Group 1: Encore Capital Group (ECPG) - Encore Capital Group is an international specialty finance company providing debt recovery solutions and related services for consumers across various financial assets [1] - The company has a Zacks Rank of 1 (Strong Buy) and has seen a 3.9% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Encore Capital Group has a price-to-earnings ratio (P/E) of 5.05, significantly lower than the industry average of 13.40, and possesses a Value Score of A [2] Group 2: TechnipFMC (FTI) - TechnipFMC is a leading manufacturer and supplier of products, services, and fully integrated technology solutions for the energy industry [2] - The company also carries a Zacks Rank of 1 and has experienced a 0.8% increase in the Zacks Consensus Estimate for its next year earnings over the last 60 days [2] - TechnipFMC has a price-to-earnings ratio (P/E) of 16.42, which is slightly lower than the industry average of 16.80, and has a Value Score of B [3]

Core Insights - The Zacks Consumer Loans industry is experiencing a positive outlook due to falling interest rates and easing lending standards, which are expected to sustain and boost loan demand, leading to modest growth in revenues [1][4]. Industry Overview - The Zacks Consumer Loans industry includes companies that provide various loan products such as mortgages, credit card loans, and personal loans, generating net interest income (NII) as a primary revenue source [3]. - The industry's performance is closely tied to the overall economic conditions and consumer sentiments, with many companies diversifying their revenue through services like commercial lending and insurance [3]. Major Influencing Themes - **Interest Rates & Loan Demand**: The Federal Reserve has lowered interest rates by 25 basis points and indicated further cuts, which is expected to keep loan demand steady and improve net interest margins (NIM) and NII [4]. - **Lending Standards**: Improved credit scores and looser lending criteria are expanding the borrower base, aiding consumer loan providers in meeting loan demand [5]. - **Asset Quality**: Falling interest rates are likely to enhance borrowers' repayment capacity, although a slight increase in non-performing loans is anticipated [6]. Industry Performance - The Zacks Consumer Loans industry ranks 87 among over 250 Zacks industries, placing it in the top 36% and indicating potential outperformance in the near term [7][8]. - Over the past two years, the industry has outperformed the Zacks S&P 500 composite and the Zacks Finance sector, with a collective increase of 127.6% compared to 56.9% and 51.2% for the S&P 500 and Finance sector, respectively [11]. Valuation Metrics - The industry has a trailing 12-month price-to-tangible book ratio (P/TBV) of 1.13X, above the five-year median of 1.02X, and is trading at a significant discount compared to the S&P 500's P/TBV of 13.68X [14][16]. Investment Opportunities - **Capital One Financial Corporation (COF)**: Focused on consumer and commercial lending, with a market cap of $135.5 billion. The company is expected to see modest improvements in NII and NIM due to anticipated interest rate cuts, with a projected earnings growth of 22.1% for 2025 [19][21][22]. - **Encore Capital Group, Inc. (ECPG)**: Specializes in debt recovery services, with a market cap of $981.9 million. The company is expected to benefit from rising delinquency rates and improved collections as interest rates decline, with earnings projected to jump 63.3% this year [24][26][27].

Core Viewpoint - Encore Capital Group (ECPG) has received a Zacks Rank 2 (Buy) upgrade, indicating a positive trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of changing earnings estimates in determining stock price movements, making it a valuable tool for investors [2][4]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in stock price movements [4]. Company Performance and Outlook - The upgrade reflects an improvement in Encore Capital Group's underlying business, suggesting that investors may respond positively by driving the stock price higher [5]. - The Zacks Consensus Estimate for Encore Capital Group has increased by 23.6% over the past three months, with expected earnings of $8.31 per share for the fiscal year ending December 2025, indicating no year-over-year change [8]. Zacks Rank System - The Zacks Rank system categorizes stocks based on earnings estimate revisions, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - Stocks in the top 20% of Zacks-covered stocks, like Encore Capital Group with its Zacks Rank 2, are positioned for potential market-beating returns in the near term [10].

Core Insights - Encore Capital Group, Inc. will release its financial results for Q3 2025 on November 5, 2025, after market close [1] - A conference call will be held on the same day at 2:00 p.m. Pacific / 5:00 p.m. Eastern time, featuring key executives discussing the results [1] Company Overview - Encore Capital Group is an international specialty finance company that provides debt recovery solutions and related services for consumers [3] - The company purchases portfolios of consumer receivables from major banks, credit unions, and utility providers [3] - Encore operates with a Consumer Bill of Rights, offering industry-leading commitments to consumers [4] - The company is headquartered in San Diego and is publicly traded on NASDAQ under the ticker symbol ECPG [4]

Financial Data and Key Metrics Changes - Portfolio purchases in Q2 2025 were $367 million, up 32% compared to Q2 2024 [6][13] - Collections increased by 20% to a record $655 million, with Estimated Remaining Collections (ERC) rising 12% to $9.4 billion [6][14] - Earnings per share for Q2 were $2.49, an increase of 86% compared to the same quarter last year [6][26] - Leverage improved to 2.6 times, compared to 2.7 times a year ago [7][26] - Net income increased by 82% to $59 million [26] Business Line Data and Key Metrics Changes - Midland Credit Management (MCM) in the U.S. had record portfolio purchases of $317 million, a 34% increase year-over-year [8][18] - MCM collections reached $490 million, up 24% compared to Q2 last year [8][18] - Cabot Credit Management in Europe reported collections of $164 million, up 10% year-over-year, and portfolio purchases of $50 million [8][19] Market Data and Key Metrics Changes - U.S. revolving credit remains near record levels, with elevated charge-off rates driving robust portfolio supply [15][16] - U.S. consumer credit card delinquencies are at multi-year highs, indicating favorable purchasing conditions [16][17] - In Europe, the market is impacted by subdued consumer lending and low delinquencies, leading to lower supply [19][57] Company Strategy and Development Direction - The company focuses on markets with strong regulatory frameworks and stable long-term returns [12] - The three-pillar strategy emphasizes market focus, operational execution, and cash generation [11][15] - The company aims to maintain a strong balance sheet and flexible funding structure to capitalize on purchasing opportunities [30][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the favorable purchasing environment in the U.S. and expects MCM to surpass its 2024 purchasing record [41][42] - The company raised its guidance for global collections growth to approximately 15.5%, expecting total collections to reach $2.5 billion [34][30] - Management noted stable consumer payment behavior despite macroeconomic uncertainties [23][26] Other Important Information - The company increased its revolving credit facility by $190 million to $1.485 billion, extending its maturity to 2029 [27] - Interest expense is expected to be approximately $285 million for the year, with a