,360 |
Variable Interest Entity | ||
Assets | ||
Cash and cash equivalents | 1,642 | 1,344 |
Investment in receivable portfolios, net | 459,974 | 431,350 |
Other assets | 3,813 | 3,627 |
Liabilities: | ||
Accounts payable and accrued liabilities | 496 | 150 |
Borrowings | 431,919 | 423,522 |
Other liabilities | $ 105 | $ 105 |
Consolidated Statements of Fi_2
Consolidated Statements of Financial Condition (Parenthetical) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
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 | 75,000,000 |
Common stock issued (shares) | 23,482,000 | 23,323,000 |
Common stock outstanding (shares) | 23,482,000 | 23,323,000 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues | ||
Revenue from receivable portfolios | $ 295,674 | $ 304,105 |
Changes in recoveries | (9,501) | 167,223 |
Total debt purchasing revenue | 286,173 | 471,328 |
Servicing revenue | 22,585 | 26,146 |
Other revenues | 3,872 | 2,208 |
Total revenues | 312,630 | 499,682 |
Operating expenses | ||
Salaries and employee benefits | 103,850 | 96,956 |
Cost of legal collections | 54,101 | 55,717 |
General and administrative expenses | 37,965 | 33,534 |
Other operating expenses | 27,556 | 27,027 |
Collection agency commissions | 8,150 | 9,605 |
Depreciation and amortization | 10,870 | 11,829 |
Total operating expenses | 242,492 | 234,668 |
Income from operations | 70,138 | 265,014 |
Other expense | ||
Interest expense | (46,835) | (34,633) |
Other income, net | 1,732 | 392 |
Total other expense | (45,103) | (34,241) |
Income before income taxes | 25,035 | 230,773 |
Provision for income taxes | (6,409) | (55,024) |
Net income | $ 18,626 | $ 175,749 |
Earnings per share: | ||
Basic (USD per share) | $ 0.79 | $ 7.11 |
Diluted (USD per share) | $ 0.75 | $ 6.40 |
Weighted average shares outstanding: | ||
Basic (shares) | 23,548 | 24,722 |
Diluted (shares) | 24,942 | 27,482 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 18,626 | $ 175,749 |
Change in unrealized (loss) gain on derivative instruments: | ||
Unrealized (loss) gain on derivative instruments | (8,053) | 15,592 |
Income tax effect | 876 | (3,698) |
Unrealized (loss) gain on derivative instruments, net of tax | (7,177) | 11,894 |
Change in foreign currency translation: | ||
Unrealized gain (loss) on foreign currency translation | 16,008 | (22,254) |
Income tax effect | (383) | 0 |
Unrealized gain (loss) on foreign currency translation | 15,625 | (22,254) |
Other comprehensive income (loss), net of tax: | 8,448 | (10,360) |
Total comprehensive income | $ 27,074 | $ 165,389 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Earnings | Accumulated Other Comprehensive (Loss) Income |
Balance at beginning of period (shares) at Dec. 31, 2021 | 24,541,000 | ||||
Balance at Beginning of period at Dec. 31, 2021 | $ 1,185,261 | $ 245 | $ 0 | $ 1,238,564 | $ (53,548) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 175,749 | 175,749 | |||
Other comprehensive income, net of tax | (10,360) | (10,360) | |||
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes (shares) | 220,000 | ||||
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes | (11,352) | $ 3 | (3,921) | (7,434) | |
Repurchase of commons stock (in shares) | (400,000) | ||||
Repurchase and retirement of common stock | (25,692) | $ (4) | 0 | (25,688) | |
Stock-based compensation | 3,921 | 3,921 | |||
Settlement of convertible notes | (71,152) | (71,152) | |||
Balance at end of period (shares) at Mar. 31, 2022 | 24,361,000 | ||||
Balance at end of period at Mar. 31, 2022 | 1,246,375 | $ 244 | 0 | 1,310,039 | (63,908) |
Balance at beginning of period (shares) at Dec. 31, 2022 | 23,323,000 | ||||
Balance at Beginning of period at Dec. 31, 2022 | 1,179,627 | $ 233 | 0 | 1,278,210 | (98,816) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 18,626 | 18,626 | |||
Other comprehensive income, net of tax | 8,448 | 8,448 | |||
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes (shares) | 159,000 | ||||
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes | $ (6,353) | $ 2 | (6,355) | ||
Repurchase of commons stock (in shares) | (399,522) | ||||
Stock-based compensation | $ 4,052 | 4,052 | |||
Purchase of capped call options, net of tax effect | (13,865) | (13,865) | |||
Unwind of the existing capped call options | 28,542 | 28,542 | |||
Settlement of convertible notes | (34,921) | (12,374) | (22,547) | ||
Balance at end of period (shares) at Mar. 31, 2023 | 23,482,000 | ||||
Balance at end of period at Mar. 31, 2023 | $ 1,184,156 | $ 235 | $ 0 | $ 1,274,289 | $ (90,368) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Operating activities: | ||
Net income | $ 18,626 | $ 175,749 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 10,870 | 11,829 |
Other non-cash interest expense, net | 4,594 | 4,196 |
Stock-based compensation expense | 4,052 | 3,921 |
Deferred income taxes | 1,369 | 2,806 |
Changes in recoveries | 9,501 | (167,223) |
Other, net | (1,843) | 4,787 |
Changes in operating assets and liabilities | ||
Other assets | (3,139) | 27,299 |
Accounts payable, accrued liabilities and other liabilities | (8,117) | (8,834) |
Net cash provided by operating activities | 35,913 | 54,530 |
Investing activities: | ||
Purchases of receivable portfolios, net of put-backs | (274,625) | (166,298) |
Collections applied to investment in receivable portfolios | 166,682 | 215,309 |
Purchases of asset held for sale | (22,596) | (12,388) |
Purchases of property and equipment | (4,885) | (7,079) |
Other, net | 4,709 | 7,684 |
Net cash (used in) provided by investing activities | (130,715) | 37,228 |
Financing activities: | ||
Payment of loan and debt refinancing costs | (5,850) | (1,455) |
Proceeds from credit facilities | 229,128 | 328,273 |
Repayment of credit facilities | (140,043) | (180,614) |
Repayment of senior secured notes | (9,770) | (9,770) |
Proceeds from issuance of convertible senior notes | 230,000 | 0 |
Repayment of convertible and exchangeable senior notes | (192,457) | (221,152) |
Proceeds from convertible hedge instruments, net | 10,050 | 0 |
Repurchase and retirement of common stock | 0 | (25,692) |
Other, net | (10,684) | (7,606) |
Net cash provided by (used in) financing activities | 110,374 | (118,016) |
Net increase (decrease) in cash and cash equivalents | 15,572 | (26,258) |
Effect of exchange rate changes on cash and cash equivalents | (710) | (3,170) |
Cash and cash equivalents, beginning of period | 143,912 | 189,645 |
Cash and cash equivalents, end of period | 158,774 | 160,217 |
Supplemental disclosure of cash information: | ||
Cash paid for interest | 38,072 | 31,771 |
Cash paid for taxes, net of refunds | $ 908 | $ 949 |
Ownership, Description of Busin
Ownership, Description of Business, and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
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 obligations 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 in Europe. 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 the United Kingdom. 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.” Financial Statement Preparation and Presentation The accompanying interim condensed 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 condensed 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 statement of the Company’s condensed consolidated financial statements. These condensed 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, 2022. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year. The preparation of condensed 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 condensed financial statements and the accompanying notes. Actual results could materially differ from those estimates. Basis of Consolidation The condensed 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 (“VIEs”) for which it is the primary beneficiary. The primary beneficiary has both (a) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance, and (b) either the obligation to absorb losses or the right to receive benefits. Refer to “Note 8: Variable Interest Entities” for further details. All intercompany transactions and balances have been eliminated in consolidation. Translation of Foreign Currencies The condensed 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 and are reclassified to earnings upon the substantial sale or liquidation of investments in foreign operations. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share is 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 is calculated based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period. Dilutive potential common shares include outstanding stock-based awards, and the dilutive effect of the convertible and exchangeable senior notes, if applicable. On August 12, 2015, the Company’s Board of Directors approved a $50.0 million share repurchase program. On May 5, 2021, the Company announced that the Board of Directors had approved an increase in the size of the repurchase program from $50.0 million to $300.0 million (an increase of $250.0 million). Repurchases under this program are expected to be made with cash on hand and may be made from time to time, subject to market conditions and other factors, in the open market, through private transactions, block transactions, or other methods as determined by the Company’s management and Board of Directors, and in accordance with market conditions, other corporate considerations, and applicable regulatory requirements. The program does not obligate the Company to acquire any particular amount of common stock, and it may be modified or suspended at any time at the Company’s discretion. During the three months ended March 31, 2023, the Company did not make any repurchases under the share repurchase program. During the three months ended March 31, 2022, the Company repurchased 399,522 shares of its common stock for approximately $25.6 million. The Company’s practice is to retire the shares repurchased. A reconciliation of shares used in calculating earnings per basic and diluted shares follows (in thousands, except per share amounts) : Three Months Ended 2023 2022 Net income $ 18,626 $ 175,749 Total weighted-average basic shares outstanding 23,548 24,722 Dilutive effect of stock-based awards 291 540 Dilutive effect of convertible and exchangeable senior notes 1,103 2,220 Total weighted-average dilutive shares outstanding 24,942 27,482 Basic earnings per share $ 0.79 $ 7.11 Diluted earnings per share $ 0.75 $ 6.40 There were no anti-dilutive employee stock options outstanding during the three months ended March 31, 2023 and 2022. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is defined 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 Company uses 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 March 31, 2023 Level 1 Level 2 Level 3 Total Assets Interest rate cap contracts $ — $ 30,672 $ — $ 30,672 Liabilities Cross-currency swap agreements — (33,344) — (33,344) Fair Value Measurements as of December 31, 2022 Level 1 Level 2 Level 3 Total Assets Interest rate cap contracts $ — $ 36,807 $ — $ 36,807 Liabilities Cross-currency swap agreements — (36,918) — (36,918) 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. Non-Recurring Fair Value Measurement: Certain assets are measured at fair value on a nonrecurring basis. These assets include real estate-owned 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 and in each reporting period using Level 3 measurements based on appraised values using market comparables. The fair value estimate of the assets held for sale was approximately $86.8 million and $68.2 million as of March 31, 2023 and December 31, 2022, respectively. Financial Instruments Not Required To Be Carried At Fair Value 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 included in the condensed consolidated statements of financial condition as of March 31, 2023 and December 31, 2022 (in thousands) : March 31, 2023 December 31, 2022 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Financial Assets Investment in receivable portfolios, net $ 3,214,792 $ 3,333,265 $ 3,088,261 $ 3,242,506 Financial Liabilities Global senior secured revolving credit facility 752,107 752,107 661,738 661,738 Encore private placement notes 58,620 57,599 68,390 66,947 Senior secured notes (1) 1,505,060 1,353,671 1,480,258 1,334,686 Exchangeable senior notes due September 2023 17,655 21,185 172,500 205,227 Convertible senior notes due October 2025 100,000 134,336 100,000 130,556 Convertible senior notes due March 2029 230,000 232,463 — — Cabot securitisation senior facility 431,919 431,919 423,522 423,522 _______________________ (1) Carrying amount represents historical cost, adjusted for any related debt discount or debt premium. Investment in Receivable Portfolios: The fair value of investment in receivable portfolios is measured using Level 3 inputs by discounting the estimated future cash flows generated by the Company’s proprietary forecasting models. The key inputs include the estimated future gross cash flow, average cost to collect, and discount rate. 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. Borrowings: The Company’s convertible notes, exchangeable notes, senior secured notes and private placement notes are carried at historical cost, adjusted for the applicable debt discount. The fair value estimate for the convertible and exchangeable notes incorporates quoted market prices using Level 2 inputs. The fair value of the senior secured notes and private placement notes is 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 carrying value of the Company’s senior secured revolving credit facility and securitisation senior facility approximates fair value due to the use of current market rates that are repriced frequently. |
Derivatives and Hedging Instrum
Derivatives and Hedging Instruments | 3 Months Ended |
Mar. 31, 2023 | |
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. The following table summarizes the fair value of derivative instruments as recorded in the Company’s condensed consolidated statements of financial condition (in thousands) : March 31, 2023 December 31, 2022 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate cap contracts Other assets $ 30,672 Other assets $ 36,807 Cross-currency swap agreements Other liabilities (33,344) Other liabilities (36,918) Derivatives Designated as Hedging Instruments The Company uses interest rate cap contracts to manage its risk related to the interest rate fluctuations in its variable interest rate bearing debt. As of March 31, 2023, the Company held two interest rate cap contracts with a notional amount of approximately $866.8 million. The interest rate cap hedging the fluctuations in three-month EURIBOR floating rate debt (“2019 Cap”) has a notional amount of €400.0 million (approximately $434.9 million based on an exchange rate of $1.00 to €0.92, the exchange rate as of March 31, 2023) and matures in June 2024. The interest rate cap hedging the fluctuations in sterling overnight index average (“SONIA”) bearing debt (“2021 Cap”) has a notional amount of £350.0 million (approximately $431.9 million based on an exchange rate of $1.00 to £0.81, the exchange rate as of March 31, 2023) and matures in September 2024. The Company expects the hedge relationships to be highly effective and designates the 2019 Cap and 2021 Cap as cash flow hedge instruments. The Company expects to reclassify approximately $22.1 million of net derivative gain from OCI into earnings relating to interest rate caps within the next 12 months. The Company uses cross-currency swap agreements to manage foreign currency exchange risk by converting fixed-rate Euro-denominated borrowings including periodic interest payments and the payment of principal at maturity to fixed-rate USD debt. The cross-currency swap agreements are accounted for as cash flow hedges. As of March 31, 2023, there were four cross-currency swap agreements outstanding with a total notional amount of €350.0 million (approximately $380.5 million based on an exchange rate of $1.00 to €0.92, the exchange rate as of March 31, 2023). The cross-currency swaps expire in October 2023. The Company expects to reclassify approximately $1.6 million of net derivative loss from OCI into earnings relating to cross-currency swaps within their remaining term. The following table summarize the effects of derivatives in cash flow hedging relationships designated as hedging instruments in the Company’s condensed consolidated financial statements (in thousands) : Derivatives Designated as Hedging Instruments Gain (Loss) Recognized in OCI Location of Gain (Loss) Reclassified from OCI into Income (Loss) Gain (Loss) Reclassified from OCI into Income (Loss) Three Months Ended March 31, Three Months Ended March 31, 2023 2022 2023 2022 Interest rate cap contracts $ (6,924) $ 9,763 Interest expense $ (450) $ (170) Cross-currency swap agreements 2,066 (6,404) Interest expense (1,508) (1,587) Other income (expense) 5,153 (10,476) |
Investment in Receivable Portfo
Investment in Receivable Portfolios, Net | 3 Months Ended |
Mar. 31, 2023 | |
Receivables [Abstract] | |
Investment in Receivable Portfolios, Net | Investment in Receivable Portfolios, Net The Company’s purchased portfolios of loans are grossed-up to their face value with an offsetting allowance and noncredit discount allocated to the individual receivables as the unit of account is at the individual loan level. Since each loan is deeply delinquent and deemed uncollectible at the individual loan level, the Company applies its charge-off policy and fully writes-off the amortized costs ( i.e. , face value net of noncredit discount) of the individual receivables immediately after purchasing the portfolio. The Company then records a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which ultimately equals the amount paid for a portfolio purchase and presented as “Investment in receivable portfolios, net” in the Company’s condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) based on the purchase price of the portfolio and the expected future cash flows at the time of purchase. Receivable portfolio purchases are aggregated into pools based on similar risk characteristics. Examples of risk characteristics include 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 location. Once a pool is established, the portfolios will remain in the designated pool unless the underlying risk characteristics change, which is not expected due to the delinquent nature of the individual loans. The purchase EIR of a pool will not change over the life of the pool even if expected future cash flows change. Revenue is recognized for each static pool over the economic life of the pool. Debt purchasing revenue includes two components: (1) Revenue from receivable portfolios, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR) and also includes all revenue from zero basis portfolio (“ZBA”) collections, and (2) Changes in recoveries, which includes (a) Recoveries above or below forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and (b) Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases). The Company measures expected future recoveries based on historical experience, current conditions, reasonable and supportable forecasts, and other quantitative and qualitative factors. Factors that may change the expected future recoveries may include both internal as well as external factors. Internal factors include operational performance, such as capacity and the productivity of the Company’s collection staff. External factors include new laws or regulations, new interpretations of existing laws or regulations, and macroeconomic conditions. The Company continues to reassess its expected future recoveries in each reporting period. Investment in receivable portfolios, net consists of the following as of the dates presented ( in thousands ): March 31, 2023 2022 Amortized cost $ — $ — Negative allowance for expected recoveries 3,214,792 3,137,386 Balance, end of period $ 3,214,792 $ 3,137,386 The following table summarizes the changes in the balance of investment in receivable portfolios, net during the periods presented ( in thousands ): Three Months Ended 2023 2022 Balance, beginning of period $ 3,088,261 $ 3,065,553 Negative allowance for expected recoveries - current period purchases (1) 276,431 169,505 Collections applied to investment in receivable portfolios, net (2) (166,682) (215,309) Changes in recoveries (3) (9,501) 167,223 Put-backs and Recalls (1,806) (3,207) Disposals and transfers to real estate owned (1,105) (1,976) Foreign currency translation adjustments 29,194 (44,403) Balance, end of period $ 3,214,792 $ 3,137,386 _______________________ (1) The table below provides the detail on the establishment of negative allowance for expected recoveries of portfolios purchased during the periods presented: Three Months Ended 2023 2022 Purchase price $ 276,431 $ 169,505 Allowance for credit losses 659,644 350,186 Amortized cost 936,075 519,691 Noncredit discount 1,005,221 657,058 Face value 1,941,296 1,176,749 Write-off of amortized cost (936,075) (519,691) Write-off of noncredit discount (1,005,221) (657,058) Negative allowance 276,431 169,505 Negative allowance for expected recoveries - current period purchases $ 276,431 $ 169,505 (2) Collections applied to investment in receivable portfolios, net, is calculated as follows during the periods presented: Three Months Ended 2023 2022 Cash Collections $ 462,356 $ 519,414 Less - amounts classified to revenue from receivable portfolios (295,674) (304,105) Collections applied to investment in receivable portfolios, net $ 166,682 $ 215,309 (3) Changes in recoveries is calculated as follows during the periods presented, where recoveries include cash collections, put-backs and recalls, and other cash-based adjustments: Three Months Ended 2023 2022 Recoveries (below) above forecast $ (15,358) $ 46,352 Changes in expected future recoveries 5,857 120,871 Changes in recoveries $ (9,501) $ 167,223 Recoveries above or below forecast represent over and under-performance in the reporting period, respectively. Collections during the three months ended March 31, 2023, under-performed the forecasted collections by approximately $15.4 million. The under-performance was primarily attributable to shifts in the timing of collections for recent U.S. vintages as consumers transitioned back to more normalized payment behavior. The under-performance was also partly due to court closures in Spain resulting from labor unrest in the court system. When reassessing the forecasts of expected lifetime recoveries during the three months ended March 31, 2023, management considered, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment and believes that forecasted collections for certain static pools resulted in increased total expected recoveries. As a result, the Company has updated its forecast, resulting in changes in the timing and amount of total estimated remaining collections which in turn, when discounted to present value, resulted in a net positive change in expected future recoveries of approximately $5.9 million for the three months ended March 31, 2023. For the three months ended March 31, 2022, the Company recorded approximately $120.9 million in net positive change in expected future recoveries. |
