Key Highlights

  • Third quarter Revenue was USD 544.54 million against a USD 466.8 million estimate and USD 460.35 million a year earlier.
  • Diluted EPS was USD 5.57 against an estimate of USD 3.35, compared with USD 3.17 in the prior-year quarter.
  • Cash collections were USD 753.8 million against USD 663.0 million, and purchases of receivable portfolios were USD 389.7 million.
  • Adjusted EBITDA was USD 245.2 million against USD 184.8 million, and estimated remaining collections totaled USD 10.45 billion.

Encore Capital Group (NASDAQ:ECPG) describes a Debt purchasing market in which Supply stayed elevated in the United States and pricing was slightly higher than in prior quarters. Management said issuers continue to sell mostly fresh portfolios under forward flow arrangements, and that steady lending and delinquency rates at elevated levels support market supply. Europe was described differently, with pricing competitive and constraining the capital the company chooses to deploy there.

Market Conditions and Deployment

In the United States, purchases of receivable portfolios at MCM were USD 309.95 million against USD 261.14 million, a rise the company attributed to supply and pricing. In Europe, Cabot purchases were USD 79.70 million against USD 84.93 million. Total purchases were USD 389.66 million against USD 346.07 million. For the nine months, total purchases were USD 1.196 billion against USD 1.081 billion.

Management said smaller competitors face difficulties from regulatory pressure and rising cost of capital, which it believes favors larger participants able to commit to larger forward flow agreements. In Europe, it noted that default rates are low by historic levels and consumer lending volumes have stagnated.

The Quarter in Detail

Total revenues were USD 544.54 million against USD 460.35 million. Debt purchasing revenue was USD 525.46 million, which included changes in recoveries of USD 111.04 million against USD 63.64 million. Servicing revenue was USD 17.47 million against USD 22.18 million.

Operating expenses were USD 313.94 million against USD 287.18 million, led by cost of legal collections of USD 100.40 million against USD 80.01 million and salaries and employee benefits of USD 117.47 million against USD 117.12 million. Income from operations was USD 230.61 million against USD 173.18 million, and interest expense was USD 72.30 million against USD 74.24 million. Net Income was USD 124.01 million against USD 74.66 million, or USD 5.57 per diluted share against USD 3.17.

For the nine months, net income was USD 274.26 million, or USD 12.21 per diluted share, against USD 180.18 million, or USD 7.57. The nine-month figure includes a USD 30.5 million loss on extinguishment of debt from early redemptions in May.

Collections by Channel

Cash collections were USD 753.85 million against USD 663.02 million, of which USD 414.41 million was classified to portfolio revenue. Call center and digital collections were USD 366.89 million against USD 327.64 million. Collections for the nine months were USD 2.209 billion against USD 1.923 billion.

Adjusted EBITDA was USD 245.17 million against USD 184.76 million, and USD 644.32 million for the nine months against USD 489.45 million.

Balance Sheet and Cash Markers

Cash and cash equivalents were USD 158.4 million at September 30, against USD 156.8 million at year end, and borrowings were USD 4.238 billion against USD 4.001 billion. Total estimated remaining collections were USD 10.45 billion.

Financing events included USD 750.0 million of 6.625% Senior Secured Notes due June 2032, issued on May 22, and the Redemption of the EUR 415.0 million Encore 2028 Floating Rate Notes on May 28. On September 24, the company settled its USD 230.0 million of 2029 convertible notes in cash after receiving conversion notices for the full amount. In the quarter it repurchased 269,018 shares for USD 26.7 million, and 944,687 shares for USD 73.4 million over nine months, under a program authorized at USD 300.0 million with a further USD 300.0 million increase approved in November 2025.