corporate tax rate around 25% [25][34] Q&A Session Summary Question: Any one-timers in the second quarter affecting the $285 million guidance? - Management confirmed that the $285 million is the expected figure for the year without any anticipated one-timers [39] Question: What is the outlook for supply given the recent downtick in charge-off rates and delinquencies? - Management indicated that supply remains elevated and favorable, with confidence in purchasing ability [41][42] Question: Can you provide updated collections multiples for MCM and Cabot? - For 2025 vintage, MCM's multiple is 2.3 and Cabot's is 2.4 [43] Question: What factors contributed to the year-over-year growth in collections? - Management highlighted stable U.S. consumer behavior, increased purchasing, and operational performance improvements [47] Question: Can you break down the outperformance in collections between the U.S. and Cabot? - Approximately $45 million of the $55.6 million outperformance was attributed to MCM [50][51] Question: What is the competitive dynamics and pricing in the purchasing environment? - The U.S. market remains stable with good supply and pricing, while Europe faces lower supply and higher competition [56][57]

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and notes for Q2 2025 and FY 2024 [Item 1—Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201%E2%80%94Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements and notes for Q2 2025 and FY 2024 [Condensed Consolidated Statements of Financial Condition](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) This statement provides a snapshot of the company's assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $5,191,386 | $4,789,729 | | Receivable portfolios, net | $4,184,780 | $3,776,369 | | Total Liabilities | $4,295,415 | $4,022,398 | | Borrowings | $3,965,465 | $3,672,762 | | Total Stockholders' Equity | $895,971 | $767,331 | - Most assets of consolidated variable interest entities (VIEs) can only be used to settle obligations of those VIEs, and liabilities exclude amounts where creditors have recourse to the Company's general credit[9](index=9&type=chunk) [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This statement details the company's revenues, operating income, net income, and earnings per share for the three and six months ended June 30, 2025 and 2024 | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Total Revenues | $442,122 | $355,285 | $834,897 | $683,671 | | Income from operations | $150,733 | $101,839 | $280,076 | $185,430 | | Net Income | $58,721 | $32,181 | $105,517 | $55,420 | | Basic EPS | $2.50 | $1.35 | $4.45 | $2.33 | | Diluted EPS | $2.49 | $1.34 | $4.41 | $2.28 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income components, including unrealized gains/losses on derivatives and foreign currency translation | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------------------ | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Net income | $58,721 | $32,181 | $105,517 | $55,420 | | Unrealized (loss) gain on derivative instruments, net of tax | $(2,853) | $(1,819) | $(3,729) | $971 | | Unrealized gain (loss) on foreign currency translation, net of tax | $30,914 | $(703) | $46,378 | $(7,009) | | Comprehensive income | $86,782 | $29,659 | $148,166 | $49,382 | [Condensed Consolidated Statements of Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This statement outlines changes in total stockholders' equity, accumulated earnings, and other comprehensive loss, including share repurchases | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total Stockholders' Equity | $767,331 | $895,971 | | Accumulated Earnings | $909,927 | $1,015,221 | | Accumulated Other Comprehensive Loss | $(162,130) | $(119,481) | | Common Stock Shares Outstanding | 23,691 | 23,095 | - The company repurchased **418,499 shares** of common stock for approximately **$15.0 million** during the three months ended June 30, 2025, and **707,924 shares** for approximately **$25.0 million** during the six months ended June 30, 2025[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Net cash provided by operating activities | $54,807 | $86,697 | | Net cash used in investing activities | $(169,652) | $(131,886) | | Net cash provided by financing activities | $87,230 | $139,492 | | Purchases of receivable portfolios, net of put-backs | $(725,391) | $(566,960) | | Collections applied to receivable portfolios | $553,400 | $419,833 | | Cash and cash equivalents, end of period | $172,896 | $250,621 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1: Ownership, Description of Business, and Summary of Significant Accounting Policies](index=9&type=section&id=Note%201%3A%20Ownership%2C%20Description%20of%20Business%2C%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes the company's business, primary operations, and recent accounting pronouncements affecting financial reporting - Encore Capital Group, Inc. is an international specialty finance company providing debt recovery solutions and related services, primarily purchasing defaulted consumer receivables[25](index=25&type=chunk) - The company's primary operations are through Midland Credit Management, Inc. (MCM) in the U.S. and Cabot Credit Management Limited (CCM) in Europe and the UK[26](index=26&type=chunk) - Recent accounting pronouncements include ASU 2023-09 (Income Tax Disclosures, effective after Dec 15, 2024), ASU 2024-03/2025-01 (Expense Disaggregation Disclosures, effective after Dec 15, 2026), and ASU 2024-04 (Induced Conversions of Convertible Debt, effective after Dec 15, 2025)[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) [Note 2: Earnings Per Share](index=10&type=section&id=Note%202%3A%20Earnings%20Per%20Share) This note details the calculation of basic and diluted earnings per share and information on share repurchases | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $58,721 | $32,181 | $105,517 | $55,420 | | Basic earnings per share | $2.50 | $1.35 | $4.45 | $2.33 | | Diluted earnings per share | $2.49 | $1.34 | $4.41 | $2.28 | | Weighted-average basic shares outstanding | 23,507 | 23,883 | 23,692 | 23,834 | | Weighted-average dilutive shares outstanding | 23,578 | 24,097 | 23,926 | 24,282 | - The company repurchased **418,499 shares** for approximately **$15.0 million** during the three months ended June 30, 2025, and **707,924 shares** for approximately **$25.0 million** during the six months ended June 30, 2025, under its **$300.0 million** share repurchase program[38](index=38&type=chunk) [Note 3: Fair Value Measurements](index=11&type=section&id=Note%203%3A%20Fair%20Value%20Measurements) This note provides fair value measurements for financial instruments, including derivatives and receivable portfolios, and their valuation methodologies | Financial Instrument | Fair Value Level | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------- | :--------------- | :----------------------------- | :----------------------------- | | Interest rate cap contracts | Level 2 | $503 | $252 | | Interest rate swap agreements | Level 2 | $(22,659) | $(18,360) | | Financial Instrument | Fair Value Level | Carrying Amount (June 30, 2025) | Estimated Fair Value (June 30, 2025) | | :------------------- | :--------------- | :------------------------------ | :----------------------------------- | | Receivable portfolios, net | Level 3 | $4,184,780 | $4,469,118 | - The fair value of receivable portfolios is measured by discounting estimated future cash flows using proprietary forecasting models, with key inputs including estimated future gross cash flow, average cost to collect, and discount rate[48](index=48&type=chunk) [Note 4: Derivatives and Hedging