ECPG - Earnings call 3 2023 | Encore Capital Group, Inc.

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Operator

Good day, everyone, and thank you for standing by. Welcome to the Encore Capital Group's Quarter 3 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Bruce Thomas, VP of Global Industrial Relations. Bruce, please go ahead.

Bruce Thomas

operator. you, Thank welcome Earnings and Capital Third Group's Good to XXXX Call. Quarter afternoon, Encore

on are Vice Joining President call Bell, the me today Credit Midland Executive Financial and Management. Jonathan President Chief of and Ashish Officer; Clark, and Executive President Officer; Ryan Chief our Masih,

and we'll be quarter otherwise John on noted, will then this remarks third made take third to the conference today, prepared and happy XXXX. XXXX your will between of comparisons of the Ashish and call make be quarter questions. Unless

future In statements addition, forward-looking today's subject to discussion could will include risks forward-looking and differ uncertainties. results these from materially statements. Actual

Please refer discussion uncertainties. detailed a filings to our for and of potential risks SEC

use and sake we for call, will this During rounding abbreviations the of brevity.

financial comparable most non-GAAP in to We on are was included be measures. GAAP earnings measures X-K will directly presentation, which Form our filed discussing the financial today. Reconciliations earlier also

also the me where our available also conclusion Chief a call call and made remarks following let call. for reminder, of website, Ashish to over our the be President Executive of the this on will With replay we our Officer. section prepared that, conference this turn post As Masih, will Investors

Ashish Masih

with joining afternoon, us highlights. QX Bruce, you Thanks, today's call and everyone. Thank a I'll good for few begin

thrive. The U.S. to strong MCM third at of which quarter the business, was purchasing attractive continues in another period our returns for

charge-off portfolio rates in growth pricing U.S. driven and supply to has returns. led by lending improved rising continued The card and credit growth portfolio

Cabot environment U.K. million multiple. U.S. continues with market at and attractive price an we the Concurrent navigate the As QX in challenging $XXX purchasing X.X favorable deployed in Europe. the to a in U.S. conditions result, the purchase in

stronger behavior a of Cabot as in right global available normalized with become consumer do to returns collections QX, we continue for stable until the were in in and investing long-term what's environment. returns to instead U.S. continue In the Encore, see in constraining market. success more attractive line deployments collections We expectations,

like amid to to our existing John also provide activity create highlight these accomplishments our and that sheet a markets, since enhanced more In of tap financing conditions October, the the challenging balance also capital liquidity. new end facility quarter. few further will U.S. us bond strong in I'd in enabled details an the on third minutes. a a

consumer I business and to in expected believe resolution critical it's debts, helpful by the unpaid we credit the of assisting the in model. role outcome play of ecosystem are reiterate lending which the an necessary

the we Our them help consumers mission is to to helping debts. serve resolve their by create past freedom for due economic pathways

by that We and empathetic do engaging consumers in respectful honest, conversations.

purchase Our costs. at nonperforming attractive business funding is minimizing returns to while loans portfolios of

of we maintaining the each while For and level an exceed we as to portfolio compliance strive that efficient our highest well as focus. ensuring consumer expectations, structure cost own, collection

our objectives instrumental financial and these This on strategy. us well is enables building positions value. consistently this X-pillar future achieved us performance capitalize We We believe strategy to opportunities. shareholder through deliver long-term for outstanding to

risk-adjusted efforts returns. concentrates of where achieve highest the markets can strategy, pillar first The we focus, our the our market on

in the below and to a banks. X average by our Changes portfolio during credit now with unusually sales turn consumer take a resulted Let's markets, card charge-offs, look led beginning pandemic in at which largest balances the of behavior reduced low to level U.S.

