Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2024 | May 01, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
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, $0.01 Par Value Per Share | |
Trading Symbol | ECPG | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 23,686,865 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001084961 | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Assets | ||
Cash and cash equivalents | $ 172,990 | $ 158,364 |
Investment in receivable portfolios, net | 3,531,387 | 3,468,432 |
Property and equipment, net | 102,776 | 103,959 |
Other assets | 277,622 | 293,256 |
Goodwill | 602,400 | 606,475 |
Total assets | 4,687,175 | 4,630,486 |
Liabilities: | ||
Accounts payable and accrued liabilities | 180,206 | 189,928 |
Borrowings | 3,364,029 | 3,318,031 |
Other liabilities | 189,081 | 185,989 |
Total liabilities | 3,733,316 | 3,693,948 |
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, 23,687 and 23,545 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | 237 | 235 |
Additional paid-in capital | 8,648 | 11,052 |
Accumulated earnings | 1,072,410 | 1,049,171 |
Accumulated other comprehensive loss | (127,436) | (123,920) |
Total stockholders’ equity | 953,859 | 936,538 |
Total liabilities and stockholders’ equity | 4,687,175 | 4,630,486 |
Variable Interest Entity | ||
Assets | ||
Cash and cash equivalents | 26,879 | 24,472 |
Investment in receivable portfolios, net | 736,226 | 717,556 |
Other assets | 11,280 | 19,358 |
Liabilities: | ||
Accounts payable and accrued liabilities | 1,005 | 1,854 |
Borrowings | 492,027 | 494,925 |
Other liabilities | $ 253 | $ 2,452 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Financial Condition (Parenthetical) - $ / shares | Mar. 31, 2024 | Dec. 31, 2023 |
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) | 23,687,000 | 23,545,000 |
Common stock outstanding (shares) | 23,687,000 | 23,545,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenues | ||
Revenue from receivable portfolios | $ 315,852 | $ 295,674 |
Changes in recoveries | (12,409) | (9,501) |
Total debt purchasing revenue | 303,443 | 286,173 |
Servicing revenue | 20,379 | 22,585 |
Other revenues | 4,564 | 3,872 |
Total revenues | 328,386 | 312,630 |
Operating expenses | ||
Salaries and employee benefits | 104,184 | 103,850 |
Cost of legal collections | 58,721 | 54,101 |
General and administrative expenses | 36,241 | 37,965 |
Other operating expenses | 30,367 | 27,556 |
Collection agency commissions | 7,434 | 8,150 |
Depreciation and amortization | 7,848 | 10,870 |
Total operating expenses | 244,795 | 242,492 |
Income from operations | 83,591 | 70,138 |
Other expense | ||
Interest expense | (55,765) | (46,835) |
Other income, net | 2,666 | 1,732 |
Total other expense | (53,099) | (45,103) |
Income before income taxes | 30,492 | 25,035 |
Provision for income taxes | (7,253) | (6,409) |
Net income | $ 23,239 | $ 18,626 |
Earnings per share: | ||
Basic (USD per share) | $ 0.98 | $ 0.79 |
Diluted (USD per share) | $ 0.95 | $ 0.75 |
Weighted average shares outstanding: | ||
Basic (shares) | 23,784 | 23,548 |
Diluted (shares) | 24,468 | 24,942 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 23,239 | $ 18,626 |
Change in unrealized gain (loss) on derivative instruments: | ||
Unrealized gain (loss) on derivative instruments | 5,475 | (8,053) |
Income tax effect | (2,685) | 876 |
Unrealized gain (loss) on derivative instruments, net of tax | 2,790 | (7,177) |
Change in foreign currency translation: | ||
Unrealized (loss) gain on foreign currency translation | (6,146) | 16,008 |
Income tax effect | (160) | (383) |
Unrealized (loss) gain on foreign currency translation, net of tax | (6,306) | 15,625 |
Other comprehensive (loss) income, net of tax: | (3,516) | 8,448 |
Total comprehensive income | $ 19,723 | $ 27,074 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Earnings | Accumulated Other Comprehensive Loss |
Balance at beginning of period (shares) at Dec. 31, 2022 | 23,323 | ||||
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 (loss), 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 | ||||
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes | (6,353) | $ 2 | (6,355) | ||
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 | ||||
Balance at end of period at Mar. 31, 2023 | 1,184,156 | $ 235 | 0 | 1,274,289 | (90,368) |
Balance at beginning of period (shares) at Dec. 31, 2023 | 23,545 | ||||
Balance at Beginning of period at Dec. 31, 2023 | 936,538 | $ 235 | 11,052 | 1,049,171 | (123,920) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 23,239 | 23,239 | |||
Other comprehensive income (loss), net of tax | (3,516) | (3,516) | |||
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes (shares) | 142 | ||||
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes | (5,759) | $ 2 | (5,761) | ||
Stock-based compensation | 3,357 | 3,357 | |||
Balance at end of period (shares) at Mar. 31, 2024 | 23,687 | ||||
Balance at end of period at Mar. 31, 2024 | $ 953,859 | $ 237 | $ 8,648 | $ 1,072,410 | $ (127,436) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Operating activities: | ||
Net income | $ 23,239 | $ 18,626 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 7,848 | 10,870 |
Other non-cash interest expense, net | 3,727 | 4,594 |
Stock-based compensation expense | 3,357 | 4,052 |
Deferred income taxes | 170 | 1,369 |
Changes in recoveries | 12,409 | 9,501 |
Other, net | 717 | (1,843) |
Changes in operating assets and liabilities | ||
Other assets | (6,223) | (3,139) |
Accounts payable, accrued liabilities and other liabilities | 5,740 | (8,117) |
Net cash provided by operating activities | 50,984 | 35,913 |
Investing activities: | ||
Purchases of receivable portfolios, net of put-backs | (291,367) | (274,625) |
Collections applied to investment in receivable portfolios | 195,035 | 166,682 |
Purchases of asset held for sale | (212) | (22,596) |
Purchases of property and equipment | (6,861) | (4,885) |
Other, net | 12,523 | 4,709 |
Net cash used in investing activities | (90,882) | (130,715) |
Financing activities: | ||
Payment of loan and debt refinancing costs | (10,202) | (5,850) |
Proceeds from credit facilities | 248,549 | 229,128 |
Repayment of credit facilities | (696,351) | (140,043) |
Proceeds from senior secured notes | 500,000 | 0 |
Repayment of senior secured notes | (9,770) | (9,770) |
Proceeds from issuance of convertible senior notes | 0 | 230,000 |
Repayment of exchangeable senior notes | 0 | (192,457) |
Proceeds from convertible hedge instruments, net | 0 | 10,050 |
Other, net | 23,564 | (10,684) |
Net cash provided by financing activities | 55,790 | 110,374 |
Net increase in cash and cash equivalents | 15,892 | 15,572 |
Effect of exchange rate changes on cash and cash equivalents | (1,266) | (710) |
Cash and cash equivalents, beginning of period | 158,364 | 143,912 |
Cash and cash equivalents, end of period | 172,990 | 158,774 |
Supplemental disclosure of cash information: | ||
Cash paid for interest | 46,469 | 38,072 |
Cash paid for taxes, net of refunds | 1,542 | 908 |
Supplemental schedule of non-cash investing activities: | ||
Investment in receivable portfolios transferred to real estate owned | $ 2,045 | $ 1,105 |
Ownership, Description of Busin
Ownership, Description of Business, and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
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, 2023. 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. Recent Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within the segment measure of profit or loss. This guidance will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024. This ASU will likely result in additional required disclosure when adopted. The Company is currently evaluating the provisions of this ASU and the impact on its consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The new standard is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period. The number of shares used to calculate the diluted earnings per share is computed by using the basic weighted-average number of common shares outstanding plus any dilutive potential common shares outstanding during the period, except when their effect is anti-dilutive. Dilutive potential common shares include outstanding stock based awards, and the dilutive effect of the convertible and exchangeable senior notes, if applicable. A reconciliation of shares used in calculating earnings per basic and diluted shares follows (in thousands, except per share amounts) : Three Months Ended 2024 2023 Net income $ 23,239 $ 18,626 Shares: Total weighted-average basic shares outstanding 23,784 23,548 Dilutive effect of stock-based awards 200 291 Dilutive effect of convertible and exchangeable senior notes 484 1,103 Total weighted-average dilutive shares outstanding 24,468 24,942 Basic earnings per share $ 0.98 $ 0.79 Diluted earnings per share $ 0.95 $ 0.75 There were no anti-dilutive employee stock options outstanding during the three months ended March 31, 2024 and 2023. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2024 | |