Instruments](index=12&type=section&id=Note%204%3A%20Derivatives%20and%20Hedging%20Instruments) This note explains the company's use of interest rate swaps and cross-currency swaps to manage interest rate and foreign currency risks | Derivative Instrument | Balance Sheet Location | Fair Value (June 30, 2025, in thousands) | Fair Value (December 31, 2024, in thousands) | | :-------------------- | :--------------------- | :--------------------------------------- | :--------------------------------------- | | Interest rate cap contracts | Other assets | $503 | $252 | | Interest rate swap agreements | Other liabilities | $(22,659) | $(18,360) | - The company uses interest rate swap agreements and interest rate cap contracts as cash flow hedges to reduce exposure to fluctuations in interest rates on variable interest rate debt[55](index=55&type=chunk) - Cross-currency swap agreements are used as fair value hedges to manage foreign currency exchange risk by converting fixed-rate Euro and GBP borrowings to fixed-rate USD debt[56](index=56&type=chunk) [Note 5: Receivable Portfolios, Net](index=14&type=section&id=Note%205%3A%20Receivable%20Portfolios%2C%20Net) This note details the balance of receivable portfolios, net, and the impact of collections and changes in expected recoveries | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :----------------------------- | | Receivable portfolios, net (Balance, end of period) | $4,184,780 | $3,776,369 | | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Negative allowance for expected recoveries - portfolio purchases | $367,099 | $278,692 | $734,950 | $574,406 | | Collections applied to receivable portfolios, net | $(293,811) | $(224,798) | $(553,400) | $(419,833) | | Changes in recoveries | $55,599 | $5,754 | $77,063 | $(6,655) | - Collections over-performed forecasted collections by approximately **$52.3 million** and **$79.2 million** for the three and six months ended June 30, 2025, respectively[66](index=66&type=chunk) [Note 6: Other Assets](index=17&type=section&id=Note%206%3A%20Other%20Assets) This note provides a breakdown of other asset categories, including operating lease right-of-use assets and real estate owned | Other Asset Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------- | :----------------------------- | :----------------------------- | | Operating lease right-of-use assets | $61,054 | $58,089 | | Prepaid expenses | $34,874 | $35,564 | | Real estate owned | $30,122 | $38,075 | | Total Other Assets | $206,743 | $225,090 | [Note 7: Borrowings](index=17&type=section&id=Note%207%3A%20Borrowings) This note outlines the company's various borrowing instruments, including credit facilities and senior notes, and recent amendments | Borrowing Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :----------------------------- | | Global senior secured revolving credit facility | $999,678 | $865,365 | | Senior secured notes | $1,950,022 | $1,846,047 | | Convertible senior notes | $330,000 | $330,000 | | Cabot securitisation senior facility | $350,141 | $319,137 | | U.S. facility | $300,000 | $283,500 | | Total Borrowings (net) | $3,965,465 | $3,672,762 | - The Global Senior Facility was upsized by **$190.0 million** to **$1.485 billion** and its termination date extended from September 2028 to September 2029 (except for a **$69.5 million** tranche)[71](index=71&type=chunk) - The U.S. Facility was amended on July 3, 2025, to extend its maturity date from October 2027 to October 2028 and increase the committed amount from **$300.0 million** to **$450.0 million**[91](index=91&type=chunk) [Note 8: Variable Interest Entities](index=20&type=section&id=Note%208%3A%20Variable%20Interest%20Entities) This note explains the company's consolidation of Variable Interest Entities (VIEs) for which it is the primary beneficiary - The company consolidates Variable Interest Entities (VIEs) for which it is the primary beneficiary, having both the power to direct activities and the obligation to absorb losses or right to receive benefits[94](index=94&type=chunk) - VIEs include certain securitized financing vehicles and other immaterial special purpose entities created to purchase receivable portfolios in specific geographies[95](index=95&type=chunk) [Note 9: Accumulated Other Comprehensive Loss](index=20&type=section&id=Note%209%3A%20Accumulated%20Other%20Comprehensive%20Loss) This note details the components of accumulated other comprehensive loss, including derivatives and currency translation adjustments | Component | Balance at December 31, 2024 (in thousands) | Balance at June 30, 2025 (in thousands) | | :----------------------------- | :------------------------------------------ | :-------------------------------------- | | Derivatives | $(16,368) | $(20,097) | | Currency Translation Adjustments | $(145,762) | $(99,384) | | Total Accumulated Other Comprehensive Loss | $(162,130) | $(119,481) | - For the six months ended June 30, 2025, other comprehensive income before reclassification included **$(7.1) million** from derivatives and **$46.2 million** from currency translation adjustments[98](index=98&type=chunk) [Note 10: Income Taxes](index=21&type=section&id=Note%2010%3A%20Income%20Taxes) This note presents the provision for income taxes, effective tax rates, and factors influencing tax rate differences | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Provision for income taxes | $19,295 | $10,329 | $32,959 | $17,582 | | Effective tax rate | 24.7% | 24.3% | 23.8% | 24.1% | - The effective tax rate differences from the federal statutory rate were primarily due to state income taxes and other foreign adjustments for 2025, and state income taxes for 2024[99](index=99&type=chunk) - The company has estimated and recorded an immaterial impact from the OECD's Pillar Two global minimum tax framework, and the recently signed One Big Beautiful Bill Act (OBBBA) is expected to have an immaterial impact for future periods[103](index=103&type=chunk)[105](index=105&type=chunk) [Note 11: Commitments and Contingencies](index=22&type=section&id=Note%2011%3A%20Commitments%20and%20Contingencies) This note discusses legal actions, regulatory investigations, and forward flow purchase agreements for nonperforming loans - The company is routinely subject to legal actions and regulatory investigations related to debt collection practices (e.g., FDCPA, FCRA, TCPA)[106](index=106&type=chunk) - As of June 30, 2025, there were no material developments in previously disclosed legal proceedings, nor any new material legal proceedings, and no material reserves for legal matters[107](index=107&type=chunk)[108](index=108&type=chunk) - The company had forward flow purchase agreements for nonperforming loans with an estimated minimum aggregate purchase price of approximately **$411.1 million** as of June 30, 2025[110](index=110&type=chunk) [Note 12: Segment and Geographic Information](index=23&type=section&id=Note%2012%3A%20Segment%20and%20Geographic%20Information) This note provides revenue and operating income by the company's single reportable segment and geographic areas - The company operates as one reportable segment: debt purchasing and recovery, based on aggregation criteria[112](index=112&type=chunk) | Metric | Three Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | | :----------------------------- | :------------------------------------ | :---------------------------------- | | Debt purchasing and recovery segment - Total revenues | $442,122 | $834,897 | | Debt purchasing and recovery segment - Operating income | $167,815 | $311,081 | | Geographic Area | Three Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | | :-------------- | :------------------------------------ | :---------------------------------- | | United