outstandings XXXX, rising. early since have However, been

historically U.S. levels level pre-pandemic seen has credit the Revolving a the new in market. the steady Reserve Each outstands lending in of we month Federal thereafter, growth have surpassed in in reported the XXXX. early U.S. U.S. record reflecting

card growing growth by charge-offs. also credit XXXX, the delinquencies, indicator now is normalizing the also in above in steadily consumer of credit charge-offs been continued levels. to the card has future approaching and The now levels. led that out charge-off and behavior a pre-pandemic rise same U.S. and driven bottoming credit has increased are leading rising to has U.S. Since rate the late demand U.S. consumer in for consumer have banks, lending pre-pandemic

lending U.S, are supply growth U.S. strong and continued the the simultaneously pricing. improving we both rate the in in growing seeing and With market charge-off

expect As issuers. sales a to be result, a for we XXXX and banks year credit U.S. record by card portfolio

amid With pricing this The MCM an portfolio a favorable environment had price environment. multiple. X.X purchasing million backdrop, in our quarter result at business our MCM strong disciplined purchasing attractive QX. $XXX purchase as of an approach improving another of deployed

for year We current see past purchases purchasing environment To MCM X strong million down. that of no deployed has for slowing full proper million quarters, the returns. record $XXX MCM's calendar signs this is $XXX and Over into context, a portfolio put XXXX. figure in favorable

the in expected fourth pipeline supply the fact, million quarter remains X.X U.S. MCM's multiple. robust a $XXX to and with be In above purchasing

future and as This relevant would new multiples, expected MCM differentiated of financial our returns is This of our indicators annual purchasing competitors realities to valuation which higher purchases. the a importance cannot the on decisions. face the establish of are and their record particularly for performance. We overstate of prior starting number impact are the

capacity. the added XXXX has the stable the a to MCM U.S. $XXX beginning to behavior the supply market MCM quarter Since account MCM consumer were collections as XXX in operation. continues continues in to U.S., managers in third million of of expand internal collections grow indicative collections

flat remained Continental in consumer's markets. outstandings Cabot's U.K. Europe. card in million rates the below to U.K. With business still pay and competitive. charge-off very compared pre-pandemic steady Cabot as to collections in ability Turning QX, in X% still Europe were very the credit quarters $XXX and low, recent remains level our the markets to

were in $XX portfolio QX million. Cabot purchases

world. market the in caused the an constrain the Encore's purchases to strategy reflect and are to still markets purchasing does integral amongst yet market not capital debt remains portfolio global rates. of fully higher its as European most U.S. pricing reallocating business cost part Cabot capital we higher of continue the interest believe Cabot We by meaningful markets

in capital towards in have additional allocate deployments before ultimately, our to funding said growing we as need costs the with Europe. will we pricing higher past, But align

continue to given prudently the the cost recent We of in structure manage level quarters. portfolio reduced Cabot purchases

enhancing on competitive focuses strategy advantages. our of our pillar second The

business a have We well that flow. and cash competencies earnings deliver to allow us significant differentiated returns as around key generate as built certain

purchasing strong price and effectiveness us collections disciplined at multiples. superior portfolios purchase Our purchase enable to

returns. continuous higher a Then collection have vintages. improvement over efforts time, portfolio and vintage drive us each substantially even multiple and enabled our in our to collect raises for current both from turn historical more helps differentiated This current

purchased As to a raised the X.X. result on year-to-date a QX X.X MCM's U.S. for focus has returns, diligent multiple for multiple this of on basis portfolios purchases purchase

see in the U.S. supply QX pipeline forward for look a robust We to XXXX. in strong also another quarter and

supply to market the improve, remains the ERC pricing growing. U.S. in is As and the innovated environment MCM's continues steadily

more efficiency to capital portion expect during The Importantly, pricing continues as of reflects credit significant capital of deployment we ERC quarter deployed. to for of this improve, of dollar our every each the the are amount cycle. we collect the adding

