Encore Capital Group(US:ECPG)2022-11-01 16:00Financial Performance - Total revenues for the three months ended September 30, 2022, were $307,752, a decrease of 25.4% compared to $412,624 for the same period in 2021[9]. - Net income for the three months ended September 30, 2022, was $31,494, down 62.3% from $83,566 in the same period last year[10]. - Earnings per share attributable to Encore Capital Group, Inc. for the three months ended September 30, 2022, were $1.31, compared to $2.76 for the same period in 2021, reflecting a decline of 52.5%[9]. - Total revenues for the nine months ended September 30, 2022, were $1,164.4 million, down 7.4% from $1,257.2 million for the same period in 2021[61]. - Net income for the nine months ended September 30, 2022, was $267.7 million, a decrease from $275.1 million in the same period in 2021, representing a decline of approximately 0.14%[17]. Assets and Liabilities - Total assets as of September 30, 2022, were $4,327,865, a decrease of 6.1% from $4,608,125 as of December 31, 2021[7]. - Total liabilities decreased to $3,134,936 as of September 30, 2022, down 8.4% from $3,422,864 at the end of 2021[7]. - The company’s accumulated other comprehensive loss increased to $(165,721) as of September 30, 2022, compared to $(53,548) at the end of 2021[7]. - As of September 30, 2022, total equity was $1,192,929, a decrease from $1,185,261 as of December 31, 2021[14]. Cash Flow and Investments - Net cash provided by operating activities for the nine months ended September 30, 2022, was $154,876, down from $211,990 for the same period in 2021, a decrease of about 27%[17]. - The company incurred a net cash used in investing activities of $(40,672) for the nine months ended September 30, 2022, compared to a net cash provided of $312,808 in the same period of 2021[17]. - The company reported cash and cash equivalents of $147,035 at the end of the period, down from $158,243 at the end of the same period in 2021[17]. Collections and Portfolio Management - Cash collections for the three months ended September 30, 2022, amounted to $458.3 million[42]. - The company purchased receivable portfolios totaling $232.7 million during the three months ended September 30, 2022[42]. - Collections during the three months ended September 30, 2022, underperformed projected cash flows by approximately $4.9 million, while collections during the nine months over-performed by approximately $51.4 million[44]. - The company experienced a negative change in expected future recoveries of approximately $8.2 million for the three months ended September 30, 2022, but a net positive change of $127.9 million for the nine months[44]. Debt and Financing - Total borrowings as of September 30, 2022, amounted to $2.69 billion, a decrease from $2.997 billion as of December 31, 2021[46]. - The outstanding borrowings under the Global Senior Facility were $596.6 million, with a weighted average interest rate of 4.71% for the three months ended September 30, 2022[47]. - The Encore Private Placement Notes outstanding as of September 30, 2022, were $78.2 million, with an annual interest rate of 5.625%[49]. - The company’s derivative instruments increased significantly to $40.28 million as of September 30, 2022, from $3.54 million at the end of 2021[44]. Market Position and Strategy - The company is a market leader in portfolio purchasing and recovery in the United States and one of the largest credit management services providers in Europe[19]. - The company expects growth in lending and rising delinquency rates to drive future supply increases in the portfolio purchasing market[77]. - The company is focusing on market expansion strategies, particularly in Europe, to drive future growth[118]. - The company is exploring potential acquisition opportunities to further strengthen its market position and enhance product offerings[118]. Regulatory and Operational Challenges - The company continues to face regulatory pressures and high operational costs, which may favor larger participants in the market[77]. - The company is implementing a remediation plan to address a material weakness in internal control over financial reporting, expected to be completed by December 31, 2022[144]. Tax and Compliance - The Company's effective tax rate for the three months ended September 30, 2022, was 25.7%, up from 22.8% for the same period in 2021[57]. - The Company’s subsidiary in Costa Rica is operating under a 100% tax holiday through December 31, 2026, which had an immaterial impact on the tax expense for the periods ended September 30, 2022, and 2021[57].