States | $312,590 | $582,176 | | Europe | $128,138 | $249,599 | | Other geographies | $1,394 | $3,122 | | Total Revenues | $442,122 | $834,897 | [Note 13: Goodwill](index=25&type=section&id=Note%2013%3A%20Goodwill) This note details the balance of goodwill, the effect of foreign currency translation, and impairment testing information | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Balance of Goodwill | $507,808 | $542,912 | | Effect of foreign currency translation | N/A | $35,104 | - The company's goodwill is tested for impairment annually, and no interim assessment was required for the three and six months ended June 30, 2025[123](index=123&type=chunk)[124](index=124&type=chunk) - Accumulated goodwill impairment loss was **$338.8 million** as of June 30, 2025, attributable to the Cabot reporting unit[125](index=125&type=chunk) [Item 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202%20%E2%80%93%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's financial condition, operations, and liquidity, analyzing Q2 2025 revenues, expenses, and cash flows [Our Business](index=26&type=section&id=Our%20Business) This section describes Encore's core business as an international specialty finance company focused on debt recovery solutions - Encore is an international specialty finance company providing debt recovery solutions and related services, primarily purchasing portfolios of defaulted consumer receivables[128](index=128&type=chunk) - The company operates through three business units: MCM (United States), Cabot (Europe), and LAAP (Latin America and Asia-Pacific)[129](index=129&type=chunk) - The long-term growth strategy focuses on continuing to invest in core portfolio purchasing and recovery in the United States and United Kingdom, and strengthening and developing business in France and Spain[132](index=132&type=chunk) [Government Regulation](index=26&type=section&id=Government%20Regulation) This section outlines the federal, state, municipal, and foreign regulations governing the company's debt collection and purchasing activities - U.S. operations (MCM) are subject to federal, state, and municipal statutes, rules, and regulations, including the Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), and Telephone Consumer Protection Act (TCPA)[133](index=133&type=chunk)[134](index=134&type=chunk) - European operations (Cabot) are affected by foreign statutes, rules, and regulations regarding debt collection and debt purchase activities, which are subject to modification[135](index=135&type=chunk) [Portfolio Purchasing and Recovery](index=27&type=section&id=Portfolio%20Purchasing%20and%20Recovery) This section details the types of defaulted consumer receivables purchased and the proprietary models used for valuation and collections - In the United States, the company primarily purchases charged-off credit card debt portfolios, with a small percentage comprising Chapter 13 and Chapter 7 bankruptcy proceedings[136](index=136&type=chunk) - Proprietary statistical and behavioral models are employed across U.S. operations for accurate portfolio valuation and to maximize future collections[137](index=137&type=chunk) - In Europe, purchased defaulted debt portfolios primarily consist of credit card and consumer loan accounts, valued using a proprietary pricing model[138](index=138&type=chunk) [Purchases and Collections](index=27&type=section&id=Purchases%20and%20Collections) This section analyzes market conditions, capital deployments, and gross collections from purchased receivables by geographic location [Portfolio Pricing, Supply and Demand](index=27&type=section&id=Portfolio%20Pricing%2C%20Supply%20and%20Demand) This section discusses the supply, demand, and pricing dynamics for defaulted consumer receivables in the U.S. and European markets - In the U.S., supply of defaulted consumer receivables remains elevated due to record lending and high charge-off rates, with pricing remaining at favorable levels[139](index=139&type=chunk) - Smaller competitors face difficulties in the U.S. portfolio purchasing market due to high operating costs and increasing cost of capital, favoring larger participants like MCM[140](index=140&type=chunk) - The UK market provides a relatively consistent pipeline of opportunities, and France and Spain are significant markets in Europe for non-performing loan disposals[141](index=141&type=chunk)[142](index=142&type=chunk) - Portfolio pricing remains competitive across European markets, constraining the amount of capital deployed in Europe[143](index=143&type=chunk) [Purchases by Geographic Location](index=28&type=section&id=Purchases%20by%20Geographic%20Location) This section provides a breakdown of capital deployed for receivable portfolio purchases across different geographic regions | Geographic Location | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------ | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | MCM (United States) | $317,264 | $236,826 | $633,630 | $473,335 | | Cabot (Europe) | $49,835 | $41,866 | $101,320 | $101,071 | | Total purchases of receivable portfolios | $367,099 | $278,692 | $734,950 | $574,406 | - U.S. capital deployments increased during the three and six months ended June 30, 2025, due to increased supply and favorable pricing[144](index=144&type=chunk) - European capital deployment increased during the three months ended June 30, 2025, primarily due to favorable foreign currency translation, while remaining relatively consistent for the six-month period[145](index=145&type=chunk) [Collections from Purchased Receivables by Channel and Geographic Location](index=28&type=section&id=Collections%20from%20Purchased%20Receivables%20by%20Channel%20and%20Geographic%20Location) This section details gross collections from purchased receivables, segmented by geographic area and collection channel | Geographic Area | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | MCM (United States) - Subtotal | $490,352 | $396,629 | $944,377 | $766,107 | | Cabot (Europe) - Subtotal | $163,967 | $149,224 | $313,943 | $289,921 | | Total collections from purchased receivables | $654,985 | $546,728 | $1,259,792 | $1,057,615 | - Gross collections from purchased receivables increased by **19.8%** to **$655.0 million** (three months) and **19.1%** to **$1.26 billion** (six months) in 2025[148](index=148&type=chunk) - Increases were driven by consistent capital deployments in the U.S. and a combination of increased capital deployments and acquisitions of portfolios with higher returns in Europe[148](index=148&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenues, operating expenses, interest expense, and income taxes [Revenues](index=31&type=section&id=Revenues) This section examines the sources and drivers of the company's total revenues, including portfolio revenue and servicing revenue | Revenue Category | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Portfolio revenue | $361,174 | $321,930 | $706,392 | $637,782 | | Changes in recoveries | $55,599 | $5,754 | $77,063 | $(6,655) | | Total debt purchasing revenue | $416,773 | $327,684 | $783,455 | $631,127 | | Servicing revenue | $22,300 | $21,107 | $44,847 | $41,486 | | Other revenues | $3,049 | $6,494 | $6,595 | $11,058 | | Total revenues | $442,122 | $355,285 | $834,897 | $683,671 | - Revenue recognized from portfolio basis increased due to a higher receivable portfolios balance in the U.S. driven by consistent higher purchase volumes in recent periods[157](index=157&type=chunk) - Collections over-performed forecasted collections by approximately **$52.3 million** (three months) and **$79.2 million** (six months) in 2025, primarily driven by enhanced U.S. collection strategies[158](index=158&type=chunk) [Operating