Other Assets
Other Assets | 3 Months Ended |
Mar. 31, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | Other Assets Other assets consist of the following (in thousands) : March 31, December 31, Real estate owned $ 86,844 $ 68,242 Operating lease right-of-use assets 71,413 70,074 Prepaid expenses 33,425 30,376 Derivative instruments 30,672 36,807 Identifiable intangible assets, net 21,369 22,112 Income tax deposits 20,188 18,259 Deferred tax assets 16,487 18,069 Service fee receivables 16,126 16,094 Other 71,517 61,040 Total $ 368,041 $ 341,073 |
Borrowings
Borrowings | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings The Company is in compliance in all material respects with all covenants under its financing arrangements as of March 31, 2023. The components of the Company’s consolidated borrowings were as follows (in thousands) : March 31, December 31, Global senior secured revolving credit facility $ 752,107 $ 661,738 Encore private placement notes 58,620 68,390 Senior secured notes 1,510,416 1,485,888 Convertible notes and exchangeable notes 347,655 272,500 Cabot securitisation senior facility 431,919 423,522 Other 20,206 23,512 Finance lease liabilities 4,716 5,675 3,125,639 2,941,225 Less: debt discount and issuance costs, net of amortization (43,853) (42,404) Total $ 3,081,786 $ 2,898,821 Encore is the parent of the restricted group for the Global Senior Facility, the Senior Secured Notes and the Encore Private Placement Notes, each of which is guaranteed by the same group of material Encore subsidiaries and secured by the same collateral, which represents substantially all of the assets of those subsidiaries. Global Senior Secured Revolving Credit Facility In September 2020, the Company entered into a multi-currency senior secured revolving credit facility agreement (as amended and restated, the “Global Senior Facility”). On March 29, 2022, the Company amended and restated the Global Senior Facility to, among other things (1) upsize the facility by $90.0 million to $1.14 billion, (2) extend the termination date of the facility from September 2025 to September 2026, and (3) transition from LIBOR to Term SOFR for U.S. dollar borrowings. As of March 31, 2023, the Global Senior Facility provided for a total committed facility of $1.14 billion that matures in September 2026 and includes the following key provisions: • Interest at Term SOFR (or EURIBOR for any loan drawn in Euro or a rate based on SONIA for any loan drawn in British Pound), with a Term SOFR (or EURIBOR or SONIA) floor of 0.00%, plus a margin of 2.50%, plus in the case of Term SOFR borrowings, a credit adjustment spread of 0.10%; • An unused commitment fee of 0.40% per annum, payable quarterly in arrears; • A restrictive covenant that limits the LTV Ratio (defined in the Global Senior Facility) to 0.75 in the event that the Global Senior Facility is more than 20% utilized; • A restrictive covenant that limits the SSRCF LTV Ratio (defined in the Global Senior Facility) to 0.275; • A restrictive covenant that requires the Company to maintain a Fixed Charge Coverage Ratio (as defined in the Global Senior Facility) of at least 2.0; • Additional restrictions and covenants which limit, among other things, the payment of dividends and the incurrence of additional indebtedness and liens; and • Standard events of default which, upon occurrence, may permit the lenders to terminate the Global Senior Facility and declare all amounts outstanding to be immediately due and payable. The Global Senior Facility is secured by substantially all of the assets of the Company and the guarantors. Pursuant to the terms of an intercreditor agreement entered into with respect to the relative positions of (1) the Global Senior Facility, any super priority hedging liabilities and the Encore Private Placement Notes (collectively, “Super Senior Liabilities”) and (2) the Senior Secured Notes, Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets. As of March 31, 2023, the outstanding borrowings under the Global Senior Facility were $752.1 million. The weighted average interest rate of the Global Senior Facility was 7.06% and 2.73% for the three months ended March 31, 2023 and 2022, respectively. Available capacity under the Global Senior Facility, after taking into account applicable debt covenants, was approximately $387.9 million as of March 31, 2023. Encore Private Placement Notes In August 2017, Encore entered into $325.0 million in senior secured notes with a group of insurance companies (the “Encore Private Placement Notes”). As of March 31, 2023, $58.6 million of the Encore Private Placement Notes remained outstanding. The Encore Private Placement Notes bear an annual interest rate of 5.625%, mature in August 2024 and require quarterly principal payments of $9.8 million. The covenants and material terms for the Encore Private Placement Notes are substantially similar to those for the Global Senior Facility. Senior Secured Notes The following table provides a summary of the Company’s senior secured notes (the “Senior Secured Notes”) ($ in thousands) : March 31, December 31, Issue Maturity Date Interest Payment Dates Interest Rate Encore 2025 Notes $ 380,510 $ 375,325 EUR Oct 15, 2025 Apr 15, Oct 15 4.875 % Encore 2026 Notes 370,216 363,019 GBP Feb 15, 2026 Feb 15, Aug 15 5.375 % Encore 2028 Notes 308,514 302,516 GBP Jun 1, 2028 Jun 1, Dec 1 4.250 % Encore 2028 Floating Rate Notes 451,176 445,028 EUR Jan 15, 2028 Jan 15, Apr 15, Jul 15, Oct 15 EURIBOR +4.250% (1) $ 1,510,416 $ 1,485,888 _______________________ (1) Interest rate is based on three-month EURIBOR (subject to a 0% floor) plus 4.250% per annum, resets quarterly. The Senior Secured Notes are secured by the same collateral as the Global Senior Facility and the Encore Private Placement Notes. The guarantees provided in respect of the Senior Secured Notes are pari passu with each such guarantee given in respect of the Global Senior Facility and Encore Private Placement Notes. Subject to the intercreditor agreement described above under the section “Global Senior Secured Revolving Credit Facility,” Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets. Convertible Notes and Exchangeable Notes The following table provides a summary of the principal balance, maturity date and interest rate for the Company’s convertible and exchangeable senior notes (the “Convertible Notes” or “Exchangeable Notes,” as applicable) ($ in thousands) : March 31, December 31, Maturity Date Interest Payment Dates Interest Rate 2023 Exchangeable Notes $ 17,655 $ 172,500 Sep 1, 2023 Mar 1, Sep 1 4.500 % 2025 Convertible Notes 100,000 100,000 Oct 1, 2025 Apr 1, Oct 1 3.250 % 2029 Convertible Notes 230,000 — Mar 15, 2029 Mar 15, Sep 15 4.000 % $ 347,655 $ 272,500 In March 2023, Encore issued $230.0 million aggregate principal amount of 4.00% convertible senior notes that mature on March 15, 2029 in a private placement transaction (the “2029 Convertible Notes”). Interest on the 2029 Convertible Notes is payable semi-annually. The Company used a portion of the net proceeds from the issuance of the 2029 Convertible Notes to repurchase, in separate privately negotiated transactions, approximately $154.8 million aggregate principal amount of its 2023 Exchangeable Notes for approximately $192.5 million. The repurchase met the criteria for an induced conversion and accordingly, the Company recognized expense of $2.7 million, representing the fair value of the consideration paid to certain holders of the 2023 Exchangeable Notes in excess of the fair value to which they were entitled to receive pursuant to the original conversion terms on the respective settlement dates. The amount is included in Other income, net, in the Company’s condensed consolidated statements of income during the three months ended March 31, 2023. The remaining excess above the principal amount of the repurchased 2023 Exchangeable Notes was recognized in the Company’s stockholder’s equity. Additionally, the Company received proceeds of approximately $28.5 million from the unwind of the capped call options associated with the repurchased portion of the 2023 Exchangeable Notes. 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 stockholder’s equity in the condensed consolidated statements of financial condition as of March 31, 2023. In addition, the Company recognized approximately $0.7 million of interest expense in the condensed consolidated statements of income during the three months ended March 31, 2023 to record the write-off of unamortized debt issuance costs associated with the 2023 Exchangeable Notes repurchased. The 2023 Exchangeable Notes were issued by Encore Capital Europe Finance Limited (“Encore Finance”), a 100% owned finance subsidiary of Encore, and are fully and unconditionally guaranteed by Encore. Unless otherwise indicated in connection with a particular offering of debt securities, Encore will fully and unconditionally guarantee any debt securities issued by Encore Finance. Amounts related to Encore Finance are included in the consolidated financial statements of Encore subsequent to April 30, 2018, the date of incorporation of Encore Finance. 