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. The Company’s cash and cash equivalents, certain other assets, accounts payable and accrued liabilities, and other liabilities approximate their fair values due to their short-term nature, which are determined to be a Level 1 measurement. 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, 2024 Level 1 Level 2 Level 3 Total Assets Interest rate cap contracts $ — $ 10,039 $ — $ 10,039 Liabilities Interest rate swap agreements — (11,976) — (11,976) Cross-currency swap agreements — (39,004) — (39,004) Fair Value Measurements as of December 31, 2023 Level 1 Level 2 Level 3 Total Assets Interest rate cap contracts $ — $ 16,950 $ — $ 16,950 Cross-currency swap agreements — 361 — 361 Liabilities Interest rate swap agreements — (22,510) — (22,510) Cross-currency swap agreements — (28,039) — (28,039) 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. The Company’s derivative agreements are subject to underlying agreements with master netting arrangements, which provide for the right of offset in the event of default or in the event of bankruptcy of either party to the transactions. The Company reports its assets and liabilities subject to these arrangements on a gross basis for certain derivative agreements. 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 $64.0 million and $70.6 million as of March 31, 2024 and December 31, 2023, 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, 2024 and December 31, 2023 (in thousands) : March 31, 2024 December 31, 2023 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Financial Assets Investment in receivable portfolios, net $ 3,531,387 $ 3,582,622 $ 3,468,432 $ 3,515,651 Financial Liabilities Global senior secured revolving credit facility 367,739 367,739 816,880 816,880 Encore private placement notes 19,540 19,409 29,310 28,922 Senior secured notes (1) 2,123,535 2,084,677 1,649,621 1,598,636 Convertible senior notes due October 2025 100,000 125,369 100,000 136,403 Convertible senior notes due March 2029 230,000 215,540 230,000 226,794 Cabot securitisation senior facility 322,110 322,110 324,646 324,646 U.S. facility 175,000 175,000 175,000 175,000 Other borrowings 65,902 65,902 24,904 24,904 _______________________ (1) Carrying amount represents historical cost, adjusted for any related debt discount. 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, 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 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, securitisation senior facility, U.S. facility, and other borrowings approximates fair value due to the use of current market rates that are repriced frequently, which are determined to be a Level 2 measurement. |
Derivatives and Hedging Instrum
Derivatives and Hedging Instruments | 3 Months Ended |
Mar. 31, 2024 | |
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, 2024 December 31, 2023 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate cap contracts Other assets $ 8,405 Other assets $ 14,564 Interest rate swap agreements Other liabilities (11,976) Other liabilities (22,510) Cross-currency swap agreements Other assets — Other assets 361 Cross-currency swap agreements Other liabilities (39,004) Other liabilities (28,039) Derivatives not designated as hedging instruments: Interest rate cap contracts Other assets 1,634 Other assets 2,386 Derivatives Designated as Hedging Instruments The Company may periodically enter into interest rate swap agreements and interest rate cap contracts to reduce its exposure to fluctuations in interest rates on variable interest rate debt and their impact on earnings and cash flows. Under the swap agreements, the Company receives floating interest rate payments and makes interest payments based on fixed interest rates. Under the cap contracts, the Company receives floating interest rate payments and makes interest payments based on capped interest rates. The Company designates its interest rate swap and interest rate cap instruments as cash flow hedges at inception. The Company uses cross-currency swap agreements to manage foreign currency exchange risk by converting fixed-rate Euro-denominated borrowings and fixed-rate GBP-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 fair value hedges. The following table summarizes the terms of the derivative instruments designated as hedging instruments as recorded in the Company’s consolidated statements of financial condition: March 31, 2024 Effective date Maturity Date Hedge Designation Notional Amount Receive Floating Rate Index Interest rate cap contracts 2019 Cap January 2020 June 2024 Cash flow hedge $431.7 million 3-month EURIBOR 2021 Cap (1) November 2021 September 2024 Cash flow hedge $315.8 million SONIA 2024 Cap September 2024 September 2026 Cash flow hedge $322.1 million SONIA Interest rate swap agreements 2023 Euro IR Swap October 2023 January 2028 Cash flow hedge $107.9 million 3-month EURIBOR 2024 Euro IR Swaps June 2024 January 2028 Cash flow hedge $447.9 million 3-month EURIBOR 2023 SOFR IR Swaps November 2023 October 2026 Cash flow hedge $150.0 million 1-month SOFR CME Term Cross-currency swap agreements 2020 Euro Swaps September 2020 October 2025 Fair value hedge $377.8 million — 2023 GBP Swaps July 2023 February 2026 Fair value hedge $379.0 million — ______________________ (1) The total notional amount of the 2021 Cap was $442.1 million, of which $315.8 million was hedge designated and $126.3 million was not hedge designated as of March 31, 2024. December 31, 2023 Effective date Maturity Date Hedge Designation Notional Amount Receive Floating Rate Index Interest rate cap contracts 2019 Cap January 2020 June 2024 Cash flow hedge $441.5 million 3-month EURIBOR 2021 Cap (1) November 2021 September 2024 Cash flow hedge $318.3 million SONIA 2024 Cap September 2024 September 2026 Cash flow hedge $324.6 million SONIA Interest rate swap agreements 2023 Euro IR Swap October 2023 January 2028 Cash flow hedge $110.4 million 3-month EURIBOR 2024 Euro IR Swaps June 2024 January 2028 Cash flow hedge $458.1 million 3-month EURIBOR 2023 SOFR IR Swaps November 2023 October 2026 Cash flow hedge $150.0 million 1-month SOFR CME Term Cross-currency swap agreements 2020 Euro Swaps September 2020 October 2025 Fair value hedge $386.3 million — 2023 GBP Swaps July 2023 February 2026 Fair value hedge $381.9 million — _______________________ (1) The total notional amount of the 2021 Cap was $445.6 million, of which $318.3 million was hedge designated and $127.3 million was not hedge designated as of December 31, 2023. The Company expects to reclassify approximately $7.3 million of net derivative gain fro m OCI into earnings relating to its cash flow designated derivatives within the next 12 months. The following tables summarize the effects of derivatives 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 Three Months Ended March 31, Three Months Ended March 31, 2024 2023 2024 2023 Interest rate swap agreements $ 11,074 $ — Interest expense $ 540 $ — Interest rate cap contracts (6,051) (6,924) Interest expense (712) (450) Cross-currency swap agreements (13,010) 2,066 Interest expense (1,780) (1,508) Other (expense) income (11,510) 5,153 Derivatives Not Designated as Hedging Instruments In September 2023, the Company partially dedesignated the 2021 Cap. As of March 31, 2024, £100.0 million (approximately $126.3 million based on an exchange rate of $1.00 to £0.79, the exchange rate as of March 31, 2024) of the notional amount of the 2021 Cap is not designated as a hedging instrument for accounting purposes. The gains or losses resulting from changes in fair value on the portion of the 2021 cap that is no longer designated as a hedging instrument are recognized in other income or other expenses. |
Investment in Receivable Portfo
Investment in Receivable Portfolios, Net | 3 Months Ended |
Mar. 31, 2024 | |