Expenses](index=37&type=section&id=Operating%20Expenses) This section details changes in key operating expense categories, such as salaries, legal collections, and general and administrative costs | Expense Category | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Salaries and employee benefits | $117,738 | $106,608 | $223,670 | $210,792 | | Cost of legal collections | $79,649 | $64,249 | $147,662 | $122,970 | | General and administrative expenses | $41,327 | $36,779 | $82,345 | $73,020 | | Other operating expenses | $36,990 | $30,845 | $71,242 | $61,212 | | Total operating expenses | $291,389 | $253,446 | $554,821 | $498,241 | - Salaries and employee benefits increased primarily due to an increase in overall headcount and employee benefits/payroll taxes[174](index=174&type=chunk) - Cost of legal collections increased due to increased legal placements in this channel in the United States[176](index=176&type=chunk) [Interest Expense](index=39&type=section&id=Interest%20Expense) This section discusses the factors contributing to changes in interest expense, including debt balances and interest rates | Expense Category | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Stated interest on debt obligations | $70,276 | $57,163 | $137,262 | $109,201 | | Total interest expense | $73,943 | $61,376 | $144,473 | $117,141 | - The increase in interest expense was primarily due to increased average debt balance and rising interest rates[183](index=183&type=chunk) - Foreign currency translation had an unfavorable impact on interest expense, driven by the weakening of the U.S. dollar against the British Pound[183](index=183&type=chunk) [Other Income, net of Other Expense](index=39&type=section&id=Other%20Income%2C%20net%20of%20Other%20Expense) This section provides an overview of other non-operating income and expenses impacting the company's financial results | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Other income, net | $1,226 | $2,047 | $2,873 | $4,713 | | Interest income | $1,400 (approx.) | $1,800 (approx.) | $2,900 (approx.) | $3,100 (approx.) | [Provision for Income Taxes](index=40&type=section&id=Provision%20for%20Income%20Taxes) This section analyzes the provision for income taxes and the effective tax rate, highlighting key reconciling items | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Provision for income taxes | $19,295 | $10,329 | $32,959 | $17,582 | | Effective tax rate | 24.7% | 24.3% | 23.8% | 24.1% | - The differences between the effective tax rate and the federal statutory rate were primarily due to state income taxes offset by other foreign adjustments for 2025, and state income taxes for 2024[184](index=184&type=chunk) [Non-GAAP Disclosure](index=40&type=section&id=Non-GAAP%20Disclosure) This section defines and reconciles Adjusted EBITDA, a non-GAAP financial measure, to GAAP net income for performance evaluation - Adjusted EBITDA is a non-GAAP financial measure used to evaluate operating performance, defined as net income before interest, taxes, depreciation and amortization, stock-based compensation, acquisition/integration/restructuring expenses, and other non-indicative charges or gains[187](index=187&type=chunk) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------- | :------------------------------------ | :------------------------------------ | :---------------------------------- | :---------------------------------- | | GAAP net income, as reported | $58,721 | $32,181 | $105,517 | $55,420 | | Adjusted EBITDA | $164,233 | $116,029 | $304,693 | $214,247 | [Supplemental Performance Data](index=42&type=section&id=Supplemental%20Performance%20Data) This section presents key performance metrics, including cumulative collections money multiples and estimated remaining gross collections - Supplemental performance data, including purchases, collections, and Estimated Remaining Collections (ERC), is impacted by foreign currency translation[192](index=192&type=chunk) [Cumulative Collections Money Multiple - Cumulative Collections from Purchased Receivables to Purchase Price Multiple](index=43&type=section&id=Cumulative%20Collections%20Money%20Multiple%20-%20Cumulative%20Collections%20from%20Purchased%20Receivables%20to%20Purchase%20Price%20Multiple) This section provides the cumulative collections money multiple, comparing total collections to purchase price by geographic area | Geographic Area | Total Purchase Price (in thousands) | Total Cumulative Collections (in thousands) | CCMM (Multiple) | | :-------------- | :---------------------------------- | :------------------------------------------ | :-------------- | | United States | $10,567,420 | $21,519,619 | 2.0 | | Europe | $4,366,630 | $6,512,157 | 1.5 | | Other geographies | $340,283 | $550,501 | 1.6 | | Total | $15,274,333 | $28,582,277 | 1.9 | [Purchase Price Multiple - Total Estimated Collections from Purchased Receivables to Purchase Price Multiple](index=44&type=section&id=Purchase%20Price%20Multiple%20-%20Total%20Estimated%20Collections%20from%20Purchased%20Receivables%20to%20Purchase%20Price%20Multiple) This section presents the purchase price multiple, comparing total estimated gross collections to purchase price by geographic area | Geographic Area | Purchase Price (in thousands) | Total Estimated Gross Collections (in thousands) | Purchase Price Multiple | | :-------------- | :---------------------------- | :----------------------------------------------- | :---------------------- | | United States | $10,567,420 | $27,175,949 | 2.6 | | Europe | $4,366,630 | $10,146,612 | 2.3 | | Other geographies | $340,283 | $575,287 | 1.7 | | Total | $15,274,333 | $37,897,848 | 2.5 | [Estimated Remaining Gross Collections by Year of Purchase](index=45&type=section&id=Estimated%20Remaining%20Gross%20Collections%20by%20Year%20of%20Purchase) This section details the estimated remaining gross collections (ERC) for portfolios and real estate owned, segmented by geographic area | Category | Total ERC (in thousands) | | :--------------- | :----------------------- | | Portfolio ERC | $9,315,571 | | REO ERC | $46,829 | | Total ERC | $9,362,400 | | Geographic Area | Portfolio ERC (in thousands) | | :-------------- | :--------------------------- | | United States | $5,656,330 | | Europe | $3,634,455 | | Other geographies | $24,786 | [Estimated Future Collections Applied to Receivable Portfolios](index=46&type=section&id=Estimated%20Future%20Collections%20Applied%20to%20Receivable%20Portfolios) This section outlines the projected amortization schedule for estimated future collections applied to receivable portfolios | Years Ending December 31, | Total Amortization (in thousands) | | :----------------------- | :-------------------------------- | | 2025 (July-Dec) | $469,704 | | 2026 | $926,570 | | 2027 | $698,223 | | 2028 | $485,396 | | 2029 | $357,310 | | 2030 | $268,196 | | Total | $4,184,780 | [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash flow activities, primary capital sources, and available funding capacity [Liquidity](index=47&type=section&id=Liquidity) This section analyzes the company's cash flows from operating, investing, and financing activities and their impact on overall liquidity | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------- | :------------------------------------ | :------------------------------------ | | Net cash provided by operating activities | $54,807 | $86,697 | | Net cash used in investing activities | $(169,652) | $(131,886) | | Net cash provided by financing activities | $87,230 | $139,492 | - Net cash provided by operating activities decreased due to adjustments for changes in recoveries, which resulted in a **$77.1 million** decrease in operating cash flows for the six months ended