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Encore Capital Group
ECPG
#5125
Rank
$1.58 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$71.14
Share price
0.38%
Change (1 day)
127.14%
Change (1 year)
๐Ÿ’ณ Financial services
Categories
  1. Encore Capital Group
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2024 Q1

Encore Capital Group - 10-Q quarterly report FY2024 Q1


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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________________________________________________________
FORM 10-Q
(Mark One)
☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024 or
☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to__________.
COMMISSION FILE NUMBER: 000-26489
ENCORE CAPITAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware48-1090909
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)
350 Camino De La Reina, Suite 100
San Diego, California 92108
(Address of principal executive offices, including zip code)
(877) 445 - 4581
(Registrant’s telephone number, including area code)
(Not Applicable)
(Former name, former address and former fiscal year, if changed since last report)
_______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 Par Value Per ShareECPG
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding at May 1, 2024
Common Stock, $0.01 par value23,686,865 shares

Table of Contents
ENCORE CAPITAL GROUP, INC.
INDEX TO FORM 10-Q
 
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Table of Contents
PART I – FINANCIAL INFORMATION
Item 1—Condensed Consolidated Financial Statements (Unaudited)
ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Financial Condition
(In Thousands, Except Par Value Amounts)
(Unaudited)
March 31,
2024		December 31,
2023
Assets
Cash and cash equivalents$172,990 $158,364 
Investment in receivable portfolios, net3,531,387 3,468,432 
Property and equipment, net102,776 103,959 
Other assets277,622 293,256 
Goodwill602,400 606,475 
Total assets
$4,687,175 $4,630,486 
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities$180,206 $189,928 
Borrowings3,364,029 3,318,031 
Other liabilities189,081 185,989 
Total liabilities
3,733,316 3,693,948 
Commitments and contingencies (Note 11)
Equity:
Convertible preferred stock, $0.01 par value, 5,000 shares authorized, no shares issued and outstanding
— — 
Common stock, $0.01 par value, 75,000 shares authorized, 23,687 and 23,545 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
237 235 
Additional paid-in capital8,648 11,052 
Accumulated earnings1,072,410 1,049,171 
Accumulated other comprehensive loss(127,436)(123,920)
Total stockholders’ equity953,859 936,538 
Total liabilities and stockholders’ equity$4,687,175 $4,630,486 
The following table presents certain assets and liabilities of consolidated variable interest entities (“VIEs”) included in the condensed consolidated statements of financial condition above. Most assets in the table below include those assets that can only be used to settle obligations of consolidated VIEs. The liabilities exclude amounts where creditors or beneficial interest holders have recourse to the general credit of the Company. See “Note 8: Variable Interest Entities” for additional information on the Company’s VIEs.
March 31,
2024		December 31,
2023
Assets
Cash and cash equivalents$26,879 $24,472 
Investment in receivable portfolios, net736,226 717,556 
Other assets11,280 19,358 
Liabilities
Accounts payable and accrued liabilities1,005 1,854 
Borrowings492,027 494,925 
Other liabilities253 2,452 
See accompanying notes
3
Table of Contents
ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Income
(In Thousands, Except Per Share Amounts)
(Unaudited)
 Three Months Ended
March 31,
 20242023
Revenues
Revenue from receivable portfolios$315,852 $295,674 
Changes in recoveries(12,409)(9,501)
Total debt purchasing revenue303,443 286,173 
Servicing revenue20,379 22,585 
Other revenues4,564 3,872 
Total revenues328,386 312,630 
Operating expenses
Salaries and employee benefits104,184 103,850 
Cost of legal collections58,721 54,101 
General and administrative expenses36,241 37,965 
Other operating expenses30,367 27,556 
Collection agency commissions7,434 8,150 
Depreciation and amortization7,848 10,870 
Total operating expenses244,795 242,492 
Income from operations83,591 70,138 
Other expense
Interest expense(55,765)(46,835)
Other income, net
2,666 1,732 
Total other expense(53,099)(45,103)
Income before income taxes30,492 25,035 
Provision for income taxes(7,253)(6,409)
Net income $23,239 $18,626 
Earnings per share:
Basic$0.98 $0.79 
Diluted$0.95 $0.75 
Weighted average shares outstanding:
Basic23,784 23,548 
Diluted24,468 24,942 