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. 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, 2024 December 31, 2023 Amortized cost $ — $ — Negative allowance for expected recoveries 3,531,387 3,468,432 Balance, end of period $ 3,531,387 $ 3,468,432 The following table summarizes the changes in the balance of investment in receivable portfolios, net during the periods presented ( in thousands ): Three Months Ended 2024 2023 Balance, beginning of period $ 3,468,432 $ 3,088,261 Negative allowance for expected recoveries - current period purchases (1) 295,714 276,431 Collections applied to investment in receivable portfolios, net (2) (195,035) (166,682) Changes in recoveries (3) (12,409) (9,501) Put-backs and recalls (4,347) (1,806) Disposals and transfers to real estate owned (2,045) (1,105) Foreign currency translation adjustments (18,923) 29,194 Balance, end of period $ 3,531,387 $ 3,214,792 _______________________ (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 2024 2023 Purchase price $ 295,714 $ 276,431 Allowance for credit losses 644,514 659,644 Amortized cost 940,228 936,075 Noncredit discount 1,255,793 1,005,221 Face value 2,196,021 1,941,296 Write-off of amortized cost (940,228) (936,075) Write-off of noncredit discount (1,255,793) (1,005,221) Negative allowance 295,714 276,431 Negative allowance for expected recoveries - current period purchases $ 295,714 $ 276,431 (2) Collections applied to investment in receivable portfolios, net, is calculated as follows during the periods presented: Three Months Ended 2024 2023 Cash Collections $ 510,887 $ 462,356 Less - amounts classified to revenue from receivable portfolios (315,852) (295,674) Collections applied to investment in receivable portfolios, net $ 195,035 $ 166,682 (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 2024 2023 Recoveries above (below) forecast $ 853 $ (15,358) Changes in expected future recoveries (13,262) 5,857 Changes in recoveries $ (12,409) $ (9,501) Recoveries above or below forecast represent over and under-performance in the reporting period, respectively. Collections during the three months ended March 31, 2024, over-performed the forecasted collections by approximately $0.9 million. Collections during the three months ended March 31, 2023, under-performed the forecasted collections by approximately $15.4 million. When reassessing the forecasts of expected lifetime recoveries during the three months ended March 31, 2024, management considered, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment. The updated forecast resulted in changes in the timing and amount of total estimated remaining collections which in turn, when discounted to present value, resulted in a net negative change in expected future recoveries of approximately $13.3 million for the three months ended March 31, 2024. During the three months ended March 31, 2023, the Company recorded approximately $5.9 million in net positive change in expected future period recoveries. |
Other Assets
Other Assets | 3 Months Ended |
Mar. 31, 2024 | |
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 $ 63,961 $ 70,590 Operating lease right-of-use assets 63,243 67,019 Prepaid expenses 40,599 32,910 Deferred tax assets, net 13,709 17,277 Derivative instruments 10,039 17,311 Service fee receivables 9,669 9,080 Income tax deposits 7,427 8,735 Other 68,975 70,334 Total $ 277,622 $ 293,256 |
Borrowings
Borrowings | 3 Months Ended |
Mar. 31, 2024 | |
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, 2024. The components of the Company’s consolidated borrowings were as follows (in thousands) : March 31, December 31, Global senior secured revolving credit facility $ 367,739 $ 816,880 Encore private placement notes 19,540 29,310 Senior secured notes 2,128,357 1,654,989 Convertible senior notes 330,000 330,000 Cabot securitisation senior facility 322,110 324,646 U.S. facility 175,000 175,000 Other 65,902 24,904 Finance lease liabilities 2,262 2,818 3,410,910 3,358,547 Less: debt discount and issuance costs, net of amortization (46,881) (40,516) Total $ 3,364,029 $ 3,318,031 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”). As of March 31, 2024, the Global Senior Facility provided for a total committed facility of $1,203.0 million that matures in September 2027 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, 2024, the outstanding borrowings under the Global Senior Facility were $367.7 million. The weighted average interest rate of the Global Senior Facility was 7.89% and 7.06% for the three months ended March 31, 2024 and 2023, respectively. Available capacity under the Global Senior Facility, after taking into account applicable debt covenants, was approximately $827.3 million as of March 31, 2024. 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, 2024, $19.5 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 2025 Notes $ 377,762 $ 386,324 EUR Oct 15, 2025 Apr 15, Oct 15 4.875 % 2026 Notes 378,952 381,937 GBP Feb 15, 2026 Feb 15, Aug 15 5.375 % 2028 Notes 315,794 318,280 GBP Jun 1, 2028 Jun 1, Dec 1 4.250 % 2028 Floating Rate Notes 555,849 568,448 EUR Jan 15, 2028 Jan 15, Apr 15, Jul 15, Oct 15 EURIBOR +4.250% (1) 2029 Notes 500,000 — USD Apr 1, 2029 Apr 1, Oct 1 9.250 % $ 2,128,357 $ 1,654,989 _______________________ (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. In March 2024, Encore issued $500.0 million in aggregate principal amount of 9.250% Senior Secured Notes due April 2029 at an issue price of 100.000% (the “2029 Notes”). Interest on the 2029 Notes is payable semi-annually, in arrears, on April 1 and October 1 of each year, commencing on October 1, 2024. The Company used the proceeds from this offering to pay down $493.0 million of the drawings under its Global Senior Facility and to pay certain transaction fees and expenses incurred in connection with the offering of the 2029 Notes. The 2028 Floating Rate Notes had a weighted average interest rate of 8.12% and 6.38% for the three months ended March 31, 2024 and 2023, respectively. As discussed in “Note 4: Derivatives and Hedging Instruments,” the Company uses interest rate derivative contracts to manage its risk related to the interest rate fluctuation in its variable interest rate bearing debt. The weighted average interest rate of the 2028 Floating Rate Notes including the effect of the hedging instruments was 5.01% and 4.33% for the three months ended March 31, 2024 and 2023, respectively. Convertible Notes The following table provides a summary of the principal balance, maturity date and interest rate for the Company’s convertible senior notes (the “Convertible Notes”) ($ in thousands) : March 31, December 31, Maturity Date Interest Payment Dates Interest Rate 2025 Convertible Notes $ 100,000 $ 100,000 Oct 1, 2025 Apr 1, Oct 1 3.250 % 2029 Convertible Notes 230,000 230,000 Mar 15, 2029 Mar 15, Sep 15 4.000 % $ 330,000 $ 330,000 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 prices of the Convertible Notes, the Company may enter into hedge programs that increase the effective conversion price for the Convertible 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 $82.69. These hedging instruments have been determined to be indexed to the Company’s own stock and meet the criteria for equity classification. The Company recorded the cost of the hedge instruments as a reduction in additional paid-in capital, and does not recognize subsequent changes in fair value of these financial instruments in its condensed consolidated financial statements. The Company did not hedge the 2025 Convertible Notes. Certain key terms related to the convertible features as of March 31, 2024 are listed below ($ in thousands, except conversion price) : 2025 Convertible Notes 2029 Convertible Notes Initial conversion price $ 40.00 $ 65.89 Closing stock price at date of issuance $ 32.00 $ 51.68 Closing stock price date Sep 4, 2019 Feb 28, 2023 Initial conversion rate (shares per $1,000 principal amount) 25.0000 15.1763 Adjusted conversion rate (shares per $1,000 principal amount) (1) 25.1310 15.1763 Adjusted conversion price (1) $ 39.79 $ 65.89 Adjusted effective conversion price (2) $ 39.79 $ 82.69 Excess of if-converted value compared to principal (3) $ 14,622 $ — Conversion date Jul 1, 2025 Dec 15, 2028 _______________________ (1) Pursuant to the indenture for the Company’s 2025 Convertible Notes, the conversion rate for the 2025 Convertible Notes was 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 conversion price for the 2029 Convertible Notes to $82.69. (3) Represents the premium the Company would have to pay assuming the Convertible Notes were converted on March 31, 2024 using a hypothetical share price based on the closing stock price on March 28, 2024, the last trading day for the three months ended March 31, 2024. 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 was $3.1 million and $2.9 million during the three months ended March 31, 2024 and 2023, 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 £255.0 million (as amended, the “Cabot Securitisation Senior Facility”). Funds drawn under the Cabot Securitisation Senior Facility bear interest at a rate per annum equal to SONIA plus a margin of 3.20% plus, for periods after September 18, 2026, a step up margin ranging from 0% to 1.00%. The Cabot Securitisation Senior Facility matures in September 2028. As of March 31, 2024, the outstanding borrowings under the Cabot Securitisation Senior Facility were £255.0 million (approximately $322.1 million based on an exchange rate of $1.00 to £0.79, the exchange rate as of March 31, 2024). 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 £329.2 million (approximately $415.8 million based on an exchange rate of $1.00 to £0.79, the exchange rate as of March 31, 2024) as of March 31, 2024. The weighted average interest rate of the Cabot Securitisation Senior Facility was 8.40% and 6.87% for the three months ended March 31, 2024 and 2023, respectively. As discussed in “Note 4, Derivatives and 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. The weighted average interest rate of the Cabot Securitisation Senior Facility including the effect of the hedging instruments was 5.51% and 5.25% for the three months ended March 31, 2024 and 2023, 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. U.S. Facility In October 2023, an indirect subsidiary of Encore (“U.S. Financing Subsidiary”), entered into a facility for a committed amount of $175.0 million (the “U.S. Facility”). The U.S. Facility matures in October 2026. Funds drawn under the U.S. Facility bear interest at a rate per annum equal to Term SOFR plus a margin of 3.5%. As of March 31, 2024, the outstanding borrowings under the U.S. Facility were $175.0 million. The obligations under the U.S. Facility are secured by first ranking security interests over all of U.S. Financing Subsidiary’s assets and rights. As of March 31, 2024, this included receivables acquired from MCM, the book value of which was approximately $319.8 million. The weighted average interest rate of the U.S. Facility was 8.93% for the three months ended March 31, 2024. As discussed in “Note 4: Derivatives and Hedging Instruments,” the Company uses interest rate derivative contracts to manage its risk related to the interest rate fluctuation in its variable interest rate bearing debt. The weighted average interest rate of the U.S. Facility including the effect of the hedging instruments was 8.08% for the three months ended March 31, 2024. The U.S. Facility 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, 2024 | |