Our quarter portfolio clearly purchasing the in third point. illustrates this

deployment than higher portion been quarter Yet from in ago. the more MCM's the year X.X% we've anticipating. we cycle the purchases multiples. ERC of XX% in was QX This these added a at recent is third higher more

and strong profitability is business adds cash Our to at business. which purchasing portfolios returns, in flows MCM stride future full the

pillar cash is card an advantage, U.S. and in believe half competitive led of to strategy. provides significant generate important that rates higher market reduced from first spending, key our the which the through of for a XXXX, We lower industry consumer our balances ability charge-off also to the component drove us credit connections business. and XXXX supply also our our In second of

and under normalize to to began incremental reduced from collections. higher generation overall behavior purchases as period led consumer lower came portfolio pressure prolonged the these collections of began that When cash cash our generation to subside,

has past this generation over trend, again. and to enabling our trend improving we to This More expect quarters is portfolio recently, reversed however, few higher begin continue. purchases will a grow pricing the cash

over call I'd sheet our look update now like more to balance on pillar results a strategy, third detailed for financial of at to our to strength. an John hand provide and the the

Jonathan Clark

Thank Ashish. you,

another each third key our of strong period remained was of our at performance while markets. our business stable purchasing The for collections in attractive returns, quarter U.S.

QX impacted were which primarily more a few in detail. expectations provide like last quarter, to small in I'd higher with our line grown debt related way. balance flat, our since to to Collections we in last negative ERC, the and items highlight purchasing. earnings and increase had which sequentially $XX for expense adjustments due year, has was to rates portfolio and Interest increased of interest million year's in a

QX changes and reducing EPS by million below QX thus million future I in $XX reduced Together, recoveries $X.XX. of reduced reduced $XX $X.XX. QX QX earnings collections totaling revenues EPS forecast, of recoveries in in by changes by by $XXX resulted $X.XX. million, $X million QX recoveries expected

year results a the end the take can they reported X% fluctuations it's was cause results, repeating at ago. CECL bears another to the quarterly we quarter over term. to of accounting our financial that yet significant converge view do metrics. the It compared long with reason important is cash believe of that This in up but long ERC

businesses, U.S. the our year. long-term value. down MCM the business the we X%. major Breaking Cabot in grew building the decisions, with grew into way consistent perspective last X quarter in third collections run to make is compared QX This a and to our X% employing results global shareholder collections collection

and were with in collections expectations. For both QX MCM Cabot line in

year-end through XXXX, collections quarter of the end year-to-date XX% global was our the at portfolio ERC. owned portfolios For and Encore's of third performance

For figures X for performance. our QX these the XX%, Cabot, MCM of same first the All were and third collections were through by and measure identical through to respectively. half XX% quarter

is that now priority. become with When stronger of our strategy and company. structure financing extended sheet the much pillar a flexibility, maturities. provides global third unified have Encore of that The constant years, strength our We compared us a funding a financial of balance to ensures sources has diversified pre-pandemic

past and leverage our to of operating of the levels lower capital higher level X several cash last debt, reduced strong and which and significantly. of increased purchasing years, More each Over has lower our generation risen recently, deployment, during collections quarters. the a performance leverage focused drove by our portfolio driven contributed

our our But portfolio importance global rates With fund strong off interest we sheet, higher that rates of balance With as and we interest now and the structure as would. lie our be bond ahead. funding expected are positioned we continued collections stabilized, the cannot overstated. the conditions environment opportunities to seeing remain with level in challenging has it markets, well leverage purchasing

We and funding to believe us balance competitive very costs when our compared our sheet provides competitors. peers

in us by also we effectively structure see provides liquidity In financial made good in flexibility use flexibility our pipeline balance environment. funding sources to as prepare $XXX for this incremental diversified the adding the funding and million of XXXX. compete U.S. this sheet growing to we of supply supply Our we robust October, in

portfolios. into To achieve entered facility secured a by receivable we million this, $XXX U.S.

facility securitization reduced its GBP September million Cabot XXX the of to maturity the to XXXX extended GBP XX also We million. size by and

In incremental tap we addition, a our an XXXX of notes December issued million offering. of our follow-on floating EUR XXXX as rate XXX

back that, over like to Ashish. With to turn I'd it

Ashish Masih

Before I arrived a in of that strong to balance everyone close, U.S. the like overstated, our ago. be long anticipated industry highly consistent I'd to commitment set importance a our especially growth we of cannot the in established in financial The market priorities diversified has sheet of as remind supply

to will are purchases good to long-term be time at especially view also competitors the build always I'd long when challenges. a capital attractive to continue own stewards their by in and a of like competitive advantages, returns of with shareholder portfolio taking value. your our summarize dealing number during We order prioritizing the