June 30, 2025[209](index=209&type=chunk) - Net cash used in investing activities was primarily affected by **$725.4 million** in receivable portfolio purchases (net of put-backs) and **$553.4 million** in collections applied to receivable portfolios for the six months ended June 30, 2025[210](index=210&type=chunk) [Capital Resources](index=47&type=section&id=Capital%20Resources) This section identifies the primary sources of capital, including debt facilities and share repurchase programs, and their utilization - Primary sources of capital include cash collections from receivable portfolios, bank borrowings, debt offerings, and equity offerings[212](index=212&type=chunk) - Available capacity under the Global Senior Facility was **$397.2 million** as of June 30, 2025[213](index=213&type=chunk) - The company repurchased **707,924 shares** of common stock for approximately **$25.0 million** during the six months ended June 30, 2025, under its **$300.0 million** share repurchase program, with **$66.9 million** remaining authorization[214](index=214&type=chunk) [Critical Accounting Estimates](index=48&type=section&id=Critical%20Accounting%20Estimates) This section highlights key accounting estimates, particularly the ongoing reassessment of expected future recoveries of receivable portfolios - The preparation of condensed consolidated financial statements requires management to make estimates and assumptions, particularly regarding the ongoing reassessment of expected future recoveries of receivable portfolios under the CECL accounting policy[218](index=218&type=chunk) - No material changes to critical accounting policies and estimates have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024, other than the ongoing reassessment of expected future recoveries[218](index=218&type=chunk) [Item 3 – Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As of June 30, 2025, there were no material changes in foreign currency exchange rates or interest rate risk information compared to the 2024 Annual Report on Form 10-K - No material change in foreign currency risk information as of June 30, 2025, compared to the 2024 Annual Report on Form 10-K[220](index=220&type=chunk) - No material change in interest rate risk information as of June 30, 2025, compared to the 2024 Annual Report on Form 10-K[221](index=221&type=chunk) [Item 4 – Controls and Procedures](index=49&type=section&id=Item%204%20%E2%80%93%20Controls%20and%20Procedures) Management confirmed effective disclosure controls as of June 30, 2025, with no material changes to internal control during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[225](index=225&type=chunk) - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the quarter ended June 30, 2025[226](index=226&type=chunk) [PART II – OTHER INFORMATION](index=50&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section provides information on legal proceedings, risk factors, equity sales, other disclosures, and exhibits [Item 1 – Legal Proceedings](index=50&type=section&id=Item%201%20%E2%80%93%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from "Note 11: Commitments and Contingencies" in the condensed consolidated financial statements - Information with respect to legal proceedings is found in "Note 11: Commitments and Contingencies" to the condensed consolidated financial statements[228](index=228&type=chunk) [Item 1A – Risk Factors](index=50&type=section&id=Item%201A%20%E2%80%93%20Risk%20Factors) There were no material changes in the risk factors reported in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There is no material change in the information reported under "Part I-Item 1A-Risk Factors" in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[230](index=230&type=chunk) [Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **418,499 shares** for **$15.0 million** in Q2 2025, with **$66.9 million** remaining under its **$300.0 million** share repurchase program - The company repurchased **418,499 shares** of common stock for approximately **$15.0 million** during the three months ended June 30, 2025, under its **$300.0 million** share repurchase program[232](index=232&type=chunk) - As of June 30, 2025, authorization for **$66.9 million** of share repurchases remained under the share repurchase program[232](index=232&type=chunk) [Item 5 – Other Information](index=50&type=section&id=Item%205%20%E2%80%93%20Other%20Information) John Yung adopted a Rule 10b5-1(c) trading plan to sell up to **6,000 shares** of common stock between August 2025 and June 2026 - John Yung, President International and Cabot Credit Management, adopted a trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) to sell up to **6,000 shares** of Encore Capital Group, Inc. common stock between August 15, 2025, and June 9, 2026[234](index=234&type=chunk) [Item 6 – Exhibits](index=51&type=section&id=Item%206%20%E2%80%93%20Exhibits) This section lists Form 10-Q exhibits, including corporate documents, a Senior Facilities Agreement amendment, and officer certifications - Exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, an Amendment Letter to the Amended and Restated Senior Facilities Agreement, and certifications from the Principal Executive Officer and Principal Financial Officer[237](index=237&type=chunk) [SIGNATURES](index=52&type=section&id=SIGNATURES) This section confirms the official signing of the report by the company's Chief Financial Officer and Treasurer on August 6, 2025 - The report was signed on behalf of Encore Capital Group, Inc. by Tomas Hernanz, Executive Vice President, Chief Financial Officer and Treasurer, on August 6, 2025[241](index=241&type=chunk)

Financial Performance - Portfolio purchases increased by 32% to $367 million[7] - Collections increased by 20% to a record $655 million[7] - Estimated Remaining Collections (ERC) increased by 12% to a record $94 billion[7] - Earnings Per Share (EPS) increased from $134 in Q2 2024 to $249 in Q2 2025[7] - Cash generation increased by 23%[18] - The company updated its full-year guidance, projecting collections to increase by 155% to $25 billion[43] U.S. Market (MCM) - Portfolio purchases in the U.S. increased by 34% compared to Q2 2024, reaching $317 million[7, 26] - Collections in the U.S. increased by 24% compared to Q2 2024, reaching $490 million[7, 26] European Market (Cabot) - Collections in Europe increased by 10% compared to Q2 2024, reaching $164 million[7, 31] - Portfolio purchases in Europe were $50 million, in line with historical trends[7, 31] Liquidity and Debt - Available liquidity was $547 million, including $397 million in available Revolving Credit Facility (RCF) and $150 million in cash[38] - The company increased the size of its revolving credit facility by $190 million to $1485 billion and extended its maturity to 2029[38]

