Encore Capital Reports Strong Third Quarter Results

Debt buyer Encore Capital Group Inc. reported Thursday that total revenues in the third quarter ended Sept. 30 increased 16% to a record $273.3 million, compared to $235.6 million in the year-ago period.

Gross collections from the portfolio purchasing and recovery business grew 7% to $407.2 million, compared to $379.7 million in the third quarter of 2013. Estimated Remaining Collections (ERC) rose 27% to a record $5.1 billion, compared to $4.0 billion last year.

"Encore delivered record earnings per share during the third quarter, driven by our continued focus on growing the core business while diversifying into new geographies and asset classes," said Kenneth A. Vecchione, president and CEO. "Our international operations contributed more than one fourth of the quarter's collections. Similarly, we deployed more than one third of our capital overseas, enabling us to grow our [ERC].

"On the core business front, the acquisition of Atlantic Credit & Finance (ACF) closed during the quarter and the integration is progressing as we expected," he said. "ACF's continued success in collecting on recently charged-off, higher-balance accounts expands our capabilities and enables us to deploy additional capital in the recently charged-off market segment in the U.S. Our asset class expansion, coupled with our global diversification strategy, has positioned Encore to continue to thrive in a time of ongoing industry change and consolidation."

Encore's investment in portfolios in the purchasing and recovery business in Q3 totaled $299.5 million, translating to $4.0 billion in face value of debt purchased. In Q3 2013, the investment totaled $617.9 million to buy $13.4 billion in debt face value. That figured included the $559 million acquisition of Cabot Credit Management's portfolio in July 2013.

Total operating expenses increased 8% to $189.0 million, compared to $174.4 million in the year-ago period. 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 and integration related expenses) per dollar collected for the portfolio purchasing and recovery business decreased to 38.9%, compared to 39.7% a year ago.

Net income from continuing operations attributable to Encore was $30.3 million, compared to net income from continuing operations attributable to Encore of $22.2 million last year.

Encore in February announced the acquisition of U.K.-based debt buyer Marlin Financial Services for approximately $481 million through Cabot Credit Management.