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, 2024, 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, 2024 | |
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, 2024 Derivatives Currency Translation Adjustments Accumulated Other Comprehensive Loss Balance at beginning of period $ (3,093) $ (120,827) $ (123,920) Other comprehensive loss before reclassification (7,987) (6,146) (14,133) Reclassification 13,462 — 13,462 Tax effect (2,685) (160) (2,845) Balance at end of period $ (303) $ (127,133) $ (127,436) 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) |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rate for the three months ended March 31, 2024 was 23.8%. For the three months ended March 31, 2023, the Company’s effective tax rate was 25.6%. For the three months ended March 31, 2024, the difference between the effective tax rate and the federal statutory rate was primarily due to state income taxes offset by other foreign adjustments. For the three months ended March 31, 2023, the difference between the effective tax rate and the federal statutory rate was primarily due to state income taxes offset by other foreign adjustments. 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, 2024 and 2023, 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. In December 2021, the Organization for Economic Cooperation and Development (“OECD”) enacted model rules for a new global minimum tax framework (“Pillar Two”). Under the Pillar Two rules, a company is required to determine a combined effective tax rate for each jurisdiction. If the jurisdictional effective tax rate determined under the Pillar Two rules is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. In December 2022, European Union Member States adopted a directive implementing the Pillar Two rules requiring Member States to enact the directive into their national laws and these began to go into effect from January 1, 2024. The Company has estimated the applicable top-up tax and recorded this in tax expense for the three months ended March 31, 2024. The estimated impact of top-up tax for the quarter was immaterial. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
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, 2024, 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, 2023 or any new material legal proceedings during the three months ended March 31, 2024. 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, 2024, 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, 2024, the Company had entered into forward flow purchase agreements for the purchase of nonperforming loans with an estimated minimum aggregate purchase price of approximately $598.9 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, 2024 | |
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 2024 2023 Total revenues: United States $ 219,136 $ 200,218 Europe United Kingdom 72,427 77,985 Other European countries (1) 36,104 34,238 Total Europe 108,531 112,223 Other geographies (1) 719 189 Total $ 328,386 $ 312,630 ________________________ (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, 2024 | |
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, 2024, 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 the MCM and Cabot reporting units included in its portfolio purchasing and recovery segment. The following table summarizes the activity in the Company’s goodwill balance (in thousands): MCM Cabot (1) Total Balance as of December 31, 2023 $ 148,936 $ 457,539 $ 606,475 Effect of foreign currency translation — (4,075) (4,075) Balance as of March 31, 2024 $ 148,936 $ 453,464 $ 602,400 ______________________ (1) The amount is net of accumulated goodwill impairment loss of $238.2 million as of March 31, 2024 and December 31, 2023, related to the Cabot reporting unit. MCM Cabot Total Balance as of December 31, 2022 $ 148,936 $ 672,278 $ 821,214 Effect of foreign currency translation — 12,960 12,960 Balance as of March 31, 2023 $ 148,936 $ 685,238 $ 834,174 There was no accumulated goodwill impairment loss as of March 31, 2023 and December 31, 2022. The Company’s acquired intangible assets are summarized as follows (in thousands) : As of March 31, 2024 As of December 31, 2023 Gross Accumulated Net Gross Accumulated Net Trade name and other $ 918 $ (918) $ — $ 918 $ (870) $ 48 Total intangible assets $ 918 $ (918) $ — $ 918 $ (870) $ 48 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) Attributable to Parent | $ 23,239 | $ 18,626 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 shares | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | On March 18, 2024, Andrew Asch, Senior Vice President and General Counsel, adopted a trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) to sell up to 2,025 shares of Encore Capital Group, Inc. common stock between June 17, 2024, and June 18, 2025, subject to certain conditions. |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Andrew Asch [Member] | |
Trading Arrangements, by Individual | |
Name | Andrew Asch |
Title | Senior Vice President and General Counsel |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | March 18, 2024 |
Arrangement Duration | 366 days |
Aggregate Available | 2,025 |
Ownership, Description of Bus_2
Ownership, Description of Business, and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Financial Statement Preparation and 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, 2023. 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 Currencies |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within the segment measure of profit or loss. This guidance will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024. This ASU will likely result in additional required disclosure when adopted. The Company is currently evaluating the provisions of this ASU and the impact on its consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The new standard is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. |
Earnings Per Share | Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period. The number of shares used to calculate the diluted earnings per share is computed by using the basic weighted-average number of common shares outstanding plus any dilutive potential common shares outstanding during the period, except when their effect is anti-dilutive. 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. The Company’s cash and cash equivalents, certain other assets, accounts payable and accrued liabilities, and other liabilities approximate their fair values due to their short-term nature, which are determined to be a Level 1 measurement. 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. The Company’s derivative agreements are subject to underlying agreements with master netting arrangements, which provide for the right of offset in the event of default or in the event of bankruptcy of either party to the transactions. The Company reports its assets and liabilities subject to these arrangements on a gross basis for certain derivative agreements. Non-Recurring Fair Value Measurement: 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, 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 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. |
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. 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, 2024, 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. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 2024 2023 Net income $ 23,239 $ 18,626 Shares: Total weighted-average basic shares outstanding 23,784 23,548 Dilutive effect of stock-based awards 200 291 Dilutive effect of convertible and exchangeable senior notes 484 1,103 Total weighted-average dilutive shares outstanding 24,468 24,942 Basic earnings per share $ 0.98 $ 0.79 Diluted earnings per share $ 0.95 $ 0.75 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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, 2024 Level 1 Level 2 Level 3 Total Assets Interest rate cap contracts $ — $ 10,039 $ — $ 10,039 Liabilities Interest rate swap agreements — (11,976) — (11,976) Cross-currency swap agreements — (39,004) — (39,004) Fair Value Measurements as of December 31, 2023 Level 1 Level 2 Level 3 Total Assets Interest rate cap contracts $ — $ 16,950 $ — $ 16,950 Cross-currency swap agreements — 361 — 361 Liabilities Interest rate swap agreements — (22,510) — (22,510) Cross-currency swap agreements — (28,039) — (28,039) |