These industry our financial the the in advantages evidence. differentiate are and long-term results business

the the are with market is we player -- largest highest be returns. happens U.S. the First, world's the which market, tech to purchasing largest in also

the lifetime, collect we returns. Second, we more earnings believe ability corresponding best-in-class. a purchase are which We ultimately on in generates a over more higher price and and collect vintages portfolios turn buy multiples our to cash more

allows us our the of to to the Third, in to demonstrated This in to overall by capital with opportunities returns. MCM order as from returns. vital a sheet capital Cabot business our in flexibility well-diversified Europe allocate maximize U.S. global business highest reallocation balance is our

enormous of flexibility the and to times in traditional advantage been a to ERC ways. and a balance using expensive. has an our significant myriad business our finally, sheet in This more And disciplined provides Our represents built approach purchasing become less fund a us provides billion generate cash. also of $X consistent, capability certain markets when

by a competitive and standing truly supported purchasing We believe values, industry. the advantages mission, Encore's these differentiate in vision debt

health. number to play their continues are cycle committed around of to credit in we increasing are the great restore financial consumers work the to credit As turn, role the Through ecosystem. doing our an we the the essential help colleagues world

a company as of our the sector. believe our closing, Encore continued result the in of positioned strategy, In we is disciplined best execution

portfolio on substantial capability operational and in sheet We purchasing balance have the the the growing market. opportunity to U.S. and capitalize

of our expect we be deployment XXXX returns. capital ahead, MCM the Looking record at business year in will a strong U.S. for

supply for returns and a will see valuable XXXX the become will and more which plan the only even ERC we in growth pipeline in with capital remain steady disciplined We time better to expect earnings. We highly attractive, robust expect allocate and we in competitive happen significantly European more U.S. when market over returns. and the

Operator, any be for we'd please answer questions have. Now open up lines happy questions. you the to that may

Operator

from [Operator comes Mark Instructions] of question first Truist Hughes Securities. from Our line the

Mark Hughes

amount does it anticipate it in the in if line expected that there more But million reflect XX%, and stays of to very you're about stays adjustments? think would the kind this overall a obviously $XX of level, perhaps we in quarter at another in small your changes balance would current XX% elevated XX% if portfolio, receivables Jonathan, your risk is more collections, or we would XX% at already forecast to is relative ERC. recoveries, of be at -- if be

Jonathan Clark

great as up clear But any XXXX. confusion. refers XX% to the of The a to end just question, our ERC it's Yes, Mark. of

you really term, of purpose people are more if that close the hitting metric of date. forecast created will, as that so that longer So ERC was is that how you to understand

One, years remember, more you're things You there after X portfolio. to that need buying now are that. impact

purchased you guess for we through so best our number, if process in that forecast is in where go forward. move evaluate know, that a going anything and that's you going course as the XXXX definition, of addition, will, to included during not quarter-on-quarter. you every And is And establish we and what by quarter, a

as question. indicator I from, any understand it of you an PCL shouldn't I but that charges. your where future So comes understand take

Mark Hughes

portfolio into I and based think Is does, it on if is takes mark-to-market it, history. recent I the expectations the your already fair? restate that account

Jonathan Clark

addition, XXXX. And Correct. from purchases obviously, added you've your in all

Ashish Masih

could exceeding I Mark, add XXXX later if purchases, Ashish. are will that, you Q, our And see as in expectations. The to the this is well

is 'XX, charges around 'XX of some vintages, those. exceeding negative -- So order the were 'XX in but

Mark Hughes

terms natural Is haven't any circumstances, some charge-off lag, bought more I or the mean across more you dynamic? selling? and so a numbers comment banks this in of these wonder -- change seeing on those selective? you Is looking at doubling of if just issuers paper? why being certain -- behavior of in I you could that

Ashish Masih

buying are Yes, we so more.