[Executive Summary & Business Update](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Update) Encore Capital Group reports strong Q2 2025 performance, segment results, updated full-year guidance, and share repurchases [Second Quarter 2025 Performance Overview](index=1&type=section&id=Second%20Quarter%202025%20Performance%20Overview) Encore Capital Group reported strong financial performance in Q2 2025, with significant year-over-year increases in portfolio purchases, collections, and earnings per share, reflecting broad strength across its operations - Encore delivered strong performance in Q2 2025, reflected in financial metrics across the board[2](index=2&type=chunk) Q2 2025 Key Performance Indicators (YoY Growth) | Metric | Q2 2025 Value | YoY Change | | :-------------------------- | :-------------- | :--------- | | Global Portfolio Purchases | $367 million | +32% | | Global Collections | $655 million | +20% | | Earnings Per Share (EPS) | $2.49 | +86% | | Estimated Remaining Collections (ERC) | $9.4 billion | +12% | [Segment Performance](index=1&type=section&id=Segment%20Performance) The MCM business in the U.S. achieved record portfolio purchases and collections, driven by favorable market conditions and strong execution. The Cabot business in Europe delivered solid results with increased collections Q2 2025 Segment Performance (YoY Growth) | Segment | Metric | Q2 2025 Value | YoY Change | | :---------------- | :---------------------- | :-------------- | :--------- | | **MCM (U.S.)** | Portfolio Purchases | $317 million | +34% | | | Collections | $490 million | +24% | | **Cabot (Europe)**| Portfolio Purchases | $50 million | In line | | | Collections | $164 million | +10% | - MCM U.S. capitalized on favorable supply environment, achieving record purchases at attractive returns and record collections due to superior execution[2](index=2&type=chunk) [Full-Year 2025 Guidance Update](index=1&type=section&id=Full-Year%202025%20Guidance%20Update) Following a strong first half of 2025, Encore raised its full-year global collections guidance to approximately $2.5 billion, representing 15.5% year-over-year growth. Global portfolio purchasing guidance remains unchanged, expected to exceed 2024 levels Full-Year 2025 Guidance Update | Metric | Previous Guidance | Updated Guidance | YoY Growth | | :-------------------------- | :---------------- | :--------------- | :--------- | | Global Collections | $2.4 billion | ~$2.5 billion | +15.5% | | Global Portfolio Purchasing | Exceed $1.35B (2024) | Unchanged | - | - The higher collections guidance is an increase over the prior expectation of **11%** growth to **$2.4 billion**[2](index=2&type=chunk) [Share Repurchase Program](index=1&type=section&id=Share%20Repurchase%20Program) Encore repurchased $15 million of its common stock during the second quarter of 2025, bringing the total repurchases for the first half of the year to $25 million Share Repurchases | Period | Amount Repurchased | | :---------------- | :----------------- | | Q2 2025 | $15 million | | First Half 2025 | $25 million | [Financial Highlights for the Second Quarter of 2025](index=2&type=section&id=Financial%20Highlights%20for%20the%20Second%20Quarter%20of%202025) This section presents Encore Capital Group's key financial metrics for Q2 2025, highlighting significant year-over-year growth in purchases, collections, and net income [Key Financial Metrics](index=2&type=section&id=Key%20Financial%20Metrics) The company's financial highlights for the second quarter of 2025 demonstrate robust growth across key metrics, including a 32% increase in portfolio purchases, a 20% rise in collections, and an 82% surge in net income compared to the prior year Financial Highlights for the Three Months Ended June 30, 2025 (in thousands, except percentages and earnings per share) | (in thousands, except percentages and earnings per share) | 2025 | 2024 | Change | | :------------------------------------------------------ | :---------- | :---------- | :----- | | Portfolio purchases | $367,099 | $278,692 | 32% | | Average receivable portfolios | $4,068,656 | $3,557,355 | 14% | | Estimated Remaining Collections (ERC) | $9,362,400 | $8,396,696 | 12% | | Collections | $654,985 | $546,728 | 20% | | Revenues | $442,122 | $355,285 | 24% | | Operating expenses | $291,389 | $253,446 | 15% | | Net income | $58,721 | $32,181 | 82% | | Earnings per share | $2.49 | $1.34 | 86% | - U.S. purchases were **$317.3 million** in Q2 2025, up from **$236.8 million** in Q2 2024. Europe purchases were **$49.8 million** in Q2 2025, up from **$41.9 million** in Q2 2024[5](index=5&type=chunk) [Company Information & Disclosures](index=2&type=section&id=Company%20Information%20%26%20Disclosures) This section provides essential company information, including conference call details, non-GAAP measure definitions, company profile, forward-looking statements, and contact information [Conference Call and Webcast](index=2&type=section&id=Conference%20Call%20and%20Webcast) Encore Capital Group will host a conference call and slide presentation on August 6, 2025, to discuss its second-quarter results, with live webcast and replay options available via its investor relations website - A conference call and slide presentation will be held on August 6, 2025, at 2:00 p.m. Pacific / 5:00 p.m. Eastern time[7](index=7&type=chunk) - The live webcast can be accessed on the Investor Relations page of Encore's website at encorecapital.com, with a replay available shortly after the call[7](index=7&type=chunk)[8](index=8&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) This section clarifies the use of non-GAAP financial measures, specifically Adjusted EBITDA, which management uses to evaluate operations and indicate cash generation. It emphasizes that these measures are not GAAP compliant and should not be considered alternatives to GAAP metrics - Adjusted EBITDA is a non-GAAP financial measure used by management to evaluate operations and indicate the Company's ability to generate cash collections in excess of operating expenses[10](index=10&type=chunk) - Adjusted EBITDA is not prepared in accordance with GAAP and should not be considered an alternative to net income and net income per share[10](index=10&type=chunk) [About Encore Capital Group, Inc.](index=3&type=section&id=About%20Encore%20Capital%20Group%2C%20Inc.) Encore Capital Group is an international specialty finance company focused on debt recovery solutions and related services. It purchases consumer receivables globally and is committed to helping consumers achieve financial recovery, operating with a Consumer Bill of Rights - Encore Capital Group is an international specialty finance company providing debt recovery solutions and related services for consumers[11](index=11&type=chunk) - The company purchases portfolios of consumer receivables from major banks, credit unions, and utility providers globally[11](index=11&type=chunk) - Encore operates with a Consumer Bill of Rights, demonstrating its commitment to helping consumers restore financial health[12](index=12&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section serves as a cautionary statement regarding forward-looking information, indicating that such statements involve risks and uncertainties that could cause actual results to differ materially from projections. The company claims safe harbor protection and disclaims any obligation to update these statements - Statements in the press release that are not historical facts, including those with words like 'will,' 'expects,' 'anticipates,' are 'forward-looking statements' under the Private Securities Litigation Reform Act of 1995[13](index=13&type=chunk) - Such statements involve risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied[13](index=13&type=chunk) - The Company disclaims any intent or obligation to update these forward-looking statements[13](index=13&type=chunk) [Contact Information](index=4&type=section&id=Contact%20Information) Contact details for investor relations are provided for inquiries regarding Encore Capital Group - For investor relations inquiries, contact Bruce Thomas, Vice President, Global Investor Relations, at bruce.thomas@encorecapital.com[14](index=14&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents Encore Capital Group's condensed consolidated financial statements, including statements of financial condition, income, and cash flows for Q2 2025 [Condensed Consolidated Statements of Financial Condition](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Condition) The condensed consolidated statements of financial condition show Encore's financial position as of