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, 2024 and December 31, 2023 (in thousands) : March 31, 2024 December 31, 2023 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Financial Assets Investment in receivable portfolios, net $ 3,531,387 $ 3,582,622 $ 3,468,432 $ 3,515,651 Financial Liabilities Global senior secured revolving credit facility 367,739 367,739 816,880 816,880 Encore private placement notes 19,540 19,409 29,310 28,922 Senior secured notes (1) 2,123,535 2,084,677 1,649,621 1,598,636 Convertible senior notes due October 2025 100,000 125,369 100,000 136,403 Convertible senior notes due March 2029 230,000 215,540 230,000 226,794 Cabot securitisation senior facility 322,110 322,110 324,646 324,646 U.S. facility 175,000 175,000 175,000 175,000 Other borrowings 65,902 65,902 24,904 24,904 _______________________ (1) Carrying amount represents historical cost, adjusted for any related debt discount. |
Derivatives and Hedging Instr_2
Derivatives and Hedging Instruments (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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, 2024 December 31, 2023 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate cap contracts Other assets $ 8,405 Other assets $ 14,564 Interest rate swap agreements Other liabilities (11,976) Other liabilities (22,510) Cross-currency swap agreements Other assets — Other assets 361 Cross-currency swap agreements Other liabilities (39,004) Other liabilities (28,039) Derivatives not designated as hedging instruments: Interest rate cap contracts Other assets 1,634 Other assets 2,386 |
Schedule of Derivative Instruments | The following table summarizes the terms of the derivative instruments designated as hedging instruments as recorded in the Company’s consolidated statements of financial condition: March 31, 2024 Effective date Maturity Date Hedge Designation Notional Amount Receive Floating Rate Index Interest rate cap contracts 2019 Cap January 2020 June 2024 Cash flow hedge $431.7 million 3-month EURIBOR 2021 Cap (1) November 2021 September 2024 Cash flow hedge $315.8 million SONIA 2024 Cap September 2024 September 2026 Cash flow hedge $322.1 million SONIA Interest rate swap agreements 2023 Euro IR Swap October 2023 January 2028 Cash flow hedge $107.9 million 3-month EURIBOR 2024 Euro IR Swaps June 2024 January 2028 Cash flow hedge $447.9 million 3-month EURIBOR 2023 SOFR IR Swaps November 2023 October 2026 Cash flow hedge $150.0 million 1-month SOFR CME Term Cross-currency swap agreements 2020 Euro Swaps September 2020 October 2025 Fair value hedge $377.8 million — 2023 GBP Swaps July 2023 February 2026 Fair value hedge $379.0 million — ______________________ (1) The total notional amount of the 2021 Cap was $442.1 million, of which $315.8 million was hedge designated and $126.3 million was not hedge designated as of March 31, 2024. December 31, 2023 Effective date Maturity Date Hedge Designation Notional Amount Receive Floating Rate Index Interest rate cap contracts 2019 Cap January 2020 June 2024 Cash flow hedge $441.5 million 3-month EURIBOR 2021 Cap (1) November 2021 September 2024 Cash flow hedge $318.3 million SONIA 2024 Cap September 2024 September 2026 Cash flow hedge $324.6 million SONIA Interest rate swap agreements 2023 Euro IR Swap October 2023 January 2028 Cash flow hedge $110.4 million 3-month EURIBOR 2024 Euro IR Swaps June 2024 January 2028 Cash flow hedge $458.1 million 3-month EURIBOR 2023 SOFR IR Swaps November 2023 October 2026 Cash flow hedge $150.0 million 1-month SOFR CME Term Cross-currency swap agreements 2020 Euro Swaps September 2020 October 2025 Fair value hedge $386.3 million — 2023 GBP Swaps July 2023 February 2026 Fair value hedge $381.9 million — _______________________ (1) |
Effects of Derivatives in Cash Flow Hedging Relationships | The following tables summarize the effects of derivatives 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 Three Months Ended March 31, Three Months Ended March 31, 2024 2023 2024 2023 Interest rate swap agreements $ 11,074 $ — Interest expense $ 540 $ — Interest rate cap contracts (6,051) (6,924) Interest expense (712) (450) Cross-currency swap agreements (13,010) 2,066 Interest expense (1,780) (1,508) Other (expense) income (11,510) 5,153 |
Investment in Receivable Port_2
Investment in Receivable Portfolios, Net (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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, 2024 December 31, 2023 Amortized cost $ — $ — Negative allowance for expected recoveries 3,531,387 3,468,432 Balance, end of period $ 3,531,387 $ 3,468,432 |
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 2024 2023 Balance, beginning of period $ 3,468,432 $ 3,088,261 Negative allowance for expected recoveries - current period purchases (1) 295,714 276,431 Collections applied to investment in receivable portfolios, net (2) (195,035) (166,682) Changes in recoveries (3) (12,409) (9,501) Put-backs and recalls (4,347) (1,806) Disposals and transfers to real estate owned (2,045) (1,105) Foreign currency translation adjustments (18,923) 29,194 Balance, end of period $ 3,531,387 $ 3,214,792 _______________________ (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 2024 2023 Purchase price $ 295,714 $ 276,431 Allowance for credit losses 644,514 659,644 Amortized cost 940,228 936,075 Noncredit discount 1,255,793 1,005,221 Face value 2,196,021 1,941,296 Write-off of amortized cost (940,228) (936,075) Write-off of noncredit discount (1,255,793) (1,005,221) Negative allowance 295,714 276,431 Negative allowance for expected recoveries - current period purchases $ 295,714 $ 276,431 (2) Collections applied to investment in receivable portfolios, net, is calculated as follows during the periods presented: Three Months Ended 2024 2023 Cash Collections $ 510,887 $ 462,356 Less - amounts classified to revenue from receivable portfolios (315,852) (295,674) Collections applied to investment in receivable portfolios, net $ 195,035 $ 166,682 (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 2024 2023 Recoveries above (below) forecast $ 853 $ (15,358) Changes in expected future recoveries (13,262) 5,857 Changes in recoveries $ (12,409) $ (9,501) |
Other Assets (Tables)
Other Assets (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 $ 63,961 $ 70,590 Operating lease right-of-use assets 63,243 67,019 Prepaid expenses 40,599 32,910 Deferred tax assets, net 13,709 17,277 Derivative instruments 10,039 17,311 Service fee receivables 9,669 9,080 Income tax deposits 7,427 8,735 Other 68,975 70,334 Total $ 277,622 $ 293,256 |
Borrowings (Tables)
Borrowings (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 $ 367,739 $ 816,880 Encore private placement notes 19,540 29,310 Senior secured notes 2,128,357 1,654,989 Convertible senior notes 330,000 330,000 Cabot securitisation senior facility 322,110 324,646 U.S. facility 175,000 175,000 Other 65,902 24,904 Finance lease liabilities 2,262 2,818 3,410,910 3,358,547 Less: debt discount and issuance costs, net of amortization (46,881) (40,516) Total $ 3,364,029 $ 3,318,031 |
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 2025 Notes $ 377,762 $ 386,324 EUR Oct 15, 2025 Apr 15, Oct 15 4.875 % 2026 Notes 378,952 381,937 GBP Feb 15, 2026 Feb 15, Aug 15 5.375 % 2028 Notes 315,794 318,280 GBP Jun 1, 2028 Jun 1, Dec 1 4.250 % 2028 Floating Rate Notes 555,849 568,448 EUR Jan 15, 2028 Jan 15, Apr 15, Jul 15, Oct 15 EURIBOR +4.250% (1) 2029 Notes 500,000 — USD Apr 1, 2029 Apr 1, Oct 1 9.250 % $ 2,128,357 $ 1,654,989 _______________________ (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 senior notes (the “Convertible Notes”) ($ in thousands) : March 31, December 31, Maturity Date Interest Payment Dates Interest Rate 2025 Convertible Notes $ 100,000 $ 100,000 Oct 1, 2025 Apr 1, Oct 1 3.250 % 2029 Convertible Notes 230,000 230,000 Mar 15, 2029 Mar 15, Sep 15 4.000 % $ 330,000 $ 330,000 |