As you ERC I Mark, is a and you quarters, this X much amounts indicated, matters And $XXX record but is buying what MCM, spend, what for over how X for not just closed. are add. we million

are But X, charge-offs, their are chart increasing selling the an of close. deployment the if you at who because So at some pretty if is face rate. higher the rates banks of in actually, amount, lending multiply opportunity U.S. pre-pandemic, you the look even the will post-pandemic higher look it charge-off

or are we money getting then that even we're the amount same more, spend. actually spending same And for and more of

on are we've ERC rate we slide So our X at record adding as that presentation. very a in shown

Mark Hughes

Appreciate that. you below little it show you then deck the And in here slide performing expectations. is that XXXX your How lately. seen initial a have vintage, that bit

the in are Q. feeling the look we'll that you vintage? about you But at quarter, guess see last I If how

Ashish Masih

when high take I were multiple the reflection buying 'XX collection of we off time of I pandemic in we and as or to and at call fine 'XX, point. prior the the we adjust. this that a coming It's a for think, valuations period X were performing as mean indicated, changes, that what valuations,

hasn't improved. really Pricing

ERC. And sense, was like has actually. XXXX total about So multiple in that it's driver changes. in bought. the very more unique just driver. the of paper over It's maybe a performance There's adjusted major past we terms the no as in is vintage movements and of several of quarters, that been of the it expectations slight that performing those big It's consistently XXXX, in particularly nothing

Operator

Janney John Scott. from Our the next Montgomery Rowan comes of from line question

John Rowan

trying that weaker a to and just the quarter. the I X the So just dip prior then Why the to took guess the you is for gave it quarter. quarters MCM a in in relative guidance fourth third little the quarter purchases to relative understand apparently bit

Ashish Masih

I just X prior is you volatility wouldn't a of call nothing quarter-over-quarter. market, XXX a There's of it weak. reflection It's come It's some expect increase versus might just flows, in sizes. what of to in XXX the portfolios decrease in terms may why the quarters. special it or about it normal they

buying -- and selective pricing at reflects are kind being cost given and being dynamics of good that higher we are. market what very So of the what so it supply-demand rate should, also capital

we the to staying sure making we're direction So on you and capitalize disciplined fully would. able pricing are if that,

So But it was last bit. by look a which little quarter given expectation of exceed a going the year, just in cumulative can record huge ebb and to it if flow is you XXX, our at XXXX. margin,

John Rowan

of Okay. I given portfolio that just comments -- deal, performing that you was note negative in back surprised when you with to year the August line is half after made or relative little revision see the it in through to was of the a year. August, kind the December of the about the the look the 'XX first at the with marks first consistent half

assume wasn't other weaker X months notably point, revision would the negative the at a least September probably Was at there I of So than that year. through months? X

Ashish Masih

case, the not That's John.

That's is. number first few me months. explain So and normal is here, right? different September no than one. just X It's another was performance things The a seasonality let whatever

line QX end previously, that was John number we XXXX December it's Number talked XX% was two, XX% against at about, what with have in of that the said the a when we said ERC. And QX, X our of on the said, And includes script end presentation. the we're at have still XX% that QX, months. for seeing same we we performance in the which XX% are September,

the -- mentioned Now revisions. you

if just or So is noticed you number. above $X performance our million below recoveries in the Q,

barely that X% or put the less impact you If context, terms X% in than that's in of forecast.

close So because 'XX which XX%, that's better -- changed, that's was also the but the has expectations to vintage overperforming. and forecast the it than very

factors X about. that John those talked So

is is million less other X%. $X And the X ERC. So in just than changes

Some of it actually timing. is

on that is X% way vintage, small and changes change variations. if cause quarterly can that we changes the timing As the than But well. forecast ARC less as every

X why over at to that's term. have it So long look the

If you start we've QX, had and downwards. 'XX XXXX, in then some back upward in -- significant revisions