See accompanying notes
4
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ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited, In Thousands)
 Three Months Ended
March 31,
 20242023
Net income$23,239 $18,626 
Other comprehensive (loss) income, net of tax:
Change in unrealized gain (loss) on derivative instruments:
Unrealized gain (loss) on derivative instruments
5,475 (8,053)
Income tax effect(2,685)876 
Unrealized gain (loss) on derivative instruments, net of tax
2,790 (7,177)
Change in foreign currency translation:
Unrealized (loss) gain on foreign currency translation
(6,146)16,008 
Income tax effect(160)(383)
Unrealized (loss) gain on foreign currency translation, net of tax
(6,306)15,625 
Other comprehensive (loss) income, net of tax:
(3,516)8,448 
Total comprehensive income
$19,723 $27,074 
See accompanying notes
5
Table of Contents
ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Equity
(Unaudited, In Thousands)

Three Months Ended March 31, 2024
Common StockAdditional Paid-In CapitalAccumulated Earnings
Accumulated Other Comprehensive Loss
Total Equity
SharesPar
Balance as of December 31, 2023
23,545 $235 $11,052 $1,049,171 $(123,920)$936,538 
Net income— — — 23,239 — 23,239 
Other comprehensive loss, net of tax
— — — — (3,516)(3,516)
Issuance of share-based awards, net of shares withheld for employee taxes
142 2 (5,761)— — (5,759)
Stock-based compensation— — 3,357 — — 3,357 
Balance as of March 31, 202423,687 $237 $8,648 $1,072,410 $(127,436)$953,859 

Three Months Ended March 31, 2023
Common StockAdditional Paid-In CapitalAccumulated EarningsAccumulated Other Comprehensive LossTotal Equity
SharesPar
Balance as of December 31, 2022
23,323 $233 $— $1,278,210 $(98,816)$1,179,627 
Net income— — — 18,626 — 18,626 
Other comprehensive income, net of tax
— — — — 8,448 8,448 
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes159 2 (6,355)— — (6,353)
Stock-based compensation
— — 4,052 — — 4,052 
Purchase of capped call options, net of tax effect— — (13,865)— — (13,865)
Unwind of the existing capped call options— — 28,542 — — 28,542 
Settlement of convertible notes— — (12,374)(22,547)— (34,921)
Balance as of March 31, 202323,482 $235 $— $1,274,289 $(90,368)$1,184,156 


See accompanying notes

6
Table of Contents
ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, In Thousands)
 Three Months Ended March 31,
 20242023
Operating activities:
Net income$23,239 $18,626 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization7,848 10,870 
Other non-cash interest expense, net3,727 4,594 
Stock-based compensation expense3,357 4,052 
Deferred income taxes170 1,369 
Changes in recoveries12,409 9,501 
Other, net717 (1,843)
Changes in operating assets and liabilities
Other assets(6,223)(3,139)
Accounts payable, accrued liabilities and other liabilities5,740 (8,117)
Net cash provided by operating activities50,984 35,913 
Investing activities:
Purchases of receivable portfolios, net of put-backs(291,367)(274,625)
Collections applied to investment in receivable portfolios195,035 166,682 
Purchases of asset held for sale(212)(22,596)
Purchases of property and equipment(6,861)(4,885)
Other, net12,523 4,709 
Net cash used in investing activities(90,882)(130,715)
Financing activities:
Payment of loan and debt refinancing costs(10,202)(5,850)
Proceeds from credit facilities248,549 229,128 
Repayment of credit facilities(696,351)(140,043)
Proceeds from senior secured notes500,000 — 
Repayment of senior secured notes(9,770)(9,770)
Proceeds from issuance of convertible senior notes— 230,000 
Repayment of exchangeable senior notes
— (192,457)
Proceeds from convertible hedge instruments, net— 10,050 
Other, net23,564 (10,684)
Net cash provided by financing activities55,790 110,374 
Net increase in cash and cash equivalents15,892 15,572 
Effect of exchange rate changes on cash and cash equivalents(1,266)(710)
Cash and cash equivalents, beginning of period158,364 143,912 
Cash and cash equivalents, end of period$172,990 $158,774 
Supplemental disclosure of cash information:
Cash paid for interest$46,469 $38,072 
Cash paid for taxes, net of refunds1,542 908 
Supplemental schedule of non-cash investing activities:
Investment in receivable portfolios transferred to real estate owned$2,045 $1,105 
    