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 may enter into hedge programs that increase the effective conversion or exchange price for the Convertible Notes and the Exchangeable Notes. In connection with the issuance of the 2029 Convertible Notes, the Company entered into privately negotiated capped call transactions that effectively raised the conversion price of the 2029 Convertible Notes from $65.89 to $82.69. The cost of the capped call transactions was approximately $18.5 million. This cost, net of tax effect, was recorded as a reduction to stockholder’s equity in the condensed consolidated statements of financial condition as of March 31, 2023. As of March 31, 2023, the Company had two hedge programs that increase the effective exchange price for the 2029 Convertible Notes and the 2023 Exchangeable Notes. The hedge instruments have been determined to be indexed to the Company’s own stock and meet the criteria for equity classification. The Company recorded the cost of the hedge instruments as a reduction in stockholder’s equity, and does not recognize subsequent changes in fair value of these financial instruments in its consolidated financial statements. The Company did not hedge the 2025 Convertible Notes. Certain key terms related to the convertible and exchangeable features as of March 31, 2023 are listed below ($ in thousands, except conversion or exchange price) : 2023 Exchangeable Notes 2025 Convertible Notes 2029 Convertible Notes Initial conversion or exchange price $ 44.62 $ 40.00 $ 65.89 Closing stock price at date of issuance $ 36.45 $ 32.00 $ 51.68 Closing stock price date Jul 20, 2018 Sep 4, 2019 Feb 28, 2023 Initial conversion or exchange rate (shares per $1,000 principal amount) 22.4090 25.0000 15.1763 Adjusted conversion or exchange rate (shares per $1,000 principal amount) (1) 22.5264 25.1310 15.1763 Adjusted conversion or exchange price (1) $ 44.39 $ 39.79 $ 65.89 Adjusted effective conversion or exchange price (2) $ 62.13 $ 39.79 $ 82.69 Excess of if-converted value compared to principal (3) $ 2,409 $ 26,786 $ — Conversion or exchange date Mar 1, 2023 Jul 1, 2025 Dec 15, 2028 _______________________ (1) Pursuant to the indentures for the Company’s 2025 Convertible Notes and 2023 Exchangeable Notes, the conversion and exchange rates were adjusted upon the completion of the Company’s tender offer in December 2021. (2) As discussed above, the Company maintains a hedge program that increases the effective exchange price for the 2023 Exchangeable Notes to $62.13 and the 2029 Convertible Notes to $82.69. (3) Represents the premium the Company would have to pay assuming the Convertible Notes and Exchangeable Notes were converted or exchanged on March 31, 2023 using a hypothetical share price based on the closing stock price on March 31, 2023. The premium of the 2023 Exchangeable Notes would have been reduced to zero with the existing hedge program. In February 2023, in accordance with the indenture for the 2023 Exchangeable Notes, Encore Finance irrevocably elected “combination settlement” with a specified dollar amount equal to $1,800 per $1,000 principal amount of the 2023 Exchangeable Notes for all exchanges of the 2023 Exchangeable Notes that occur on or after March 1, 2023, the free exchange date, which effectively will result in an all cash settlement for the 2023 Exchangeable Notes so long as the stock price does not exceed $79.91 at the time of exchange. None of the 2023 Exchangeable Notes have been exchanged. In the event of conversion, the Convertible Notes are convertible into cash up to the aggregate principal amount of the notes and the excess conversion premium, if any, may be settled in cash or 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. Interest expense related to the Convertible Notes and Exchangeable Notes was $2.9 million and $3.7 million during the three months ended March 31, 2023 and 2022, respectively. Cabot Securitisation Senior Facility Cabot Securitisation UK Ltd (“Cabot Securitisation”), an indirect subsidiary of Encore, has a senior facility for a committed amount of £350.0 million (as amended, the “Cabot Securitisation Senior Facility”). The Cabot Securitisation Senior Facility matures in September 2026. Funds drawn under the Cabot Securitisation Senior Facility bear interest at a rate per annum equal to SONIA plus a margin of 3.00% plus, for periods after September 18, 2024, a step-up margin ranging from zero to 1.00%. As of March 31, 2023, the outstanding borrowings under the Cabot Securitisation Senior Facility were £350.0 million (approximately $431.9 million based on an exchange rate of $1.00 to £0.81, the exchange rate as of March 31, 2023). The obligations of Cabot Securitisation under the Cabot Securitisation Senior Facility 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 £366.5 million (approximately $452.3 million based on an exchange rate of $1.00 to £0.81, the exchange rate as of March 31, 2023) as of March 31, 2023. The weighted average interest rate was 5.25% and 3.45% for the three months ended March 31, 2023 and 2022, respectively. Cabot Securitisation is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 8: Variable Interest Entities” for further details. |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2023 | |
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 residual returns from the entity that could potentially be significant to the VIE. The Company consolidates VIEs when it is the primary beneficiary. As of March 31, 2023, 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. The Company has the power to direct the activities of the VIEs including the ability to exercise discretion in the servicing of the financial assets and has the right to receive residual returns that could potentially be significant to the VIEs. The Company’s exposure to loss is limited to the total of the carrying value of the VIEs. The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. 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. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2023 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss A summary of the Company’s changes in accumulated other comprehensive loss by component is presented below (in thousands): Three Months Ended March 31, 2023 Derivatives Currency Translation Adjustments Accumulated Other Comprehensive Loss Balance at beginning of period $ 36,494 $ (135,310) $ (98,816) Other comprehensive (loss) income before reclassification (4,858) 16,008 11,150 Reclassification (3,195) — (3,195) Tax effect 876 (383) 493 Balance at end of period $ 29,317 $ (119,685) $ (90,368) Three Months Ended March 31, 2022 Derivatives Currency Translation Adjustments Accumulated Other Comprehensive Loss Balance at beginning of period $ 516 $ (54,064) $ (53,548) Other comprehensive income (loss) before reclassification 3,359 (22,254) (18,895) Reclassification 12,233 — 12,233 Tax effect (3,698) — (3,698) Balance at end of period $ 12,410 $ (76,318) $ (63,908) |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rate for the three months ended March 31, 2023 was 25.6%. For the three months ended March 31, 2022, the Company’s effective tax rate was 23.8%. For the three months ended March 31, 2023, the difference between the effective tax rate and the federal statutory rate was primarily due to the provision for state income taxes offset by other foreign adjustments. For the three months ended March 31, 2022 the difference between the effective tax rate and the federal statutory rate was primarily due to the provision of state income taxes and the proportion of income earned in higher tax rate jurisdictions compared to lower tax rate jurisdictions. 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 Company's quarterly effective tax rate is dependent on the level of income or loss from international operations in the reporting 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 months ended March 31, 2023 and 2022, was immaterial. The Company is subject to income taxes in the U.S. and foreign jurisdictions. Significant judgement is required in evaluating uncertain tax positions and determining the provision for income taxes. During the three months ended March 31, 2023, the Company accrued $2.5 million related to state tax filing positions. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
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 asserting various claims, including those based on the Fair Debt Collection Practices Act (“FDCPA”), the Fair Credit Reporting Act (“FCRA”), the Telephone Consumer Protection Act (“TCPA”), comparable state statutes, 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. As of March 31, 2023, 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, 2022 or any new material legal proceedings during the three months ended March 31, 2023. 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 March 31, 2023, 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. A forward flow purchase agreement is a commitment to purchase receivables over a duration that is typically three to twelve months, but can be longer, generally with a specifically defined volume range, frequency, and pricing. Typically, these forward flow contracts have provisions that allow for early termination or price re-negotiation should the underlying quality of the portfolio deteriorate over time or if any particular month’s delivery is materially different than the original portfolio used to price the forward flow contract. Certain of these forward flow purchase agreements may also have termination clauses, whereby the agreements can be canceled by either party upon providing a certain specified amount of notice. As of March 31, 2023, the Company had entered into forward flow purchase agreements for the purchase of nonperforming loans with an estimated minimum aggregate purchase price of approximately $439.1 million. The Company expects actual purchases under these forward flow purchase agreements to be significantly greater than the estimated minimum aggregate purchase price. |
Segment and Geographic Informat
Segment and Geographic Information | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information The Company conducts business through several operating segments. The Company’s Chief Operating Decision Maker relies on internal management reporting processes that provide segment revenue, segment operating income, and segment asset information in order to make financial decisions and allocate resources. The Company determined its operating segments meet the aggregation criteria, and therefore, it has one reportable segment, portfolio purchasing and recovery, based on similarities among the operating units including economic characteristics, the nature of the services, the nature of the production process, customer types for their services, the methods used to provide their services and the nature of the regulatory environment. The following table presents information about geographic areas in which the Company operates (in thousands) : Three Months Ended 2023 2022 Total revenues: United States $ 200,218 $ 373,574 Europe United Kingdom 77,985 90,221 Other European countries (1) 34,238 35,811 Total Europe 112,223 126,032 Other geographies (1) 189 76 Total $ 312,630 $ 499,682 ________________________ (1) None of these countries comprise greater than 10% of the Company's consolidated revenues. |
Goodwill and Identifiable Intan
Goodwill and Identifiable Intangible Assets | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Identifiable Intangible Assets | Goodwill and Identifiable Intangible Assets The Company’s 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. The annual goodwill testing date for the reporting units that are included in the portfolio purchasing and recovery reportable segment is October 1st. There have been no events or circumstances during the three months ended March 31, 2023, 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 intangible 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): Three Months Ended March 31, 2023 2022 Balance as of beginning of period: $ 821,214 $ 897,795 Effect of foreign currency translation 12,960 (21,254) Balance as of end of period: $ 834,174 $ 876,541 The Company’s acquired intangible assets are summarized as follows (in thousands) : As of March 31, 2023 As of December 31, 2022 Gross Accumulated Net Gross Accumulated Net Customer relationships $ 46,401 $ (25,134) $ 21,267 $ 45,498 $ (23,507) $ 21,991 Trade name and other 912 (810) 102 909 (788) 121 Total intangible assets $ 47,313 $ (25,944) $ 21,369 $ 46,407 $ (24,295) $ 22,112 |