So over said the And life full time, accounting has will adds we up. of vintage. it as over equal said the John cash and have

Operator

Our of the question next comes Northland. line from from Grondahl Mike

Mike Grondahl

secondly, Could sort sort inflation into of say And driven macro any loan impairments? affecting then years that's to more student you I'm Would were maybe? you color trying the give what us driven negatively? why most understand the of

Ashish Masih

Yes, Mike.

of X%. attribute -- the pretty at So response or good thing -- if it forecast mentioned that a to outcome previous would you was do. possible that And forecast, the to to any was under I question, in to be less just as X look that's the collections than the variable, performance not any right

changes gone by at student comment, that -- and least given about. student they really loan base. we call. impacted given the found our We we've speech consumers Now consumer track When just data. your every at have come in not payments, loan looked actually We've the looked

even of student than loan long as part mentioned X% consumers account repayment less We the conversation with of found a manager. much

out total collections Again, forecast, impairment to a So it's $X the and very percent that ERC or book of that's million a I view. it's the of value. just mentioned want you call point small the under and immaterial from minuscule

Mike Grondahl

enough? most how like verify you your it you And shouldn't years question -- just determine second was and where of why then sounds are of are. 'XX what be the And it. just I headaches mean, biggest sort more? Got the that 'XX affected. It were impairment Can that? is sort do

Ashish Masih

Yes. That's good question. a

Sorry, I didn't address Mike.

vintage by be our recovery. in in will Q actually the disclosed So changes

forecast Now combination performance the any timing. change of in that's the a I recognize actual plus of

negatives. be 'XX positive and overperformed across, the a the were talking across XXXX and in vintages, XXXX. actually are vintages. which they numbers some So then I'm European Cabot's XXXX, biggest and positives Again, and And there the had and are some spread was past would U.S.

then So we audited other quarter. we heavily for our at and to and put to forecast any process, quarter. to your data that's best estimate have make the past question, always every whatnot look the prepared every And revisions

estimate, best out So we've that's there. at this point, in everything our incorporated

take vintage vintages of add well. has Now XXXX quarters, the continued some over the some hits as the those if X-month but to initial those outperform of have view, you taken cumulatively expectations

So there's some puts and there takes.

Mike Grondahl

purchase maybe know, quarter dealing or sadly, enough the pipeline. quarters latitude mean to I this because with in in X talking row, I it's been you any continually get provision not robust think too that the is we're with And time a just impairments fourth this it? much purchases don't guys, it. spending a row so Got or time do . But the I the increase we're about talking not about maybe dealing and

Ashish Masih

does John word well. call have forecast, way. and have been per or the have it that you again, as not small. -- No, you in under This forecast and X performance the a your But impairment. quarters wouldn't in very And right? change chime is the then for then I and X can quarters, work

and So would of going We million QX, increases remind very, also MCM QX. million very QX $XX by XXXX, XXXX memory, for I'm large $XXX U.S. recoveries in expected had maybe QX I for future in in

if you, view, puts and Again, there much are these talk some time. small variations to with just So a longer and agree you about I are as takes, take

revenues is we up is the are the can and future allocation the we capital purchasing to Europe from we do mentioned, thing seeing and multiples doing, collections, U.S. as building are The excited strong we're most about, that you for ERC MCM therefore and the earnings.

Jonathan Clark

process want and want anything just call think this anybody to you want If to a other our that to in. just Mike, I determine -- very, very what sure chime is forecast than I on go just -- rigorous understand to I that make can in we through order the I is.

to highly it's the It impactful audited is so P&L. because

so a have we the to to kind very, some model of or generates very overlay process, how to something it. that. of be we makes And that very extent strict you why have that adjustment about that process. defended And go you has it then sense to a structured have and to as do have

that's And we because as don't permanent. what tell impairment X know but are us, remember, is a permanent I thing future from make know -- an not This the important an when mentioned need and impairment. the isn't the accounting this, this thing. adjustments Ashish an All models This We to right? adjustment we know is just hold. what impairment them, perspective, will an we takes is the we

