SAN DIEGO, Feb. 21, 2018 (GLOBE NEWSWIRE) — Encore Capital Group, Inc. (NASDAQ:ECPG), an international specialty finance company, today reported consolidated financial results for the fourth quarter and full year ended December 31, 2017.
“In the fourth quarter, Encore continued to benefit from the growing supply of charged-off credit card receivables in the U.S. market, with solid deployments at favorable prices driving higher expected returns than a year ago,” said Ashish Masih, the Company’s President and Chief Executive Officer. “In the United States and in Europe, our consumer-centric liquidation programs are also driving better results and have contributed to substantial growth in our Estimated Remaining Collections, resulting in a new all-time high for Encore.”
“2017 was a strong year for Encore in which we generated a record level of cash collections. We continue to invest in expanding our collections capacity to capitalize on the growing market opportunity in the U.S. In Europe, our subsidiary Cabot Credit Management completed its acquisition of Wescot in the fourth quarter and is now both the largest debt buyer and debt servicer in the United Kingdom.”
“2017 was also a strong year for our industry in the U.S. After growing an estimated 15% in 2016, we estimate that sales of charged-off credit card receivables in the U.S. grew by more than 20% in 2017. We believe industry supply will continue to grow in 2018 and beyond, driven by recent record levels of revolving credit in the U.S. coupled with statements made by issuers who are broadly indicating that increases in charge-off rates are expected to continue,” said Masih.
Financial Highlights for the Fourth Quarter of 2017:
-Estimated Remaining Collections (ERC) grew $1.1 billion compared to the same period of the prior year, to $7.0 billion.
-Investment in receivable portfolios was $301 million, including $170 million in the U.S. and $110 million in Europe, compared to $210 million deployed overall in the same period a year ago.
-Gross collections were $438 million, compared to $397 million in the same period of the prior year.
-Total revenues were $317 million, compared to $271 million in the fourth quarter of 2016.
-Total operating expenses were $253 million, compared to $184 million in the same period of the prior year. This increase was a result of several factors including: the impact of expenses related to the withdrawn Cabot IPO; the acquisition of Wescot and related restructuring costs; tax planning related to the U.S. Tax Cuts and Jobs Act; and investments in the expansion of our collections capacity. Adjusted operating expenses were $182 million, compared to $152 million in the same period of the prior year.
-Total interest expense increased to $51.7 million, compared to $48.4 million in the same period of the prior year.
-GAAP net income from continuing operations attributable to Encore was $12.7 million, or $0.48 per fully diluted share, compared to $22.0 million, or $0.85 per fully diluted share, in the same period of the prior year. The decline in net income from 2016 to 2017 was largely due to the impact of expenses related to the withdrawn Cabot IPO in November 2017.
-Adjusted income from continuing operations attributable to Encore was $27.7 million, compared to $18.7 million in the same period of the prior year.
-Adjusted income from continuing operations attributable to Encore per share (also referred to as Economic EPS) was $1.05, compared to $0.72 in the same period of the prior year.
-Available capacity under Encore’s revolving credit facility, subject to borrowing base and applicable debt covenants, was $213 million as of December 31, 2017.
Financial Highlights for the Full Year of 2017:
-Investment in receivable portfolios for the full year was $1.1 billion, including $536 million in the U.S. and $464 million in Europe, compared to $0.9 billion deployed overall in 2016.
-Gross collections were $1.8 billion, compared to $1.7 billion in 2016.
-Total revenues were $1.2 billion, compared to $1.0 billion in 2016.
-Total operating expenses were $862 million, compared to $788 million in 2016. Adjusted operating expenses were $698 million, compared to $648 million in 2016 as we invested in the expansion of our collections capacity.
-Total interest expense was $204 million, compared to $198 million in 2016.
-GAAP net income from continuing operations attributable to Encore was $83.4 million, or $3.16 per fully diluted share, compared to $78.9 million, or $3.05 per fully diluted share, in 2016.
-Adjusted income from continuing operations attributable to Encore was $106.0 million, compared to $90.1 million in 2016.
-Adjusted income from continuing operations attributable to Encore per share (also referred to as Economic EPS) was $4.04, compared to $3.48 in 2016.
Conference Call and Webcast
The Company will host a conference call and slide presentation today, February 21, 2018, at 2:00 p.m. Pacific time / 5:00 p.m. Eastern time to discuss fourth quarter and full year results.
Members of the public are invited to access the live webcast via the Internet by logging on at the Investor Relations page of Encore’s website at www.encorecapital.com. To access the live, listen-only telephone conference portion, please dial (855) 541-0982 or (704) 288-0606.
For those who cannot listen to the live broadcast, a telephonic replay will be available for seven days by dialing (800) 585-8367 or (404) 537-3406 and entering the conference number 4077176. A replay of the webcast will also be available shortly after the call on the Company’s website.
Non-GAAP Financial Measures
This news release includes certain financial measures that exclude the impact of certain items and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company has included adjusted income attributable to Encore and adjusted income from continuing operations attributable to Encore per share (also referred to as economic EPS when adjusted for certain shares associated with our convertible notes that will not be issued but are reflected in the fully diluted share count for accounting purposes) because management uses this measure to assess operating performance, in order to highlight trends in the Company’s business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. The Company has included information concerning adjusted operating expenses in order to facilitate a comparison of approximate cash costs to cash collections for the portfolio purchasing and recovery business in the periods presented. Adjusted income attributable to Encore, adjusted income from continuing operations attributable to Encore per share/economic EPS, and adjusted operating expenses have not been prepared in accordance with GAAP. These non-GAAP financial measures should not be considered as alternatives to, or more meaningful than, net income, net income per share, and total operating expenses as indicators of the Company’s operating performance. Further, these non-GAAP financial measures, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. The Company has attached to this news release a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.
About Encore Capital Group, Inc.
Encore Capital Group is an international specialty finance company that provides debt recovery solutions and other related services for consumers across a broad range of financial assets. Through its subsidiaries around the globe, Encore purchases portfolios of consumer receivables from major banks, credit unions, and utility providers.
Encore partners with individuals as they repay their debt obligations, helping them on the road to financial recovery and ultimately improving their economic well-being. Encore is the first and only company of its kind to operate with a Consumer Bill of Rights that provides industry-leading commitments to consumers. Headquartered in San Diego, Encore is a publicly traded NASDAQ Global Select company (ticker symbol: ECPG) and a component stock of the Russell 2000, the S&P Small Cap 600 and the Wilshire 4500. More information about the company can be found at http://www.encorecapital.com. More information about the Company’s Cabot Credit Management subsidiary can be found at http://www.cabotcm.com. Information found on the company’s or Cabot’s website is not incorporated by reference.
Forward Looking Statements
The statements in this press release that are not historical facts, including, most importantly, those statements preceded by, or that include, the words “will,” “may,” “believe,” “projects,” “expects,” “anticipates” or the negation thereof, or similar expressions, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). These statements may include, but are not limited to, statements regarding our future operating results, performance, business plans or prospects. For all “forward-looking statements,” the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act. Such forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company and its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors are discussed in the reports filed by the Company with the Securities and Exchange Commission, including the most recent reports on Forms 10-K and 10-Q, each as it may be amended from time to time. The Company disclaims any intent or obligation to update these forward-looking statements.
Encore Capital Group, Inc.