Ownership, Description of Bus_2
Ownership, Description of Business, and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Financial Statement Preparation and Presentation The accompanying interim condensed 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 condensed 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 statement of the Company’s condensed consolidated financial statements. These condensed 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, 2022. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year. |
Use of Estimates | The preparation of condensed 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 condensed financial statements and the accompanying notes. Actual results could materially differ from those estimates. |
Basis of Consolidation | Basis of Consolidation The condensed 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 (“VIEs”) for which it is the primary beneficiary. The primary beneficiary has both (a) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance, and (b) either the obligation to absorb losses or the right to receive benefits. Refer to “Note 8: Variable Interest Entities” for further details. All intercompany transactions and balances have been eliminated in consolidation. |
Translation of Foreign Currencies | Translation of Foreign CurrenciesThe condensed 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 and are reclassified to earnings upon the substantial sale or liquidation of investments in foreign operations. |
Recently Adopted Accounting Pronouncement and Recent Accounting Pronouncements Not Yet Effective | Recently Adopted Accounting GuidanceThere have been no recent accounting pronouncements or changes in accounting pronouncements during the three months ended March 31, 2023, as compared to the recent accounting pronouncements described in our Annual Report, that have significance, or potential significance, to the Company’s condensed consolidated financial statements. |
Earnings Per Share | Basic earnings per share is 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 is calculated based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period. Dilutive potential common shares include outstanding stock-based awards, and the dilutive effect of the convertible and exchangeable senior notes, if applicable. |
Fair Value Measurements | Fair value is defined 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 Company uses 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. |
Investment in Receivable Portfolios, Net | The Company’s purchased portfolios of loans are grossed-up to their face value with an offsetting allowance and noncredit discount allocated to the individual receivables as the unit of account is at the individual loan level. Since each loan is deeply delinquent and deemed uncollectible at the individual loan level, the Company applies its charge-off policy and fully writes-off the amortized costs ( i.e. , face value net of noncredit discount) of the individual receivables immediately after purchasing the portfolio. The Company then records a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which ultimately equals the amount paid for a portfolio purchase and presented as “Investment in receivable portfolios, net” in the Company’s condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) based on the purchase price of the portfolio and the expected future cash flows at the time of purchase. Receivable portfolio purchases are aggregated into pools based on similar risk characteristics. Examples of risk characteristics include 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 location. Once a pool is established, the portfolios will remain in the designated pool unless the underlying risk characteristics change, which is not expected due to the delinquent nature of the individual loans. The purchase EIR of a pool will not change over the life of the pool even if expected future cash flows change. Revenue is recognized for each static pool over the economic life of the pool. Debt purchasing revenue includes two components: (1) Revenue from receivable portfolios, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR) and also includes all revenue from zero basis portfolio (“ZBA”) collections, and (2) Changes in recoveries, which includes (a) Recoveries above or below forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and (b) Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases). |
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 residual returns from the entity that could potentially be significant to the VIE. The Company consolidates VIEs when it is the primary beneficiary. As of March 31, 2023, 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. The Company has the power to direct the activities of the VIEs including the ability to exercise discretion in the servicing of the financial assets and has the right to receive residual returns that could potentially be significant to the VIEs. The Company’s exposure to loss is limited to the total of the carrying value of the VIEs. The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. 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. The Company’s Chief Operating Decision Maker relies on internal management reporting processes that provide segment revenue, segment operating income, and segment asset information in order to make financial decisions and allocate resources. The Company determined its operating segments meet the aggregation criteria, and therefore, it has one reportable segment, portfolio purchasing and recovery, based on similarities among the operating units including economic characteristics, the nature of the services, the nature of the production process, customer types for their services, the methods used to provide their services and the nature of the regulatory environment. |
Goodwill | The Company’s 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.Management continues to evaluate and monitor all key factors impacting the carrying value of the Company’s recorded goodwill and intangible 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) | 3 Months Ended |
Mar. 31, 2023 | |
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 2023 2022 Net income $ 18,626 $ 175,749 Total weighted-average basic shares outstanding 23,548 24,722 Dilutive effect of stock-based awards 291 540 Dilutive effect of convertible and exchangeable senior notes 1,103 2,220 Total weighted-average dilutive shares outstanding 24,942 27,482 Basic earnings per share $ 0.79 $ 7.11 Diluted earnings per share $ 0.75 $ 6.40 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, 2023 Level 1 Level 2 Level 3 Total Assets Interest rate cap contracts $ — $ 30,672 $ — $ 30,672 Liabilities Cross-currency swap agreements — (33,344) — (33,344) Fair Value Measurements as of December 31, 2022 Level 1 Level 2 Level 3 Total Assets Interest rate cap contracts $ — $ 36,807 $ — $ 36,807 Liabilities Cross-currency swap agreements — (36,918) — (36,918) |
Schedule of Financial Instruments Not Required to be Carried at Fair Value | The carrying amounts in the following table are included in the condensed consolidated statements of financial condition as of March 31, 2023 and December 31, 2022 (in thousands) : March 31, 2023 December 31, 2022 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Financial Assets Investment in receivable portfolios, net $ 3,214,792 $ 3,333,265 $ 3,088,261 $ 3,242,506 Financial Liabilities Global senior secured revolving credit facility 752,107 752,107 661,738 661,738 Encore private placement notes 58,620 57,599 68,390 66,947 Senior secured notes (1) 1,505,060 1,353,671 1,480,258 1,334,686 Exchangeable senior notes due September 2023 17,655 21,185 172,500 205,227 Convertible senior notes due October 2025 100,000 134,336 100,000 130,556 Convertible senior notes due March 2029 230,000 232,463 — — Cabot securitisation senior facility 431,919 431,919 423,522 423,522 _______________________ (1) Carrying amount represents historical cost, adjusted for any related debt discount or debt premium. |
Derivatives and Hedging Instr_2
Derivatives and Hedging Instruments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 condensed consolidated statements of financial condition (in thousands) : March 31, 2023 December 31, 2022 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate cap contracts Other assets $ 30,672 Other assets $ 36,807 Cross-currency swap agreements Other liabilities (33,344) Other liabilities (36,918) |
Effects of Derivatives in Cash Flow Hedging Relationships | The following table summarize the effects of derivatives in cash flow hedging relationships designated as hedging instruments in the Company’s condensed consolidated financial statements (in thousands) : Derivatives Designated as Hedging Instruments Gain (Loss) Recognized in OCI Location of Gain (Loss) Reclassified from OCI into Income (Loss) Gain (Loss) Reclassified from OCI into Income (Loss) Three Months Ended March 31, Three Months Ended March 31, 2023 2022 2023 2022 Interest rate cap contracts $ (6,924) $ 9,763 Interest expense $ (450) $ (170) Cross-currency swap agreements 2,066 (6,404) Interest expense (1,508) (1,587) Other income (expense) 5,153 (10,476) |
Investment in Receivable Port_2
Investment in Receivable Portfolios, Net (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Receivables [Abstract] | |
Schedule of Accounts, Notes, Loans and Financing Receivable | Investment in receivable portfolios, net consists of the following as of the dates presented ( in thousands ): March 31, 2023 2022 Amortized cost $ — $ — Negative allowance for expected recoveries 3,214,792 3,137,386 Balance, end of period $ 3,214,792 $ 3,137,386 |
Schedule of Investment in Receivable Portfolios | The following table summarizes the changes in the balance of investment in receivable portfolios, net during the periods presented ( in thousands ): Three Months Ended 2023 2022 Balance, beginning of period $ 3,088,261 $ 3,065,553 Negative allowance for expected recoveries - current period purchases (1) 276,431 169,505 Collections applied to investment in receivable portfolios, net (2) (166,682) (215,309) Changes in recoveries (3) (9,501) 167,223 Put-backs and Recalls (1,806) (3,207) Disposals and transfers to real estate owned (1,105) (1,976) Foreign currency translation adjustments 29,194 (44,403) Balance, end of period $ 3,214,792 $ 3,137,386 _______________________ (1) The table below provides the detail on the establishment of negative allowance for expected recoveries of portfolios purchased during the periods presented: Three Months Ended 2023 2022 Purchase price $ 276,431 $ 169,505 Allowance for credit losses 659,644 350,186 Amortized cost 936,075 519,691 Noncredit discount 1,005,221 657,058 Face value 1,941,296 1,176,749 Write-off of amortized cost (936,075) (519,691) Write-off of noncredit discount (1,005,221) (657,058) Negative allowance 276,431 169,505 Negative allowance for expected recoveries - current period purchases $ 276,431 $ 169,505 (2) Collections applied to investment in receivable portfolios, net, is calculated as follows during the periods presented: Three Months Ended 2023 2022 Cash Collections $ 462,356 $ 519,414 Less - amounts classified to revenue from receivable portfolios (295,674) (304,105) Collections applied to investment in receivable portfolios, net $ 166,682 $ 215,309 (3) Changes in recoveries is calculated as follows during the periods presented, where recoveries include cash collections, put-backs and recalls, and other cash-based adjustments: Three Months Ended 2023 2022 Recoveries (below) above forecast $ (15,358) $ 46,352 Changes in expected future recoveries 5,857 120,871 Changes in recoveries $ (9,501) $ 167,223 |