Mike Grondahl

these be enough, next Fair kind talk some we of quarter. have about impairment a don't it's to the extent might word, pool. Hopefully, still a strong but Yes. to on write-down

Operator

line of question the comes next Dodd of from James. Robert Our Raymond

Robert Dodd

couple A of questions.

this, to the say, year. This right. And if I your the last XXXX $X.X the upward it's million up as though year, this I well, months adjustment. were getting X mean, the time On over XXXXs written can remember point, a I is,

are 'XXs. underperformance, the you seems. But to you So to saw with confident it's -- the 'XXs you isn't confident Jonathan's our know type going it behavior occur of to outperformance the how get early that, continue curb How I little where you the behavior to a side. best can are bit from that are of where and in point, we that today, efforts there's

Ashish Masih

Robert.

add X X the months. So is And million just revision. for I just out thing correct the $XX.X you to months, actually, X your overall $X.X for or would million. XXXX pointed That's it

to just wanted that. kind So correct of I

Now best back estimate -- these do let minor in each each. because behavior, we adjustments me vintages for just possible forecast step terms of our on payment from all

are a payment stable We payment behavior. very seeing consumer U.S.

collections. said valuation the we the past, of pandemic from XXXX in were changes levels are we've in adapting -- high and XXXX to As models our

vintage, the There's lag valuation adjusted in time. adjusting takes a we some in It X are at level and and said, sit look it times that at were again confident it forecast overperforming. we at today, in they and the a that months. because models granular at look every But then very 'XX have as we forecast

what that's how the competitors consumer little post-pandemic, or be not, we a to is bit payments, some very behavior works. So making up that down U.S. process consumers there stable, overall, But less payment well have out what found may saying cash consistently business. again, are our at data our the up U.S. is holding very we smaller showing but And in setting market in steady, unlike plans plans. the looked really data just payment

So feel very operational good with the metrics. underlying we

adding We additional are purchasing year. for staff XXX We managers the account we're doing. for that added

basis. from that big concerning winter nothing vintage there's So changes view forecasting are happen on point a point macro either of by or operational capability of view. These

and best So vintages a in effect globally, view. can on for accounting that that's of each negative, your point and see of to those, are vintage positive, our and the adapt are implications do the what some from some estimate right? you you And and net forecasting happens Q,

Robert Dodd

account the staffing if point, near-term To you XXX with deterioration and that the or potentially you've and in -- you coming, the add your good. -- Are U.S. you are question. actually up going on that -- record that a is next see increased planning managers. volume a year this efficiency, to looks hit XXXX for got staffing see to appreciate the right, I deterioration -- we already

timing return staffing think of ding near-term Or that? capital, efficiency this staffing ahead so up from you kind Are collection be cash collections? a invested do whatever on managed versus on planning it of it -- the doesn't could you staffing or and metrics take on grows

Ashish Masih

Yes.

a a Doing business. fashion hiring been base it India, large account for and U.S. steady sudden Costa on them, to very and this centers across already. and of the X onetime not it's therefore, last our months managers whatnot. Rica, adding So in closing call staff able U.S., sudden We've is of in a train are and we

much. It's increased efficiency plan -- continue way we a the sure we for to like plan that. capacity, impact add purchasing. that doing and not our it's this year continue the for to do to And very So of steady, for measured increase we rest as will

So confident and expectations, very we ability can. the to that possible we're that operationally again, will forecast how back our these in best have perform into of the baked

Operator

question of Hughes Mark from next Securities. from line Truist Our comes the

Mark Hughes

multiple purchase did you cat Jonathan, the give purchase multiple? U.K. the or

Jonathan Clark

That QX? multiple the you're talking Cabot -- about for purchase for for

Mark Hughes

Yes.

you X you usually think QX, good, if too. go give I that's about but months,

Jonathan Clark

billion. $X.XX is QX

Mark Hughes

or What's talking improvement your for pressure from U.K. I what's in a -- under have while. any there really about are so they why irrational behavior like the come sheet hadn't quite Okay. been judgment Why We've is market. but contributed Europe. about a balance it kind irrational some in market durable? going the of competitors perspective, in And on seems