Schedule of Hedge Program for Convertible Notes | Certain key terms related to the convertible features as of March 31, 2024 are listed below ($ in thousands, except conversion price) : 2025 Convertible Notes 2029 Convertible Notes Initial conversion price $ 40.00 $ 65.89 Closing stock price at date of issuance $ 32.00 $ 51.68 Closing stock price date Sep 4, 2019 Feb 28, 2023 Initial conversion rate (shares per $1,000 principal amount) 25.0000 15.1763 Adjusted conversion rate (shares per $1,000 principal amount) (1) 25.1310 15.1763 Adjusted conversion price (1) $ 39.79 $ 65.89 Adjusted effective conversion price (2) $ 39.79 $ 82.69 Excess of if-converted value compared to principal (3) $ 14,622 $ — Conversion date Jul 1, 2025 Dec 15, 2028 _______________________ (1) Pursuant to the indenture for the Company’s 2025 Convertible Notes, the conversion rate for the 2025 Convertible Notes was 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 conversion price for the 2029 Convertible Notes to $82.69. (3) |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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, 2024 Derivatives Currency Translation Adjustments Accumulated Other Comprehensive Loss Balance at beginning of period $ (3,093) $ (120,827) $ (123,920) Other comprehensive loss before reclassification (7,987) (6,146) (14,133) Reclassification 13,462 — 13,462 Tax effect (2,685) (160) (2,845) Balance at end of period $ (303) $ (127,133) $ (127,436) 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) |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 2024 2023 Total revenues: United States $ 219,136 $ 200,218 Europe United Kingdom 72,427 77,985 Other European countries (1) 36,104 34,238 Total Europe 108,531 112,223 Other geographies (1) 719 189 Total $ 328,386 $ 312,630 ________________________ (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, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Activity in the Goodwill Balance | The Company’s goodwill is attributable to the MCM and Cabot reporting units included in its portfolio purchasing and recovery segment. The following table summarizes the activity in the Company’s goodwill balance (in thousands): MCM Cabot (1) Total Balance as of December 31, 2023 $ 148,936 $ 457,539 $ 606,475 Effect of foreign currency translation — (4,075) (4,075) Balance as of March 31, 2024 $ 148,936 $ 453,464 $ 602,400 ______________________ (1) The amount is net of accumulated goodwill impairment loss of $238.2 million as of March 31, 2024 and December 31, 2023, related to the Cabot reporting unit. MCM Cabot Total Balance as of December 31, 2022 $ 148,936 $ 672,278 $ 821,214 Effect of foreign currency translation — 12,960 12,960 Balance as of March 31, 2023 $ 148,936 $ 685,238 $ 834,174 |
Schedule of Acquired Intangible Assets | The Company’s acquired intangible assets are summarized as follows (in thousands) : As of March 31, 2024 As of December 31, 2023 Gross Accumulated Net Gross Accumulated Net Trade name and other $ 918 $ (918) $ — $ 918 $ (870) $ 48 Total intangible assets $ 918 $ (918) $ — $ 918 $ (870) $ 48 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share (shares) | 0 | 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, 2024 | Mar. 31, 2023 | |
Earnings Per Share [Abstract] | ||
Net Income (Loss) Attributable to Parent | $ 23,239 | $ 18,626 |
Total weighted-average basic shares outstanding (shares) | 23,784 | 23,548 |
Dilutive effect of stock-based awards (shares) | 200 | 291 |
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities (in shares) | 484 | 1,103 |
Total weighted-average dilutive shares outstanding (shares) | 24,468 | 24,942 |
Basic earnings per share (USD per share) | $ 0.98 | $ 0.79 |
Diluted earnings per share (USD per share) | $ 0.95 | $ 0.75 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments Required to be Carried at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Interest rate cap contracts | ||
Assets | ||
Interest rate cap contracts | $ 10,039 | $ 16,950 |
Interest rate cap contracts | Level 1 | ||
Assets | ||
Interest rate cap contracts | 0 | 0 |
Interest rate cap contracts | Level 2 | ||
Assets | ||
Interest rate cap contracts | 10,039 | 16,950 |
Interest rate cap contracts | Level 3 | ||
Assets | ||
Interest rate cap contracts | 0 | 0 |
Interest rate swap agreements | ||
Assets | ||
Interest rate swap agreements | (11,976) | (22,510) |
Interest rate swap agreements | Level 1 | ||
Assets | ||
Interest rate swap agreements | 0 | 0 |
Interest rate swap agreements | Level 2 | ||
Assets | ||
Interest rate swap agreements | (11,976) | (22,510) |
Interest rate swap agreements | Level 3 | ||
Assets | ||
Interest rate swap agreements | 0 | 0 |
Cross-currency swap agreements | ||
Assets | ||
Foreign Currency Contract, Asset, Fair Value Disclosure | 361 | |
Liabilities | ||
Cross-currency swap agreements | (39,004) | (28,039) |
Cross-currency swap agreements | Level 1 | ||
Assets | ||
Foreign Currency Contract, Asset, Fair Value Disclosure | 0 | |
Liabilities | ||
Cross-currency swap agreements | 0 | 0 |
Cross-currency swap agreements | Level 2 | ||
Assets | ||
Foreign Currency Contract, Asset, Fair Value Disclosure | 361 | |
Liabilities | ||
Cross-currency swap agreements | (39,004) | (28,039) |
Cross-currency swap agreements | Level 3 | ||
Assets | ||
Foreign Currency Contract, Asset, Fair Value Disclosure | 0 | |
Liabilities | ||
Cross-currency swap agreements | $ 0 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Fair Value Disclosures [Abstract] | ||
Assets held for sale | $ 63,961 | $ 70,590 |
Fair Value Measurements - Fin_2
Fair Value Measurements - Financial Instruments Not Required to be Carried at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Carrying Amount | ||
Financial Assets | ||
Investment in receivable portfolios, net | $ 3,531,387 | $ 3,468,432 |
Carrying Amount | Other | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 65,902 | 24,904 |
Carrying Amount | Global senior secured revolving credit facility | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 367,739 | 816,880 |
Carrying Amount | Cabot securitisation senior facility | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 322,110 | 324,646 |
Carrying Amount | U.S. facility | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 175,000 | 175,000 |
Carrying Amount | Encore private placement notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 19,540 | 29,310 |
Carrying Amount | Senior secured notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 2,123,535 | 1,649,621 |
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 | 230,000 |
Estimated Fair Value | ||
Financial Assets | ||
Investment in receivable portfolios, net | 3,582,622 | 3,515,651 |
Estimated Fair Value | Other | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 65,902 | 24,904 |
Estimated Fair Value | Global senior secured revolving credit facility | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 367,739 | 816,880 |
Estimated Fair Value | Cabot securitisation senior facility | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 322,110 | 324,646 |
Estimated Fair Value | U.S. facility | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 175,000 | 175,000 |
Estimated Fair Value | Encore private placement notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 19,409 | 28,922 |
Estimated Fair Value | Senior secured notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 2,084,677 | 1,598,636 |
Estimated Fair Value | 2025 Convertible Notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | 125,369 | 136,403 |
Estimated Fair Value | 2029 Convertible Notes | ||
Financial Liabilities | ||
Debt instrument, fair value disclosure | $ 215,540 | $ 226,794 |
Derivatives and Hedging Instr_3
Derivatives and Hedging Instruments - Schedule of Fair Value of Derivative Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Interest rate cap contracts | ||
Derivative [Line Items] | ||
Interest Rate Derivative Assets, at Fair Value | $ (10,039) | $ (16,950) |
Cross-currency swap agreements | ||
Derivative [Line Items] | ||
Foreign Currency Contract, Asset, Fair Value Disclosure | 361 | |
Foreign Currency Contracts, Liability, Fair Value Disclosure | 39,004 | 28,039 |
Derivatives Designated as Hedging Instruments | Interest rate cap contracts | Other assets | ||
Derivative [Line Items] | ||
Interest Rate Derivative Assets, at Fair Value | (8,405) | (14,564) |
Derivatives Designated as Hedging Instruments | Interest rate swap agreements | Other liabilities | ||
Derivative [Line Items] | ||
Interest Rate Derivative Assets, at Fair Value | (11,976) | (22,510) |
Derivatives Designated as Hedging Instruments | Cross-currency swap agreements | Other assets | ||
Derivative [Line Items] | ||
Foreign Currency Contract, Asset, Fair Value Disclosure | 0 | 361 |
Derivatives Designated as Hedging Instruments | Cross-currency swap agreements | Other liabilities | ||
Derivative [Line Items] | ||
Foreign Currency Contracts, Liability, Fair Value Disclosure | 39,004 | 28,039 |
Not Designated as Hedging Instrument | Interest rate cap contracts | Other assets | ||
Derivative [Line Items] | ||
Interest Rate Derivative Assets, at Fair Value | $ (1,634) | $ (2,386) |
Derivatives and Hedging Instr_4
Derivatives and Hedging Instruments - Notional Amount (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
2019 Cap | Cash flow hedge | Derivatives Designated as Hedging Instruments | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative instrument, notional amount | $ 431.7 | $ 441.5 |
2021 Cap | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative instrument, notional amount | 442.1 | 445.6 |