Other Assets (Tables)
Other Assets (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Components of Other Assets | Other assets consist of the following (in thousands) : March 31, December 31, Real estate owned $ 86,844 $ 68,242 Operating lease right-of-use assets 71,413 70,074 Prepaid expenses 33,425 30,376 Derivative instruments 30,672 36,807 Identifiable intangible assets, net 21,369 22,112 Income tax deposits 20,188 18,259 Deferred tax assets 16,487 18,069 Service fee receivables 16,126 16,094 Other 71,517 61,040 Total $ 368,041 $ 341,073 |
Borrowings (Tables)
Borrowings (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Consolidated Debt and Capital Lease Obligations | The components of the Company’s consolidated borrowings were as follows (in thousands) : March 31, December 31, Global senior secured revolving credit facility $ 752,107 $ 661,738 Encore private placement notes 58,620 68,390 Senior secured notes 1,510,416 1,485,888 Convertible notes and exchangeable notes 347,655 272,500 Cabot securitisation senior facility 431,919 423,522 Other 20,206 23,512 Finance lease liabilities 4,716 5,675 3,125,639 2,941,225 Less: debt discount and issuance costs, net of amortization (43,853) (42,404) Total $ 3,081,786 $ 2,898,821 |
Schedule of Notes | The following table provides a summary of the Company’s senior secured notes (the “Senior Secured Notes”) ($ in thousands) : March 31, December 31, Issue Maturity Date Interest Payment Dates Interest Rate Encore 2025 Notes $ 380,510 $ 375,325 EUR Oct 15, 2025 Apr 15, Oct 15 4.875 % Encore 2026 Notes 370,216 363,019 GBP Feb 15, 2026 Feb 15, Aug 15 5.375 % Encore 2028 Notes 308,514 302,516 GBP Jun 1, 2028 Jun 1, Dec 1 4.250 % Encore 2028 Floating Rate Notes 451,176 445,028 EUR Jan 15, 2028 Jan 15, Apr 15, Jul 15, Oct 15 EURIBOR +4.250% (1) $ 1,510,416 $ 1,485,888 _______________________ (1) Interest rate is based on three-month EURIBOR (subject to a 0% floor) plus 4.250% per annum, resets quarterly. The following table provides a summary of the principal balance, maturity date and interest rate for the Company’s convertible and exchangeable senior notes (the “Convertible Notes” or “Exchangeable Notes,” as applicable) ($ in thousands) : March 31, December 31, Maturity Date Interest Payment Dates Interest Rate 2023 Exchangeable Notes $ 17,655 $ 172,500 Sep 1, 2023 Mar 1, Sep 1 4.500 % 2025 Convertible Notes 100,000 100,000 Oct 1, 2025 Apr 1, Oct 1 3.250 % 2029 Convertible Notes 230,000 — Mar 15, 2029 Mar 15, Sep 15 4.000 % $ 347,655 $ 272,500 |
Schedule of Hedge Program for Convertible Notes | Certain key terms related to the convertible and exchangeable features as of March 31, 2023 are listed below ($ in thousands, except conversion or exchange price) : 2023 Exchangeable Notes 2025 Convertible Notes 2029 Convertible Notes Initial conversion or exchange price $ 44.62 $ 40.00 $ 65.89 Closing stock price at date of issuance $ 36.45 $ 32.00 $ 51.68 Closing stock price date Jul 20, 2018 Sep 4, 2019 Feb 28, 2023 Initial conversion or exchange rate (shares per $1,000 principal amount) 22.4090 25.0000 15.1763 Adjusted conversion or exchange rate (shares per $1,000 principal amount) (1) 22.5264 25.1310 15.1763 Adjusted conversion or exchange price (1) $ 44.39 $ 39.79 $ 65.89 Adjusted effective conversion or exchange price (2) $ 62.13 $ 39.79 $ 82.69 Excess of if-converted value compared to principal (3) $ 2,409 $ 26,786 $ — Conversion or exchange date Mar 1, 2023 Jul 1, 2025 Dec 15, 2028 _______________________ (1) Pursuant to the indentures for the Company’s 2025 Convertible Notes and 2023 Exchangeable Notes, the conversion and exchange rates were adjusted upon the completion of the Company’s tender offer in December 2021. (2) As discussed above, the Company maintains a hedge program that increases the effective exchange price for the 2023 Exchangeable Notes to $62.13 and the 2029 Convertible Notes to $82.69. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Accumulated Other Comprehensive Loss | A summary of the Company’s changes in accumulated other comprehensive loss by component is presented below (in thousands): Three Months Ended March 31, 2023 Derivatives Currency Translation Adjustments Accumulated Other Comprehensive Loss Balance at beginning of period $ 36,494 $ (135,310) $ (98,816) Other comprehensive (loss) income before reclassification (4,858) 16,008 11,150 Reclassification (3,195) — (3,195) Tax effect 876 (383) 493 Balance at end of period $ 29,317 $ (119,685) $ (90,368) Three Months Ended March 31, 2022 Derivatives Currency Translation Adjustments Accumulated Other Comprehensive Loss Balance at beginning of period $ 516 $ (54,064) $ (53,548) Other comprehensive income (loss) before reclassification 3,359 (22,254) (18,895) Reclassification 12,233 — 12,233 Tax effect (3,698) — (3,698) Balance at end of period $ 12,410 $ (76,318) $ (63,908) |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Geographical Areas of Operations | The following table presents information about geographic areas in which the Company operates (in thousands) : Three Months Ended 2023 2022 Total revenues: United States $ 200,218 $ 373,574 Europe United Kingdom 77,985 90,221 Other European countries (1) 34,238 35,811 Total Europe 112,223 126,032 Other geographies (1) 189 76 Total $ 312,630 $ 499,682 ________________________ (1) None of these countries comprise greater than 10% of the Company's consolidated revenues. |
Goodwill and Identifiable Int_2
Goodwill and Identifiable Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Activity in the Goodwill Balance | The following table summarizes the activity in the Company’s goodwill balance (in thousands): Three Months Ended March 31, 2023 2022 Balance as of beginning of period: $ 821,214 $ 897,795 Effect of foreign currency translation 12,960 (21,254) Balance as of end of period: $ 834,174 $ 876,541 |
Schedule of Acquired Intangible Assets | The Company’s acquired intangible assets are summarized as follows (in thousands) : As of March 31, 2023 As of December 31, 2022 Gross Accumulated Net Gross Accumulated Net Customer relationships $ 46,401 $ (25,134) $ 21,267 $ 45,498 $ (23,507) $ 21,991 Trade name and other 912 (810) 102 909 (788) 121 Total intangible assets $ 47,313 $ (25,944) $ 21,369 $ 46,407 $ (24,295) $ 22,112 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 | May 05, 2021 | Aug. 12, 2015 | |
Earnings Per Share [Abstract] | |||
Stock Repurchase Program, Authorized Amount | $ 300 | $ 50 | |
Stock Repurchase Program, Increase of Authorized Amount | $ 250 | ||
Stock Repurchased During Period, Shares | 399,522 | ||
Repurchase and retirement of common stock | $ 25.6 | ||
Antidilutive securities excluded from computation of earnings per share (shares) | 0 |
Earnings Per Share - Table (Det
Earnings Per Share - Table (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Share [Abstract] | ||
Net Income (Loss) Attributable to Parent | $ 18,626 | $ 175,749 |
Total weighted-average basic shares outstanding (shares) | 23,548 | 24,722 |
Dilutive effect of stock-based awards (shares) | 291 | 540 |
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities (in shares) | 1,103 | 2,220 |
Total weighted-average dilutive shares outstanding (shares) | 24,942 | 27,482 |
Basic earnings per share (USD per share) | $ 0.79 | $ 7.11 |
Diluted earnings per share (USD per share) | $ 0.75 | $ 6.40 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments Required to be Carried at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Assets | ||
Derivative instruments | $ 30,672 | $ 36,807 |
Interest rate cap contracts | ||
Assets | ||
Derivative instruments | 30,672 | 36,807 |
Interest rate cap contracts | Level 1 | ||
Assets | ||
Derivative instruments | 0 | 0 |
Interest rate cap contracts | Level 2 | ||
Assets | ||
Derivative instruments | 30,672 | 36,807 |
Interest rate cap contracts | Level 3 | ||
Assets | ||
Derivative instruments | 0 | 0 |
Cross-currency swap agreements | ||
Liabilities | ||
Cross-currency swap agreements | (33,344) | (36,918) |
Cross-currency swap agreements | Level 1 | ||
Liabilities | ||
Cross-currency swap agreements | 0 | 0 |
Cross-currency swap agreements | Level 2 | ||
Liabilities | ||
Cross-currency swap agreements | (33,344) | (36,918) |
Cross-currency swap agreements | Level 3 | ||
Liabilities | ||
Cross-currency swap agreements | $ 0 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Fair Value Disclosures [Abstract] | ||
Assets held for sale | $ 86,844 | $ 68,242 |
Fair Value Measurements - Fin_2
Fair Value Measurements - Financial Instruments Not Required to be Carried at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Carrying Amount | ||
Financial Assets | ||
Investment in receivable portfolios, net | $ 3,214,792 | $ 3,088,261 |
Carrying Amount | Global senior secured revolving credit facility | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 752,107 | 661,738 |
Carrying Amount | Cabot securitisation senior facility | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 431,919 | 423,522 |
Carrying Amount | Encore private placement notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 58,620 | 68,390 |
Carrying Amount | Senior secured notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 1,505,060 | 1,480,258 |
Carrying Amount | 2023 Exchangeable Notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 17,655 | 172,500 |
Carrying Amount | 2025 Convertible Notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 100,000 | 100,000 |
Carrying Amount | 2029 Convertible Notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 230,000 | 0 |
Estimated Fair Value | ||
Financial Assets | ||
Investment in receivable portfolios, net | 3,333,265 | 3,242,506 |
Estimated Fair Value | Global senior secured revolving credit facility | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 752,107 | 661,738 |
Estimated Fair Value | Cabot securitisation senior facility | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 431,919 | 423,522 |
Estimated Fair Value | Encore private placement notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 57,599 | 66,947 |
Estimated Fair Value | Senior secured notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 1,353,671 | 1,334,686 |
Estimated Fair Value | 2023 Exchangeable Notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 21,185 | 205,227 |
Estimated Fair Value | 2025 Convertible Notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 134,336 | 130,556 |
Estimated Fair Value | 2029 Convertible Notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | $ 232,463 | $ 0 |