Ashish Masih

we Yes. can and imagine, internally. a discussed that good It's question, Mark, lot, a as you

say that auction. I it X some we've to Now change have actions been back of taking behavior, would in an are seen banks outcomes certain certain would things, ago different now months

renew example. for can People

below because at players lending charge-offs supply in has signs seeing grown in of especially behavior, record it's pandemic at the -- But are change the this low. point, still the given U.K. we're early grown, So it's that's of not still not and number

seeing factor intensity. a competitive the We're still high that's still not So supply behavior contributed. has competitive pretty

our particularly So and opportunity move around it's of signs, to sheet U.S. enough the the capital, pricing and our allocation balance can we in -- early we not we've see given structure seen given and capital change some

don't buying staying any are and very at need watching buy more something So still we need disciplined in focused acceptable to. it's and that on returns but portfolios so buying, we than we we to staying

because of get you well pretty the can at our kind returns can relationships and are acceptable where we want purchasing, niche sellers there and and match constrain what that capabilities buy up you segments we if returns. And

Mark Hughes

then, quarterly assuming And capital call look rate like? the would let's the it Jonathan, with currently, debt what it, stays interest run is rate raise, where the

Jonathan Clark

the of of average was for -- Well, look X.X%. if end the the for about debt you of weighted our cost it quarter, as

it it move a little materially up So wouldn't frankly, this expectation. is my bit, would -- wouldn't it it quite but move very

Operator

Rowan Janney of Montgomery John from Our next comes Scott. question

John Rowan

just was hear to that quick I quite earnings? I John, items. the X revision $X.XX housekeeping it. you had didn't Did say

$X.XX and confirm you that. think $X.XX. then I I and gave to a $X.XX want number a just

Jonathan Clark

total $X.XX the $X.XX. or Yes, Yes, $X.XX. was plus changes

John Rowan

and $X I the the what I tax confused. heard rate then was $X.XX in thought was other the reason so high for And the was so income why million I quarter?

Jonathan Clark

Yes, of all kind they're actually, related.

environment So the as you U.K. purchasing the portfolio we've in current know, been Europe. reducing and in

And Cabot reduced securitization so our as we of through, walk facility. the we I size --

roughly $X.X of rate produced anticipation cap, we in gain associated accordingly, interest hedge an and and million. of And that, that a reduced

of think, business. related I was come the allowance normal. than of rate, explains, that European tax that as other to was And in income was tax our result valuation a So terms higher a higher how rate

And so that's higher quarter. how bit was this

John Rowan

quarter, it to go move assume will down the -- I correct? will mid-XXs Maybe next

Jonathan Clark

know, where XXs I think as because actually, to for it lands but by is to expect we're the will tax income. earn have more move where high something I down, have going would you your your driven year, low you going something XXs, in rate the -- we're

So as down. up rate around, going moves and to tax your move is it

high current XXs, So be XXs, actually. would my expectation

John Rowan

the though, for For year not quarter. next

Jonathan Clark

For the correct. . year,

Operator

closing I concludes Masih Mr. turn to This session. it back like question-and-answer remarks. to the for would now

Ashish Masih

call, like our differentiated with important the close believe capabilities. points of is we As solid record we to track Encore superior a -- few results and reiterate I'd sector in truly a

turn, strongest consumer continues the As is market the cycle world's seeing the credit supply growth. to U.S.

market, returns. portion disciplined grow we've of been the approach amounts a continue us this We the our approach portfolio effective U.S. will When to believe we by continue with for. operation, cycle to credit of generation. This which enable collections waiting is allocating the highest to apply a our cash record to purchasing has capital combined

the to look fourth quarter for taking full join to we us, Thanks and forward time year February. providing XXXX results in our and

Operator

today's Thank conclude in participation may you This now your program, you and the disconnect. for does conference.

Encore Capital (ECPG) 1 Nov 232023 Q3 Earnings call transcript