See accompanying notes
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ENCORE CAPITAL GROUP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1: Ownership, Description of Business, and Summary of Significant Accounting Policies
Encore Capital Group, Inc. (“Encore”), through its subsidiaries (collectively with Encore, the “Company”), is an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. The Company purchases portfolios of defaulted consumer receivables at deep discounts to face value and manages them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial obligations to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. The Company also provides debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.
Through Midland Credit Management, Inc. and its domestic affiliates (collectively, “MCM”), the Company is a market leader in portfolio purchasing and recovery in the United States. Through Cabot Credit Management Limited (“CCM”) and its subsidiaries and European affiliates (collectively, “Cabot”), the Company is one of the largest credit management services providers in Europe and the United Kingdom. These are the Company’s primary operations.
The Company also has investments and operations in Latin America and Asia-Pacific, which the Company refers to as “LAAP.”
Financial Statement Preparation and Presentation
The accompanying interim condensed consolidated financial statements have been prepared by the Company, without audit, in accordance with the instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”) and, therefore, do not include all information and footnotes necessary for a fair presentation of its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).
In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of the Company’s condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.
The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in the Company’s condensed financial statements and the accompanying notes. Actual results could materially differ from those estimates.
Basis of Consolidation
The condensed consolidated financial statements have been prepared in conformity with GAAP and reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. The Company also consolidates variable interest entities (“VIEs”) for which it is the primary beneficiary. The primary beneficiary has both (a) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance, and (b) either the obligation to absorb losses or the right to receive benefits. Refer to “Note 8: Variable Interest Entities” for further details. All intercompany transactions and balances have been eliminated in consolidation.
Translation of Foreign Currencies
The condensed financial statements of certain of the Company’s foreign subsidiaries are measured using their local currency as the functional currency. Assets and liabilities of foreign operations are translated into U.S. dollars using period-end exchange rates, and revenues and expenses are translated into U.S. dollars using average exchange rates in effect during each period. The resulting translation adjustments are recorded as a component of other comprehensive income or loss. Equity accounts are translated at historical rates, except for the change in retained earnings during the year which is the result of the income statement translation process. Intercompany transaction gains or losses at each period end arising from subsequent measurement of balances for which settlement is not planned or anticipated in the foreseeable future are included as translation adjustments and recorded within other comprehensive income or loss. Translation gains or losses are the material components of accumulated other comprehensive income or loss and are reclassified to earnings upon the substantial sale or liquidation of investments in foreign operations.
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Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within the segment measure of profit or loss. This guidance will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024. This ASU will likely result in additional required disclosure when adopted. The Company is currently evaluating the provisions of this ASU and the impact on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The new standard is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