June 30, 2025, compared to December 31, 2024, indicating an increase in total assets, primarily driven by growth in receivable portfolios and goodwill, alongside a corresponding rise in total liabilities Condensed Consolidated Statements of Financial Condition (In Thousands) | | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | **Assets** | | | | Cash and cash equivalents | $172,896 | $199,865 | | Receivable portfolios, net | $4,184,780 | $3,776,369 | | Goodwill | $542,912 | $507,808 | | Total assets | $5,191,386 | $4,789,729 | | **Liabilities and Equity** | | | | Borrowings | $3,965,465 | $3,672,762 | | Total liabilities | $4,295,415 | $4,022,398 | | Total stockholders' equity | $895,971 | $767,331 | | Total liabilities and stockholders' equity | $5,191,386 | $4,789,729 | - Receivable portfolios, net, increased by over **$400 million** from December 31, 2024, to June 30, 2025[17](index=17&type=chunk) [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The condensed consolidated statements of income highlight strong revenue growth and a significant increase in net income for both the three and six months ended June 30, 2025, compared to the prior year. Total revenues for Q2 2025 rose by 24%, and net income surged by 82% Condensed Consolidated Statements of Income (In Thousands, Except Per Share Amounts) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $442,122 | $355,285 | $834,897 | $683,671 | | Total operating expenses | $291,389 | $253,446 | $554,821 | $498,241 | | Income from operations | $150,733 | $101,839 | $280,076 | $185,430 | | Net income | $58,721 | $32,181 | $105,517 | $55,420 | | Diluted Earnings per share | $2.49 | $1.34 | $4.41 | $2.28 | - Changes in recoveries significantly contributed to total debt purchasing revenue, increasing from **$5,754 thousand** in Q2 2024 to **$55,599 thousand** in Q2 2025[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows for the six months ended June 30, 2025, show a net decrease in cash and cash equivalents, primarily due to increased purchases of receivable portfolios in investing activities, despite positive cash flow from operating and financing activities Condensed Consolidated Statements of Cash Flows (Unaudited, In Thousands) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $54,807 | $86,697 | | Net cash used in investing activities | $(169,652) | $(131,886) | | Net cash provided by financing activities | $87,230 | $139,492 | | Net (decrease) increase in cash and cash equivalents | $(27,615) | $94,303 | | Cash and cash equivalents, end of period | $172,896 | $250,621 | - Purchases of receivable portfolios, net of put-backs, increased to **$725,391 thousand** in H1 2025 from **$566,960 thousand** in H1 2024[22](index=22&type=chunk) - Cash paid for interest significantly increased to **$133,830 thousand** in H1 2025 from **$80,945 thousand** in H1 2024[22](index=22&type=chunk) [Supplemental Financial Information](index=8&type=section&id=Supplemental%20Financial%20Information) This section provides supplemental financial information, including a reconciliation of non-GAAP metrics like Adjusted EBITDA [Reconciliation of Non-GAAP Metrics (Adjusted EBITDA)](index=8&type=section&id=Reconciliation%20of%20Non-GAAP%20Metrics%20(Adjusted%20EBITDA)) This section provides a reconciliation of GAAP net income to Adjusted EBITDA, a non-GAAP measure, for the three and six months ended June 30, 2025 and 2024. Adjusted EBITDA increased significantly year-over-year, reflecting operational performance excluding certain non-recurring or non-cash items Reconciliation of Adjusted EBITDA (in thousands, unaudited) | (in thousands, unaudited) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | GAAP net income, as reported | $58,721 | $32,181 | $105,517 | $55,420 | | Interest expense | $73,943 | $61,376 | $144,473 | $117,141 | | Provision for income taxes | $19,295 | $10,329 | $32,959 | $17,582 | | Depreciation and amortization | $7,311 | $7,461 | $14,655 | $15,309 | | Stock-based compensation expense | $5,283 | $4,637 | $8,707 | $7,994 | | Acquisition, integration and restructuring related expenses | $1,042 | $1,883 | $1,290 | $4,202 | | Adjusted EBITDA | $164,233 | $116,029 | $304,693 | $214,247 | | Collections applied to principal balance | $244,677 | $228,923 | $488,977 | $443,474 | - Adjusted EBITDA for the three months ended June 30, 2025, increased by approximately **41.5%** compared to the same period in 2024[23](index=23&type=chunk) - Adjustments for non-indicative ongoing operations include net gain on derivative instruments and acquisition, integration, and restructuring related expenses[23](index=23&type=chunk)[24](index=24&type=chunk)

Core Insights - Encore Capital Group reported strong financial performance in Q2 2025, with significant increases in portfolio purchases and collections, leading to a substantial rise in earnings per share [2][6][7] Financial Performance - Portfolio purchases reached $367 million, a 32% increase compared to Q2 2024 [6][7] - Record collections amounted to $655 million, up 20% year-over-year [2][6][7] - Earnings per share for Q2 2025 were $2.49, reflecting an 86% increase from $1.34 in Q2 2024 [2][6][7] Business Segments - The U.S. MCM business achieved record portfolio purchases of $317 million, a 34% increase from the previous year, and collections of $490 million, up 24% [2][6] - The Cabot business in Europe reported portfolio purchases of $50 million and collections of $164 million, a 10% increase year-over-year [2][6] Guidance and Outlook - The company raised its full-year collections guidance to approximately $2.5 billion, indicating a year-over-year growth of 15.5%, up from a previous expectation of 11% growth [2][6] - Global portfolio purchasing is expected to exceed $1.35 billion, surpassing the previous year's purchases [2][6] Share Repurchase - In Q2 2025, Encore repurchased $15 million of its common stock, totaling $25 million for the first half of the year [3]

Core Insights - The Economic Freedom Study conducted by Encore Capital Group reveals a more optimistic outlook on personal finances among U.S. and U.K. adults compared to their national economies [1][2][3] - The study highlights the financial stressors faced by consumers and their attitudes towards debt collection, credit score awareness, and financial literacy [2][3] Group 1: Consumer Sentiment - A significant portion of U.S. adults (49%) have a negative outlook on the national economy, while a larger percentage of U.K. adults (67%) feel similarly [5] - "Being debt-free" is identified as the most important aspect of economic freedom by 27% of adults in both countries [5] - The survey indicates that U.S. adults are more aware of their credit scores (83%) compared to U.K. adults (51%) [5] Group 2: Financial Challenges and Solutions - Approximately 29% of U.S. adults and 19% of U.K. adults report having past-due debt, with younger and low-income adults being particularly affected [5] - The study shows an increase in the number of adults seeking help to repay past-due debt compared to the previous year [5] - About 24% of adults in both countries believe that receiving a discount on debt owed would be the most helpful in resolving their debt [4] Group 3: Company Approach and Initiatives - Encore Capital Group emphasizes its commitment to understanding consumer needs and providing tailored solutions to help them manage past-due debt [3][4] - The company has a Consumer Bill of Rights that outlines its commitment to suspend collection activities for consumers facing significant financial hardship [5] - Encore's Sensitive Support Team in the U.K. is dedicated to assisting consumers dealing with mental or physical health issues that impact their financial situation [6]