Derivatives and Hedging Instr_3
Derivatives and Hedging Instruments - Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Derivative [Line Items] | ||
Interest rate cap contracts | $ 30,672 | $ 36,807 |
Interest rate cap contracts | ||
Derivative [Line Items] | ||
Interest rate cap contracts | 30,672 | 36,807 |
Cross-currency swap agreements | ||
Derivative [Line Items] | ||
Cross-currency swap agreements | 33,344 | 36,918 |
Derivatives Designated as Hedging Instruments | Interest rate cap contracts | Other assets | ||
Derivative [Line Items] | ||
Interest rate cap contracts | 30,672 | 36,807 |
Derivatives Designated as Hedging Instruments | Cross-currency swap agreements | Other liabilities | ||
Derivative [Line Items] | ||
Cross-currency swap agreements | $ 33,344 | $ 36,918 |
Derivatives and Hedging Instr_4
Derivatives and Hedging Instruments - Narrative (Details) - 3 months ended Mar. 31, 2023 € in Millions, £ in Millions, $ in Millions | USD ($) instrument | EUR (€) instrument | GBP (£) instrument |
Euro Member Countries, Euro | |||
Derivative [Line Items] | |||
Foreign currency exchange rate, translation | 0.92 | 0.92 | 0.92 |
United Kingdom, Pounds | |||
Derivative [Line Items] | |||
Foreign currency exchange rate, translation | 0.81 | 0.81 | 0.81 |
Interest rate cap contracts | |||
Derivative [Line Items] | |||
Loss expected to be reclassified to earnings in next twelve months | $ 22.1 | ||
Interest rate cap contracts | Cash Flow Hedging | |||
Derivative [Line Items] | |||
Number of interest rate derivatives held | instrument | 2 | 2 | 2 |
Derivative instrument, notional amount | $ 866.8 | ||
Interest rate cap contracts | Cash Flow Hedging | 2019 Cap | |||
Derivative [Line Items] | |||
Derivative instrument, notional amount | 434.9 | € 400 | |
Interest rate cap contracts | Cash Flow Hedging | 2020 Caps | |||
Derivative [Line Items] | |||
Derivative instrument, notional amount | 431.9 | £ 350 | |
Cross-currency swap agreements | |||
Derivative [Line Items] | |||
Loss expected to be reclassified to earnings in next twelve months | $ (1.6) | ||
Cross-currency swap agreements | Cash Flow Hedging | |||
Derivative [Line Items] | |||
Number of instruments held | instrument | 4 | 4 | 4 |
Derivative instrument, notional amount | $ 380.5 | € 350 |
Derivatives and Hedging Instr_5
Derivatives and Hedging Instruments - Effects of Derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Derivative [Line Items] | ||
Gain (Loss) Recognized in OCI | $ (7,177) | $ 11,894 |
Derivatives Designated as Hedging Instruments | Interest rate cap contracts | Cash Flow Hedging | Interest expense | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized in OCI | (6,924) | 9,763 |
Gain (Loss) Reclassified from OCI into Income (Loss) | (450) | (170) |
Derivatives Designated as Hedging Instruments | Cross-currency swap agreements | Cash Flow Hedging | Interest expense | ||
Derivative [Line Items] | ||
Gain (Loss) Reclassified from OCI into Income (Loss) | (1,508) | (1,587) |
Derivatives Designated as Hedging Instruments | Cross-currency swap agreements | Cash Flow Hedging | Interest Expense / Other Income (Expense) | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized in OCI | 2,066 | (6,404) |
Derivatives Designated as Hedging Instruments | Cross-currency swap agreements | Cash Flow Hedging | Other Expense | ||
Derivative [Line Items] | ||
Gain (Loss) Reclassified from OCI into Income (Loss) | $ 5,153 | $ (10,476) |
Investment in Receivable Port_3
Investment in Receivable Portfolios, Net - Schedule of Investment Receivable Portfolios (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Receivables [Abstract] | ||
Amortized cost | $ 0 | $ 0 |
Negative allowance for expected recoveries | 3,214,792 | 3,137,386 |
Balance, end of period | $ 3,214,792 | $ 3,137,386 |
Investment in Receivable Port_4
Investment in Receivable Portfolios, Net - Change in the Balance of the Investment in Receivable Portfolios (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Investment in Receivables Portfolio [Roll Forward] | ||
Balance, beginning of period | $ 3,088,261 | $ 3,065,553 |
Purchases of receivable portfolios | 276,431 | 169,505 |
Collections applied to investment in receivable portfolios, net | (166,682) | (215,309) |
Changes in expected recoveries | (9,501) | 167,223 |
Put-backs and Recalls | (1,806) | (3,207) |
Disposals and transfers to real estate owned | (1,105) | (1,976) |
Foreign currency translation adjustments | 29,194 | (44,403) |
Balance, end of period | 3,214,792 | 3,137,386 |
Collections applied to principal balance (debt purchasing) | ||
Cash Collections | (462,356) | (519,414) |
Less - amounts classified to revenue from receivable portfolios | (295,674) | (304,105) |
Collections applied to investment in receivable portfolios, net | 166,682 | 215,309 |
Changes in expected recoveries | ||
Recoveries (below) above forecast | (15,358) | 46,352 |
Changes in expected future recoveries | 5,857 | 120,871 |
Changes in recoveries | $ (9,501) | $ 167,223 |
Investment in Receivable Port_5
Investment in Receivable Portfolios, Net - Establishment of Negative Allowance (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Receivables [Abstract] | ||
Purchase price | $ 276,431 | $ 169,505 |
Allowance for credit losses | 659,644 | 350,186 |
Amortized cost | 936,075 | 519,691 |
Noncredit discount | 1,005,221 | 657,058 |
Face value | 1,941,296 | 1,176,749 |
Write-off of amortized cost | (936,075) | (519,691) |
Write-off of noncredit discount | (1,005,221) | (657,058) |
Negative allowance | 276,431 | 169,505 |
Negative allowance for expected recoveries - current period purchases | $ 276,431 | $ 169,505 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Real estate owned | $ 86,844 | $ 68,242 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Total | Total |
Operating lease right-of-use assets | $ 71,413 | $ 70,074 |
Prepaid expenses | 33,425 | 30,376 |
Derivative instruments | 30,672 | 36,807 |
Identifiable intangible assets, net | 21,369 | 22,112 |
Income tax deposits | 20,188 | 18,259 |
Deferred tax assets | 16,487 | 18,069 |
Service fee receivables | 16,126 | 16,094 |
Other | 71,517 | 61,040 |
Total | $ 368,041 | $ 341,073 |
Borrowings - Consolidated Debt
Borrowings - Consolidated Debt and Capital Lease Obligations - Table and Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Finance lease liabilities | $ 4,716 | $ 5,675 |
Debt and finance lease liabilities, gross | 3,125,639 | 2,941,225 |
Less: debt discount and issuance costs, net of amortization | (43,853) | (42,404) |
Borrowings | $ 3,081,786 | $ 2,898,821 |
Finance Lease, Liability, Statement of Financial Position [Extensible List] | Borrowings | Borrowings |
Credit Facility | Global senior secured revolving credit facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 752,107 | $ 661,738 |
Credit Facility | Cabot securitisation senior facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | 431,919 | 423,522 |
Encore private placement notes | Encore private placement notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | 58,620 | 68,390 |
Senior secured notes | Senior secured notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | 1,510,416 | 1,485,888 |
Convertible notes and exchangeable notes | Convertible notes and exchangeable notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | 347,655 | 272,500 |
Other | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 20,206 | $ 23,512 |
Borrowings - Global Senior Secu
Borrowings - Global Senior Secured Revolving Credit Facility - Narrative (Details) - Global senior secured revolving credit facility - Revolving Credit Facility - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 29, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Debt Instrument [Line Items] | |||
Line of credit increase | $ 90 | ||
Revolving credit facility | $ 1,140 | ||
Commitment fee (in percent) | 0.40% | ||
Maximum ratio of financial indebtedness to cash and cash equivalent investments | 0.75 | ||
Utilization threshold (as a percent) | 20% | ||
Maximum ratio of super senior liabilities to cash and cash equivalent investments | 0.275 | ||
Fixed charge coverage ratio | 2 | ||
Long-term debt | $ 752.1 | ||
Weighted average interest rate (as a percent) | 7.06% | 2.73% | |
Remaining borrowing capacity | $ 387.9 | ||
Euro Interbank Offered Rate (EURIBOR) | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate (as a percent) | 2.50% | ||
Euro Interbank Offered Rate (EURIBOR) | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate (as a percent) | 0% | ||
Sterling Overnight Index Average (SONIA) | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate (as a percent) | 2.50% | ||
Sterling Overnight Index Average (SONIA) | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate (as a percent) | 0% | ||
Secured Overnight Financing Rate (SOFR) | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate (as a percent) | 2.50% | ||
Debt Instrument, Interest Rate, Adjustment Spread | 0.10% | ||
Secured Overnight Financing Rate (SOFR) | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate (as a percent) | 0% |
Borrowings - Encore Private Pla
Borrowings - Encore Private Placement Notes - Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Dec. 31, 2022 | Aug. 31, 2017 | |
Debt Instrument [Line Items] | |||
Debt issued | $ 347,655,000 | $ 272,500,000 | |
Encore private placement notes | Notes Payable, Other Payables | |||
Debt Instrument [Line Items] | |||
Debt issued | $ 325,000,000 | ||
Long-term debt | $ 58,620,000 | $ 68,390,000 | |
Stated interest rate (as a percent) | 5.625% | ||
Senior secured notes, periodic principal repayment | $ 9,800,000 |
Borrowings - Senior Secured Not
Borrowings - Senior Secured Notes - Table and Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Senior secured notes | $ 1,510,416 | $ 1,485,888 |
Encore 2025 Notes | Secured Debt | ||
Debt Instrument [Line Items] | ||
Senior secured notes | $ 380,510 | 375,325 |
Stated interest rate (as a percent) | 4.875% | |
Encore 2026 Notes | Secured Debt | ||
Debt Instrument [Line Items] | ||
Senior secured notes | $ 370,216 | 363,019 |
Stated interest rate (as a percent) | 5.375% | |
Encore 2028 Notes | Secured Debt | ||
Debt Instrument [Line Items] | ||
Senior secured notes | $ 308,514 | 302,516 |
Stated interest rate (as a percent) | 4.25% | |
Encore 2028 Floating Rate Notes | Secured Debt | ||
Debt Instrument [Line Items] | ||
Senior secured notes | $ 451,176 | $ 445,028 |
Variable rate floor | 0% | |
Encore 2028 Floating Rate Notes | Euro Interbank Offered Rate (EURIBOR) | Secured Debt | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (as a percent) | 4.25% |
Borrowings - Encore Convertible
Borrowings - Encore Convertible Notes and Exchangeable Notes - Table and Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Debt issued | $ 347,655 | $ 272,500 |
Exchangeable Notes | 2023 Exchangeable Notes | ||
Debt Instrument [Line Items] | ||
Debt issued | $ 17,655 | 172,500 |
Stated interest rate (as a percent) | 4.50% | |
Initial conversion price (usd per share) | $ 44.62 | |
Excess of if-converted value compared to principal | $ 2,409 | |
Convertible Notes | 2025 Convertible Notes | ||