Note 2: Earnings Per Share
Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period.
The number of shares used to calculate the diluted earnings per share is computed by using the basic weighted-average number of common shares outstanding plus any dilutive potential common shares outstanding during the period, except when their effect is anti-dilutive. Dilutive potential common shares include outstanding stock based awards, and the dilutive effect of the convertible and exchangeable senior notes, if applicable.
A reconciliation of shares used in calculating earnings per basic and diluted shares follows (in thousands, except per share amounts):
 Three Months Ended
March 31,
 20242023
Net income $23,239 $18,626 
Shares:
Total weighted-average basic shares outstanding23,784 23,548 
Dilutive effect of stock-based awards200 291 
Dilutive effect of convertible and exchangeable senior notes484 1,103 
Total weighted-average dilutive shares outstanding24,468 24,942 
Basic earnings per share$0.98 $0.79 
Diluted earnings per share$0.95 $0.75 
There were no anti-dilutive employee stock options outstanding during the three months ended March 31, 2024 and 2023.
Note 3: Fair Value Measurements
Fair value is defined as the price that would be received upon sale of an asset or the price paid to transfer a liability, in an orderly transaction between market participants at the measurement date (i.e., the “exit price”). The Company uses a fair value hierarchy that prioritizes the inputs used in valuation techniques to measure fair value into three broad levels. The following is a brief description of each level:
•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
•Level 3: Unobservable inputs, including inputs that reflect the reporting entity’s own assumptions.
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The Company’s cash and cash equivalents, certain other assets, accounts payable and accrued liabilities, and other liabilities approximate their fair values due to their short-term nature, which are determined to be a Level 1 measurement.
Financial Instruments Required To Be Carried At Fair Value
Financial assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):
 Fair Value Measurements as of March 31, 2024
 Level 1Level 2Level 3Total
Assets
Interest rate cap contracts$— $10,039 $— $10,039 
Liabilities
Interest rate swap agreements
— (11,976)— (11,976)
Cross-currency swap agreements— (39,004)— (39,004)
 Fair Value Measurements as of December 31, 2023
 Level 1Level 2Level 3Total
Assets
Interest rate cap contracts$— $16,950 $— $16,950 
Cross-currency swap agreements— 361 — 361 
Liabilities
Interest rate swap agreements— (22,510)— (22,510)
Cross-currency swap agreements— (28,039)— (28,039)
Derivative Contracts:
The Company uses derivative instruments to manage its exposure to fluctuations in interest rates and foreign currency exchange rates. Fair values of these derivative instruments are estimated using industry standard valuation models. These models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign currency exchange rates, and forward and spot prices for currencies. The Company’s derivative agreements are subject to underlying agreements with master netting arrangements, which provide for the right of offset in the event of default or in the event of bankruptcy of either party to the transactions. The Company reports its assets and liabilities subject to these arrangements on a gross basis for certain derivative agreements.
Non-Recurring Fair Value Measurement:
Certain assets are measured at fair value on a nonrecurring basis. These assets include real estate-owned assets classified as held for sale at the lower of their carrying value or fair value less cost to sell. The fair value of the assets held for sale and estimated selling expenses were determined at the time of initial recognition and in each reporting period using Level 3 measurements based on appraised values using market comparables. The fair value estimate of the assets held for sale was approximately $64.0 million and $70.6 million as of March 31, 2024 and December 31, 2023, respectively.
Financial Instruments Not Required To Be Carried At Fair Value
The table below summarizes fair value estimates for the Company's financial instruments that are not required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.

