Debt buyer Encore Capital Group Inc. on Thursday reported financial results for the third quarter ended September 30, including gross collections from the portfolio purchasing and recovery business of $379.7 million, a 54% jump over the $246 million in the year-ago period.
The investment in receivable portfolios reached $617.9 million, which included the acquisition of $559.0 million of Cabot Credit Management's receivable portfolios, to purchase $13.4 billion in face value of debt. In the year-ago period, Encore spent $47.3 million to purchase $1.1 billion in debt.
"For the quarter, we again delivered record financial results, as the disciplined execution of our growth strategies continue to drive shareholder returns," said Ken Vecchione, Encore's president and CEO. "Collections, revenues and Adjusted EPS all reached record highs as our recent acquisitions contributed to the quarter's success.
"We also successfully closed our acquisition of a controlling interest in Cabot Credit Management," he said. "Cabot provides Encore with the opportunity to deploy a meaningful amount of capital in a new market and generate substantial incremental earnings, as evidenced by this quarter's results. This acquisition has led to an increase in Encore's estimated remaining collections by $1.5 billion, to $4 billion as of September 30. We continue to be excited about the opportunities in the U.K. market and the progress we are making on synergy initiatives in partnership with Cabot's leadership."
Other Q3 Highlights:
Revenue from receivable portfolios was $225.4 million, a 60% increase over the $140.7 million in the same period of the prior year. Revenue recognized on receivable portfolios, as a percentage of portfolio collections, excluding the effects of net portfolio allowances, increased to approximately 58.6% from 56.9% in the same period of the prior year.
Total operating expenses were $174.4 million, a 68% increase over the $103.6 million in the same period of the prior year. Adjusted Operating Expenses (defined as operating expenses excluding stock-based compensation expense, expenses related to non-portfolio purchasing and recovery business, one-time charges, and acquisition related legal and advisory expenses of $7.8 million) per dollar collected, increased to 40.7% compared to 40.5% in the same period of the prior year.
Propel Financial Services deployed $13.3 million in the quarter, $9.3 million of which were in the origination of tax lien transfers and $4 million of which were in the acquisition of tax lien certificates, compared to $8.8 million in the same period of the prior year.