2021 Cap | Not Designated as Hedging Instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative instrument, notional amount | 126.3 | 127.3 |
2021 Cap | Cash flow hedge | Derivatives Designated as Hedging Instruments | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative instrument, notional amount | 315.8 | 318.3 |
2024 Cap | Cash flow hedge | Derivatives Designated as Hedging Instruments | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative instrument, notional amount | 322.1 | 324.6 |
2023 Euro IR Swap | Cash flow hedge | Derivatives Designated as Hedging Instruments | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative instrument, notional amount | 107.9 | 110.4 |
2024 Euro IR Swaps | Cash flow hedge | Derivatives Designated as Hedging Instruments | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative instrument, notional amount | 447.9 | 458.1 |
2023 SOFR IR Swaps | Cash flow hedge | Derivatives Designated as Hedging Instruments | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative instrument, notional amount | 150 | 150 |
2020 Euro Swaps | Fair value hedge | Derivatives Designated as Hedging Instruments | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative instrument, notional amount | 377.8 | 386.3 |
2023 GBP Swaps | Fair value hedge | Derivatives Designated as Hedging Instruments | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative instrument, notional amount | $ 379 | $ 381.9 |
Derivatives and Hedging Instr_5
Derivatives and Hedging Instruments - Effects of Derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Derivative [Line Items] | ||
Gain (Loss) Recognized in OCI | $ 2,790 | $ (7,177) |
Derivatives Designated as Hedging Instruments | Interest rate swap agreements | Cash flow hedge | Interest expense | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized in OCI | 11,074 | 0 |
Gain (Loss) Reclassified from OCI into Income | 540 | 0 |
Derivatives Designated as Hedging Instruments | Interest rate cap contracts | Cash flow hedge | Interest expense | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized in OCI | (6,051) | (6,924) |
Gain (Loss) Reclassified from OCI into Income | (712) | (450) |
Derivatives Designated as Hedging Instruments | Cross-currency swap agreements | Cash flow hedge | Interest expense | ||
Derivative [Line Items] | ||
Gain (Loss) Reclassified from OCI into Income | (1,780) | (1,508) |
Derivatives Designated as Hedging Instruments | Cross-currency swap agreements | Cash flow hedge | Interest Expense / Other Income (Expense) | ||
Derivative [Line Items] | ||
Gain (Loss) Recognized in OCI | (13,010) | 2,066 |
Derivatives Designated as Hedging Instruments | Cross-currency swap agreements | Cash flow hedge | Other Expense | ||
Derivative [Line Items] | ||
Gain (Loss) Reclassified from OCI into Income | $ (11,510) | $ 5,153 |
Derivatives and Hedging Instr_6
Derivatives and Hedging Instruments - Narrative (Details) £ in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2024 USD ($) | Mar. 31, 2025 USD ($) | Mar. 31, 2024 GBP (£) | |
Derivative [Line Items] | |||
Dedesignated derivative | $ 126.3 | £ 100 | |
Derivative, gain (loss) on derivative, net | $ 0.2 | ||
Subsequent Event | Forecast | |||
Derivative [Line Items] | |||
Cash flow hedge gain (loss) to be reclassified within 12 months | $ 7.3 | ||
United Kingdom, Pounds | |||
Derivative [Line Items] | |||
Foreign currency exchange rate, translation | 0.79 | 0.79 |
Investment in Receivable Port_3
Investment in Receivable Portfolios, Net - Schedule of Investment Receivable Portfolios (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Receivables [Abstract] | ||
Financing Receivable, before Allowance for Credit Loss | $ 0 | $ 0 |
Negative allowance for expected recoveries | 3,531,387 | 3,468,432 |
Balance, end of period | $ 3,531,387 | $ 3,468,432 |
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, 2024 | Mar. 31, 2023 | |
Investment in Receivables Portfolio [Roll Forward] | ||
Balance, beginning of period | $ 3,468,432 | $ 3,088,261 |
Purchases of receivable portfolios | 295,714 | 276,431 |
Collections applied to investment in receivable portfolios, net | (195,035) | (166,682) |
Changes in expected recoveries | (12,409) | (9,501) |
Put-backs and recalls | (4,347) | (1,806) |
Disposals and transfers to real estate owned | (2,045) | (1,105) |
Foreign currency translation adjustments | (18,923) | 29,194 |
Balance, end of period | 3,531,387 | 3,214,792 |
Financing Receivable, Purchased with Credit Deterioration, Amount at Purchase Price [Abstract] | ||
Purchase price | 295,714 | 276,431 |
Allowance for credit losses | 644,514 | 659,644 |
Amortized cost | 940,228 | 936,075 |
Noncredit discount | 1,255,793 | 1,005,221 |
Face value | 2,196,021 | 1,941,296 |
Write-off of amortized cost | (940,228) | (936,075) |
Write-off of noncredit discount | (1,255,793) | (1,005,221) |
Negative allowance | 295,714 | 276,431 |
Negative allowance for expected recoveries - current period purchases | 295,714 | 276,431 |
Collections applied to principal balance (debt purchasing) | ||
Cash Collections | 510,887 | 462,356 |
Less - amounts classified to revenue from receivable portfolios | (315,852) | (295,674) |
Collections applied to investment in receivable portfolios, net | 195,035 | 166,682 |
Changes in expected recoveries | ||
Recoveries above (below) forecast | 853 | (15,358) |
Changes in expected future recoveries | (13,262) | 5,857 |
Changes in recoveries | $ (12,409) | $ (9,501) |
Investment in Receivable Port_5
Investment in Receivable Portfolios, Net - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Receivables [Abstract] | ||
Recoveries above (below) forecast | $ 853 | $ (15,358) |
Changes in expected future recoveries | $ (13,262) | $ 5,857 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Real estate owned | $ 63,961 | $ 70,590 |
Operating lease right-of-use assets | 63,243 | 67,019 |
Prepaid expenses | 40,599 | 32,910 |
Deferred tax assets, net | 13,709 | 17,277 |
Derivative instruments | 10,039 | 17,311 |
Service fee receivables | 9,669 | 9,080 |
Income tax deposits | 7,427 | 8,735 |
Other | 68,975 | 70,334 |
Total | $ 277,622 | $ 293,256 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Total | Total |
Borrowings - Consolidated Debt
Borrowings - Consolidated Debt and Capital Lease Obligations - Table and Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Debt Instrument [Line Items] | ||
Finance lease liabilities | $ 2,262 | $ 2,818 |
Debt and finance lease liabilities, gross | 3,410,910 | 3,358,547 |
Less: debt discount and issuance costs, net of amortization | (46,881) | (40,516) |
Total | $ 3,364,029 | $ 3,318,031 |
Finance Lease, Liability, Statement of Financial Position [Extensible List] | Total | Total |
Credit Facility | Global senior secured revolving credit facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 367,739 | $ 816,880 |
Credit Facility | Cabot securitisation senior facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | 322,110 | 324,646 |
Credit Facility | U.S. facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | 175,000 | 175,000 |
Encore private placement notes | Encore private placement notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | 19,540 | 29,310 |
Senior secured notes | Senior secured notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | 2,128,357 | 1,654,989 |
Convertible senior notes | Convertible senior notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | 330,000 | 330,000 |
Other | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 65,902 | $ 24,904 |
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. 31, 2024 | Mar. 31, 2023 | |
Debt Instrument [Line Items] | ||
Revolving credit facility | $ 1,203 | |
Commitment fee (as a 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 | $ 367.7 | |
Weighted average interest rate (as a percent) | 7.89% | 7.06% |
Remaining borrowing capacity | $ 827.3 | |
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 (as a percent) | 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, 2024 | Dec. 31, 2023 | Aug. 31, 2017 | |
Debt Instrument [Line Items] | |||
Debt issued | $ 330,000,000 | $ 330,000,000 | |
Encore private placement notes | Notes Payable, Other Payables | |||
Debt Instrument [Line Items] | |||
Debt issued | $ 325,000,000 | ||
Long-term debt | $ 19,540,000 | $ 29,310,000 | |
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 (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Debt Instrument [Line Items] | ||
Senior secured notes | $ 2,128,357 | $ 1,654,989 |
2025 Notes | Secured Debt | ||
Debt Instrument [Line Items] | ||
Senior secured notes | $ 377,762 | 386,324 |
Stated interest rate (as a percent) | 4.875% | |
2026 Notes | Secured Debt | ||
Debt Instrument [Line Items] | ||
Senior secured notes | $ 378,952 | 381,937 |
Stated interest rate (as a percent) | 5.375% | |
2028 Notes | Secured Debt | ||
Debt Instrument [Line Items] | ||
Senior secured notes | $ 315,794 | 318,280 |
Stated interest rate (as a percent) | 4.25% | |
2028 Floating Rate Notes | Secured Debt | ||
Debt Instrument [Line Items] | ||