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The carrying amounts in the following table are included in the condensed consolidated statements of financial condition as of March 31, 2024 and December 31, 2023 (in thousands):
 March 31, 2024December 31, 2023
 Carrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
Financial Assets
Investment in receivable portfolios, net$3,531,387 $3,582,622 $3,468,432 $3,515,651 
Financial Liabilities
Global senior secured revolving credit facility367,739 367,739 816,880 816,880 
Encore private placement notes19,540 19,409 29,310 28,922 
Senior secured notes(1)
2,123,535 2,084,677 1,649,621 1,598,636 
Convertible senior notes due October 2025100,000 125,369 100,000 136,403 
Convertible senior notes due March 2029230,000 215,540 230,000 226,794 
Cabot securitisation senior facility322,110 322,110 324,646 324,646 
U.S. facility
175,000 175,000 175,000 175,000 
Other borrowings65,902 65,902 24,904 24,904 
_______________________
(1)Carrying amount represents historical cost, adjusted for any related debt discount.
Investment in Receivable Portfolios:
The fair value of investment in receivable portfolios is measured using Level 3 inputs by discounting the estimated future cash flows generated by the Company’s proprietary forecasting models. The key inputs include the estimated future gross cash flow, average cost to collect, and discount rate. The determination of such inputs requires significant judgment, including assessing the assumed market participant’s cost structure, its determination of whether to include fixed costs in its valuation, its collection strategies, and determining the appropriate weighted average cost of capital. The Company evaluates the use of these key inputs on an ongoing basis and refines the data as it continues to obtain better information from market participants in the debt recovery and purchasing business.
Borrowings:
The Company’s convertible notes, senior secured notes and private placement notes are carried at historical cost, adjusted for the applicable debt discount. The fair value estimate for the convertible notes incorporates quoted market prices using Level 2 inputs. The fair value of the senior secured notes and private placement notes is estimated using widely accepted valuation techniques, including discounted cash flow analyses using available market information on discount and borrowing rates with similar terms, maturities, and credit ratings. Accordingly, the Company used Level 2 inputs for these debt instrument fair value estimates.
The carrying value of the Company’s senior secured revolving credit facility, securitisation senior facility, U.S. facility, and other borrowings approximates fair value due to the use of current market rates that are repriced frequently, which are determined to be a Level 2 measurement.
Note 4: Derivatives and Hedging Instruments
The Company may periodically enter into derivative financial instruments to manage risks related to interest rates and foreign currency. Certain of the Company’s derivative financial instruments qualify for hedge accounting treatment.
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The following table summarizes the fair value of derivative instruments as recorded in the Company’s condensed consolidated statements of financial condition (in thousands):
 March 31, 2024December 31, 2023
Balance Sheet LocationFair ValueBalance Sheet LocationFair Value
Derivatives designated as hedging instruments:
Interest rate cap contractsOther assets$8,405 Other assets$14,564 
Interest rate swap agreementsOther liabilities(11,976)Other liabilities(22,510)
Cross-currency swap agreementsOther assets— Other assets361 
Cross-currency swap agreementsOther liabilities(39,004)Other liabilities(28,039)
Derivatives not designated as hedging instruments:
Interest rate cap contractsOther assets1,634 Other assets2,386 
Derivatives Designated as Hedging Instruments
The Company may periodically enter into interest rate swap agreements and interest rate cap contracts to reduce its exposure to fluctuations in interest rates on variable interest rate debt and their impact on earnings and cash flows. Under the swap agreements, the Company receives floating interest rate payments and makes interest payments based on fixed interest rates. Under the cap contracts, the Company receives floating interest rate payments and makes interest payments based on capped interest rates. The Company designates its interest rate swap and interest rate cap instruments as cash flow hedges at inception.
The Company uses cross-currency swap agreements to manage foreign currency exchange risk by converting fixed-rate Euro-denominated borrowings and fixed-rate GBP-denominated borrowings including periodic interest payments and the payment of principal at maturity to fixed-rate USD debt. The cross-currency swap agreements are accounted for as fair value hedges.
The following table summarizes the terms of the derivative instruments designated as hedging instruments as recorded in the Company’s consolidated statements of financial condition:

March 31, 2024
Effective dateMaturity DateHedge DesignationNotional AmountReceive Floating Rate Index
Interest rate cap contracts
2019 CapJanuary 2020June 2024Cash flow hedge$431.7 million3-month EURIBOR
2021 Cap(1)
November 2021September 2024Cash flow hedge$315.8 millionSONIA
2024 CapSeptember 2024September 2026Cash flow hedge$322.1 millionSONIA
Interest rate swap agreements
2023 Euro IR SwapOctober 2023January 2028Cash flow hedge$107.9 million3-month EURIBOR
2024 Euro IR Swaps
June 2024January 2028Cash flow hedge$447.9 million3-month EURIBOR
         2023 SOFR IR Swaps
November 2023October 2026Cash flow hedge$150.0 million1-month SOFR CME Term
Cross-currency swap agreements
2020 Euro SwapsSeptember 2020October 2025Fair value hedge$377.8 million—
2023 GBP SwapsJuly 2023February 2026Fair value hedge$379.0 million—
______________________
(1)The total notional amount of the 2021 Cap was $442.1 million, of which $315.8 million was hedge designated and $126.3 million was not hedge designated as of March 31, 2024.
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December 31, 2023
Effective dateMaturity DateHedge DesignationNotional AmountReceive Floating Rate Index
Interest rate cap contracts
2019 CapJanuary 2020June 2024Cash flow hedge$441.5 million3-month EURIBOR
2021 Cap(1)
November 2021September 2024Cash flow hedge$318.3 millionSONIA
2024 CapSeptember 2024September 2026Cash flow hedge$324.6 millionSONIA
Interest rate swap agreements
2023 Euro IR SwapOctober 2023January 2028Cash flow hedge$110.4 million3-month EURIBOR
2024 Euro IR Swaps
June 2024January 2028Cash flow hedge$458.1 million3-month EURIBOR
         2023 SOFR IR Swaps
November 2023October 2026Cash flow hedge$150.0 million1-month SOFR CME Term
Cross-currency swap agreements
2020 Euro SwapsSeptember 2020October 2025Fair value hedge$386.3 million—
2023 GBP SwapsJuly 2023February 2026Fair value hedge$381.9 million—
_______________________
(1)The total notional amount of the 2021 Cap was $445.6 million, of which $318.3 million was hedge designated and $127.3 million was not hedge designated as of December 31, 2023.
The Company expects to reclassify approximately $7.3 million of net derivative gain from OCI into earnings relating to its cash flow designated derivatives within the next 12 months.
The following tables summarize the effects of derivatives designated as hedging instruments in the Company’s condensed consolidated financial statements (in thousands):
Derivatives Designated as Hedging InstrumentsGain (Loss) Recognized in OCILocation of Gain (Loss) Reclassified from OCI into Income (Loss)
Gain (Loss) Reclassified from OCI into Income
Three Months Ended March 31,Three Months Ended March 31,
2024202320242023
Interest rate swap agreements$11,074 $— Interest expense$540 $— 
Interest rate cap contracts(6,051)(6,924)Interest expense(712)(450)
Cross-currency swap agreements(13,010)2,066 Interest expense(1,780)(1,508)
Other (expense) income
(11,510)5,153 
Derivatives Not Designated as Hedging Instruments
In September 2023, the Company partially dedesignated the 2021 Cap. As of March 31, 2024, £100.0 million (approximately $126.3 million based on an exchange rate of $1.00 to £0.79, the exchange rate as of March 31, 2024) of the notional amount of the 2021 Cap is not designated as a hedging instrument for accounting purposes. The gains or losses resulting from changes in fair value on the portion of the 2021 cap that is no longer designated as a hedging instrument are recognized in other income or other expenses. The Company recorded a gain of approximately $0.2 million resulting from the fair value change of the undesignated 2021 Cap during the three months ended March 31, 2024. Refer above for terms relating to the 2021 Cap.
Note 5: Investment in Receivable Portfolios, Net
The Company’s purchased portfolios of loans are grossed-up to their face value with an offsetting allowance and noncredit discount allocated to the individual receivables as the unit of account is at the individual loan level. Since each loan is deeply delinquent and deemed uncollectible at the individual loan level, the Company applies its charge-off policy and fully writes-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables immediately after purchasing the portfolio. The Company then records a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which ultimately equals the amount paid for a portfolio purchase and presented as “Investment in receivable portfolios, net” in the Company’s condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) based on the purchase price of the portfolio and the expected future cash flows at the time of purchase.
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Receivable portfolio purchases are aggregated into pools based on similar risk characteristics. Examples of risk characteristics include financial asset type, collateral type, size, interest rate, date of origination, term, and geographic location. The Company’s static pools are typically grouped into credit card, purchased consumer bankruptcy, and mortgage portfolios. The Company further groups these static pools by geographic location. Once a pool is established, the portfolios will remain in the designated pool unless the underlying risk characteristics change. The purchase EIR of a pool will not change over the life of the pool even if expected future cash flows change.
Revenue is recognized for each static pool over the economic life of the pool. Debt purchasing revenue includes two components:
(1)     Revenue from receivable portfolios, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR) and also includes all revenue from zero basis portfolio (“ZBA”) collections, and
(2)     Changes in recoveries, which includes
(a)     Recoveries above or below forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and
(b)     Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases).
The Company measures expected future recoveries based on historical experience, current conditions, reasonable and supportable forecasts, and other quantitative and qualitative factors. Factors that may change the expected future recoveries may include both internal as well as external factors. Internal factors include operational performance, such as capacity and the productivity of the Company’s collection staff. External factors include new laws or regulations, new interpretations of existing laws or regulations, and macroeconomic conditions. The Company continues to reassess its expected future recoveries in each reporting period.
Investment in receivable portfolios, net consists of the following as of the dates presented (in thousands):
March 31, 2024December 31, 2023
Amortized cost$— $— 
Negative allowance for expected recoveries3,531,387 3,468,432 
Balance, end of period$3,531,387 $3,468,432 