Debt Instrument [Line Items] | ||
Debt issued | $ 100,000 | 100,000 |
Stated interest rate (as a percent) | 3.25% | |
Initial conversion price (usd per share) | $ 40 | |
Excess of if-converted value compared to principal | $ 26,786 | |
Convertible Notes | 2029 Convertible Notes | ||
Debt Instrument [Line Items] | ||
Debt issued | $ 230,000 | $ 0 |
Stated interest rate (as a percent) | 4% | |
Initial conversion price (usd per share) | $ 65.89 | |
Excess of if-converted value compared to principal | $ 0 |
Borrowings - Encore Convertib_2
Borrowings - Encore Convertible Notes and Exchangeable Notes Table (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares | |
2023 Exchangeable Notes | Exchangeable Notes | |
Debt Instrument [Line Items] | |
Initial conversion price (usd per share) | $ 44.62 |
Closing stock price at date of issuance (usd per share) | $ 36.45 |
Initial conversion or exchange rate (shares per $1,000 principal amount) | 22.4090 |
Adjusted conversion or exchange rate (shares per $1,000 principal amount)(1) | 22.5264 |
Adjusted conversion or exchange price (usd per share) | $ 44.39 |
Adjusted effective conversion or exchange price (usd per share) | $ 62.13 |
Excess of if-converted value compared to principal | $ | $ 2,409 |
2025 Convertible Notes | Convertible Notes | |
Debt Instrument [Line Items] | |
Initial conversion price (usd per share) | $ 40 |
Closing stock price at date of issuance (usd per share) | $ 32 |
Initial conversion or exchange rate (shares per $1,000 principal amount) | 25 |
Adjusted conversion or exchange rate (shares per $1,000 principal amount)(1) | 25.1310 |
Adjusted conversion or exchange price (usd per share) | $ 39.79 |
Adjusted effective conversion or exchange price (usd per share) | $ 39.79 |
Excess of if-converted value compared to principal | $ | $ 26,786 |
2029 Convertible Notes | Convertible Notes | |
Debt Instrument [Line Items] | |
Initial conversion price (usd per share) | $ 65.89 |
Closing stock price at date of issuance (usd per share) | $ 51.68 |
Initial conversion or exchange rate (shares per $1,000 principal amount) | 15.1763 |
Adjusted conversion or exchange rate (shares per $1,000 principal amount)(1) | 15.1763 |
Adjusted conversion or exchange price (usd per share) | $ 65.89 |
Adjusted effective conversion or exchange price (usd per share) | $ 82.69 |
Excess of if-converted value compared to principal | $ | $ 0 |
Borrowings - Convertible and Ex
Borrowings - Convertible and Exchangeable Notes Narrative (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 USD ($) hedgeProgram $ / shares | Mar. 31, 2022 USD ($) | Apr. 01, 2023 $ / shares | Dec. 31, 2022 USD ($) | |
Debt Instrument [Line Items] | ||||
Debt instrument face value | $ 347,655 | $ 272,500 | ||
Interest expense | $ 46,835 | $ 34,633 | ||
Number of hedge programs | hedgeProgram | 2 | |||
Combination settlement ratio | 1.8 | |||
Convertible Notes | 2029 Convertible Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument face value | $ 230,000 | 0 | ||
Stated interest rate (as a percent) | 4% | |||
Initial conversion price (usd per share) | $ / shares | $ 65.89 | |||
Net cost of capped call transactions | $ 18,500 | |||
Convertible Notes | 2029 Convertible Notes | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Initial conversion price (usd per share) | $ / shares | $ 82.69 | |||
Exchangeable Notes | 2023 Exchangeable Notes | ||||
Debt Instrument [Line Items] | ||||
Debt instrument face value | $ 17,655 | $ 172,500 | ||
Stated interest rate (as a percent) | 4.50% | |||
Repurchased amount of debt, face amount | $ 154,800 | |||
Debt instrument, repurchased amount | 192,500 | |||
Induced conversion of convertible debt expense | 2,700 | |||
Proceeds from (Repayments of) Debt | 28,500 | |||
Interest expense | $ 700 | |||
Initial conversion price (usd per share) | $ / shares | $ 44.62 | |||
Exchangeable Notes | 2023 Exchangeable Notes | Maximum | ||||
Debt Instrument [Line Items] | ||||
Initial conversion price (usd per share) | $ / shares | $ 79.91 | |||
Convertible notes and exchangeable notes | ||||
Debt Instrument [Line Items] | ||||
Interest expense, debt, excluding amortization | $ 2,900 | $ 3,700 | ||
Encore Finance | Encore | ||||
Debt Instrument [Line Items] | ||||
Ownership % | 100% |
Borrowings - Exchangeable and C
Borrowings - Exchangeable and Convertible Notes Features and Certain Key Terms (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares | |
2023 Exchangeable Notes | Exchangeable Notes | |
Debt Instrument [Line Items] | |
Initial conversion price (usd per share) | $ 44.62 |
Closing stock price at date of issuance (usd per share) | $ 36.45 |
Initial conversion or exchange rate (shares per $1,000 principal amount) | 22.4090 |
Adjusted conversion or exchange rate (shares per $1,000 principal amount)(1) | 22.5264 |
Adjusted conversion or exchange price (usd per share) | $ 44.39 |
Adjusted effective conversion or exchange price (usd per share) | $ 62.13 |
Excess of if-converted value compared to principal | $ | $ 2,409 |
Debt instrument, convertible, if-converted value in excess of principal, after hedge effect | $ | $ 0 |
2025 Convertible Notes | Convertible Notes | |
Debt Instrument [Line Items] | |
Initial conversion price (usd per share) | $ 40 |
Closing stock price at date of issuance (usd per share) | $ 32 |
Initial conversion or exchange rate (shares per $1,000 principal amount) | 25 |
Adjusted conversion or exchange rate (shares per $1,000 principal amount)(1) | 25.1310 |
Adjusted conversion or exchange price (usd per share) | $ 39.79 |
Adjusted effective conversion or exchange price (usd per share) | $ 39.79 |
Excess of if-converted value compared to principal | $ | $ 26,786 |
2029 Convertible Notes | Convertible Notes | |
Debt Instrument [Line Items] | |
Initial conversion price (usd per share) | $ 65.89 |
Closing stock price at date of issuance (usd per share) | $ 51.68 |
Initial conversion or exchange rate (shares per $1,000 principal amount) | 15.1763 |
Adjusted conversion or exchange rate (shares per $1,000 principal amount)(1) | 15.1763 |
Adjusted conversion or exchange price (usd per share) | $ 65.89 |
Adjusted effective conversion or exchange price (usd per share) | $ 82.69 |
Excess of if-converted value compared to principal | $ | $ 0 |
Borrowings - Interest Expense R
Borrowings - Interest Expense Related to Convertible and Exchangeable Notes -Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Convertible notes and exchangeable notes | ||
Debt Instrument [Line Items] | ||
Interest expense, debt, excluding amortization | $ 2.9 | $ 3.7 |
Borrowings - Cabot Securitisati
Borrowings - Cabot Securitisation Senior Facility (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 USD ($) | Mar. 31, 2022 | Mar. 31, 2023 GBP (£) | Dec. 31, 2022 USD ($) | |
Debt Instrument [Line Items] | ||||
Book value | $ 4,685,965 | $ 4,508,360 | ||
United Kingdom, Pounds | ||||
Debt Instrument [Line Items] | ||||
Foreign currency exchange rate, translation | 0.81 | 0.81 | ||
Cabot securitisation senior facility | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 431,900 | £ 350,000,000 | ||
Book value | $ 452,300 | £ 366,500,000 | ||
Weighted average interest rate (as a percent) | 5.25% | 3.45% | ||
Cabot securitisation senior facility | Sterling Overnight Index Average (SONIA) | Debt Instrument, Redemption, Period One | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 3% | |||
Cabot securitisation senior facility | Minimum | Sterling Overnight Index Average (SONIA) | Debt Instrument, Redemption, Period Two | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 0% | |||
Cabot securitisation senior facility | Maximum | Sterling Overnight Index Average (SONIA) | Debt Instrument, Redemption, Period Two | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (as a percent) | 1% |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance at Beginning of period | $ 1,179,627 | $ 1,185,261 |
Balance at end of period | 1,184,156 | 1,246,375 |
Derivatives | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance at Beginning of period | 36,494 | 516 |
Other comprehensive (loss) income before reclassification | (4,858) | 3,359 |
Reclassification | (3,195) | 12,233 |
Tax effect | 876 | (3,698) |
Balance at end of period | 29,317 | 12,410 |
Currency Translation Adjustments | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance at Beginning of period | (135,310) | (54,064) |
Other comprehensive (loss) income before reclassification | 16,008 | (22,254) |
Reclassification | 0 | 0 |
Tax effect | (383) | 0 |
Balance at end of period | (119,685) | (76,318) |
Accumulated Other Comprehensive Loss | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance at Beginning of period | (98,816) | (53,548) |
Other comprehensive (loss) income before reclassification | 11,150 | (18,895) |
Reclassification | (3,195) | 12,233 |
Tax effect | 493 | (3,698) |
Balance at end of period | $ (90,368) | $ (63,908) |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Contingency [Line Items] | ||
Effective rate (as a percent) | 25.60% | 23.80% |
Uncertain tax positions, taxes accrued for state tax filing positions | $ 2.5 | |
Costa Rica | Tax holiday through December 31, 2026 | ||
Income Tax Contingency [Line Items] | ||
Holiday tax rate (as a percent) | 100% |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Mar. 31, 2023 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Material reserves for litigation | $ 0 |
Purchase price | $ 439,100,000 |
Segment and Geographic Inform_3
Segment and Geographic Information (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) segment | Mar. 31, 2022 USD ($) | |
Segment Reporting [Abstract] | ||
Number of reportable segments | segment | 1 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 312,630 | $ 499,682 |
United States | ||
Segment Reporting Information [Line Items] | ||
Revenues | 200,218 | 373,574 |
Total Europe | ||
Segment Reporting Information [Line Items] | ||
Revenues | 112,223 | 126,032 |
United Kingdom | ||
Segment Reporting Information [Line Items] | ||
Revenues | 77,985 | 90,221 |
Other European countries | ||
Segment Reporting Information [Line Items] | ||
Revenues | 34,238 | 35,811 |
Other Geographies | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 189 | $ 76 |
Goodwill and Identifiable Int_3
Goodwill and Identifiable Intangible Assets - Activity in Goodwill Balance (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Goodwill [Roll Forward] | ||
Balance at beginning of period | $ 821,214 | $ 897,795 |
Effect of foreign currency translation | 12,960 | (21,254) |
Balance at end of period | $ 834,174 | $ 876,541 |
Goodwill and Identifiable Int_4
Goodwill and Identifiable Intangible Assets - Acquired Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 47,313 | $ 46,407 |
Accumulated Amortization | (25,944) | (24,295) |
Net Carrying Amount | 21,369 | 22,112 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 46,401 | 45,498 |
Accumulated Amortization | (25,134) | (23,507) |
Net Carrying Amount | 21,267 | 21,991 |
Trade name and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 912 | 909 |
Accumulated Amortization | (810) | (788) |
Net Carrying Amount | $ 102 | $ 121 |