Senior secured notes | $ 555,849 | 568,448 |
Variable rate floor (as a percent) | 0% | |
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% | |
Encore 2029 Notes | Secured Debt | ||
Debt Instrument [Line Items] | ||
Senior secured notes | $ 500,000 | $ 0 |
Stated interest rate (as a percent) | 9.25% |
Borrowings - Senior Secured N_2
Borrowings - Senior Secured Notes Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Debt Instrument [Line Items] | |||
Debt instrument face value | $ 330,000 | $ 330,000 | |
Credit Facility | Global senior secured revolving credit facility | |||
Debt Instrument [Line Items] | |||
Repayment of borrowings | 493,000 | ||
Senior secured notes | Senior notes | |||
Debt Instrument [Line Items] | |||
Debt instrument face value | $ 500,000 | ||
Issuance price (as a percent) | 1 | ||
Stated interest rate (as a percent) | 9.25% | ||
2028 Floating Rate Notes | Secured Debt | |||
Debt Instrument [Line Items] | |||
Weighted average interest rate (as a percent) | 8.12% | 6.38% | |
2028 Floating Rate Notes | Secured Debt | Derivatives Designated as Hedging Instruments | |||
Debt Instrument [Line Items] | |||
Weighted average interest rate (as a percent) | 5.01% | 4.33% |
Borrowings - Encore Convertible
Borrowings - Encore Convertible Notes and Exchangeable Notes - Table and Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Apr. 01, 2023 | Mar. 31, 2023 |
Debt Instrument [Line Items] | ||||
Debt issued | $ 330,000 | $ 330,000 | ||
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 | |||
Convertible Notes | 2029 Convertible Notes | ||||
Debt Instrument [Line Items] | ||||
Debt issued | $ 230,000 | $ 230,000 | ||
Stated interest rate (as a percent) | 4% | |||
Initial conversion price (usd per share) | $ 65.89 | $ 82.69 | $ 65.89 |
Borrowings - Exchangeable and C
Borrowings - Exchangeable and Convertible Notes Features and Certain Key Terms (Details) - Convertible Notes $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 USD ($) $ / shares | Apr. 01, 2023 $ / shares | Mar. 31, 2023 $ / shares | |
2025 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 rate (shares per $1,000 principal amount) | 25 | ||
Adjusted conversion 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 | $ | $ 14,622 | ||
2029 Convertible Notes | |||
Debt Instrument [Line Items] | |||
Initial conversion price (usd per share) | $ 65.89 | $ 82.69 | $ 65.89 |
Closing stock price at date of issuance (usd per share) | $ 51.68 | ||
Initial conversion rate (shares per $1,000 principal amount) | 15.1763 | ||
Adjusted conversion 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, 2024 | Mar. 31, 2023 | |
Convertible senior notes | ||
Debt Instrument [Line Items] | ||
Interest expense, debt, excluding amortization | $ 3.1 | $ 2.9 |
Borrowings - Cabot Securitisati
Borrowings - Cabot Securitisation Senior Facility (Details) $ in Thousands, £ in Millions | 3 Months Ended | ||||
Sep. 16, 2026 | Mar. 31, 2024 USD ($) | Mar. 31, 2023 | Mar. 31, 2024 GBP (£) | Dec. 31, 2023 USD ($) | |
Debt Instrument [Line Items] | |||||
Financing Receivable, before Allowance for Credit Loss | $ 0 | $ 0 | |||
United Kingdom, Pounds | |||||
Debt Instrument [Line Items] | |||||
Foreign currency exchange rate, translation | 0.79 | 0.79 | |||
Cabot securitisation senior facility | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 322,100 | £ 255 | |||
Weighted average interest rate (as a percent) | 8.40% | 6.87% | |||
Financing Receivable, before Allowance for Credit Loss | $ 415,800 | £ 329.2 | |||
Cabot securitisation senior facility | Derivatives Designated as Hedging Instruments | |||||
Debt Instrument [Line Items] | |||||
Weighted average interest rate (as a percent) | 5.51% | 5.25% | |||
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) | 3.20% | ||||
Cabot securitisation senior facility | Minimum | Sterling Overnight Index Average (SONIA) | Debt Instrument, Redemption, Period Two | Forecast | |||||
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 | Forecast | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable rate (as a percent) | 1% |
Borrowings - U.S. Facility (Det
Borrowings - U.S. Facility (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Debt Instrument [Line Items] | ||
Financing Receivable, before Allowance for Credit Loss | $ 0 | $ 0 |
U.S. facility | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate (as a percent) | 8.93% | |
U.S. facility | Derivatives Designated as Hedging Instruments | ||
Debt Instrument [Line Items] | ||
Weighted average interest rate (as a percent) | 8.08% | |
U.S. facility | ||
Debt Instrument [Line Items] | ||
Financing Receivable, before Allowance for Credit Loss | $ 319,800 | |
U.S. facility | Credit Facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 175,000 | $ 175,000 |
U.S. facility | Credit Facility | Secured Overnight Financing Rate (SOFR) | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate (as a percent) | 3.50% |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance at Beginning of period | $ 936,538 | $ 1,179,627 |
Balance at end of period | 953,859 | 1,184,156 |
Derivatives | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance at Beginning of period | (3,093) | 36,494 |
Other comprehensive loss before reclassification | (7,987) | (4,858) |
Reclassification | 13,462 | (3,195) |
Tax effect | (2,685) | 876 |
Balance at end of period | (303) | 29,317 |
Currency Translation Adjustments | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance at Beginning of period | (120,827) | (135,310) |
Other comprehensive loss before reclassification | (6,146) | 16,008 |
Reclassification | 0 | 0 |
Tax effect | (160) | (383) |
Balance at end of period | (127,133) | (119,685) |
Accumulated Other Comprehensive Loss | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance at Beginning of period | (123,920) | (98,816) |
Other comprehensive loss before reclassification | (14,133) | 11,150 |
Reclassification | 13,462 | (3,195) |
Tax effect | (2,845) | 493 |
Balance at end of period | $ (127,436) | $ (90,368) |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Tax Contingency [Line Items] | ||
Effective rate (as a percent) | 23.80% | 25.60% |
Costa Rica | Tax holiday through December 31, 2026 | ||
Income Tax Contingency [Line Items] | ||
Holiday tax rate (as a percent) | 100% | 100% |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Mar. 31, 2024 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Material reserves for litigation | $ 0 |
Purchase price | $ 598,900,000 |
Segment and Geographic Inform_3
Segment and Geographic Information (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 USD ($) segment | Mar. 31, 2023 USD ($) | |
Segment Reporting [Abstract] | ||
Number of reportable segments | segment | 1 | |
Segment Reporting Information [Line Items] | ||
Revenues | $ 328,386 | $ 312,630 |
United States | ||
Segment Reporting Information [Line Items] | ||
Revenues | 219,136 | 200,218 |
Total Europe | ||
Segment Reporting Information [Line Items] | ||
Revenues | 108,531 | 112,223 |
United Kingdom | ||
Segment Reporting Information [Line Items] | ||
Revenues | 72,427 | 77,985 |
Other European countries | ||
Segment Reporting Information [Line Items] | ||
Revenues | 36,104 | 34,238 |
Other Geographies | ||
Segment Reporting Information [Line Items] | ||
Revenues | $ 719 | $ 189 |
Goodwill and Identifiable Int_3
Goodwill and Identifiable Intangible Assets - Activity in Goodwill Balance (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Goodwill [Line Items] | ||||
Goodwill impairment | $ 238,200,000 | $ 0 | $ 238,200,000 | $ 0 |
Effect of foreign currency translation | (4,075,000) | 12,960,000 | ||
Goodwill | 602,400,000 | 834,174,000 | 606,475,000 | 821,214,000 |
Goodwill [Roll Forward] | ||||
Balance at beginning of period | 606,475,000 | 821,214,000 | ||
Effect of foreign currency translation | (4,075,000) | 12,960,000 | ||
Balance at end of period | 602,400,000 | 834,174,000 | ||
MCM | ||||
Goodwill [Line Items] | ||||
Effect of foreign currency translation | 0 | 0 | ||
Goodwill | 148,936,000 | 148,936,000 | 148,936,000 | 148,936,000 |
Goodwill [Roll Forward] | ||||
Balance at beginning of period | 148,936,000 | 148,936,000 | ||
Effect of foreign currency translation | 0 | 0 | ||
Balance at end of period | 148,936,000 | 148,936,000 | ||
Cabot | ||||
Goodwill [Line Items] | ||||
Effect of foreign currency translation | (4,075,000) | 12,960,000 | ||
Goodwill | 453,464,000 | 685,238,000 | $ 457,539,000 | $ 672,278,000 |
Goodwill [Roll Forward] | ||||
Balance at beginning of period | 457,539,000 | 672,278,000 | ||
Effect of foreign currency translation | (4,075,000) | 12,960,000 | ||
Balance at end of period | $ 453,464,000 | $ 685,238,000 |
Goodwill and Identifiable Int_4
Goodwill and Identifiable Intangible Assets - Acquired Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 918 | $ 918 |
Accumulated Amortization | (918) | (870) |
Net Carrying Amount | 0 | 48 |
Trade name and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 918 | 918 |
Accumulated Amortization | (918) | (870) |
Net Carrying Amount | $ 0 | $ 48 |