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The following table summarizes the changes in the balance of investment in receivable portfolios, net during the periods presented (in thousands):
Three Months Ended
March 31,
20242023
Balance, beginning of period$3,468,432 $3,088,261 
Negative allowance for expected recoveries - current period purchases(1)
295,714 276,431 
Collections applied to investment in receivable portfolios, net (2)
(195,035)(166,682)
Changes in recoveries (3)
(12,409)(9,501)
Put-backs and recalls
(4,347)(1,806)
Disposals and transfers to real estate owned(2,045)(1,105)
Foreign currency translation adjustments(18,923)29,194 
Balance, end of period$3,531,387 $3,214,792 
_______________________
(1)The table below provides the detail on the establishment of negative allowance for expected recoveries of portfolios purchased during the periods presented:
Three Months Ended
March 31,
20242023
Purchase price$295,714 $276,431 
Allowance for credit losses644,514 659,644 
Amortized cost940,228 936,075 
Noncredit discount1,255,793 1,005,221 
Face value2,196,021 1,941,296 
Write-off of amortized cost(940,228)(936,075)
Write-off of noncredit discount(1,255,793)(1,005,221)
Negative allowance295,714 276,431 
Negative allowance for expected recoveries - current period purchases$295,714 $276,431 
(2)Collections applied to investment in receivable portfolios, net, is calculated as follows during the periods presented:
Three Months Ended
March 31,
20242023
Cash Collections$510,887 $462,356 
Less - amounts classified to revenue from receivable portfolios(315,852)(295,674)
Collections applied to investment in receivable portfolios, net$195,035 $166,682 
(3)Changes in recoveries is calculated as follows during the periods presented, where recoveries include cash collections, put-backs and recalls, and other cash-based adjustments:
Three Months Ended
March 31,
20242023
Recoveries above (below) forecast
$853 $(15,358)
Changes in expected future recoveries(13,262)5,857 
Changes in recoveries$(12,409)$(9,501)
Recoveries above or below forecast represent over and under-performance in the reporting period, respectively. Collections during the three months ended March 31, 2024, over-performed the forecasted collections by approximately $0.9 million. Collections during the three months ended March 31, 2023, under-performed the forecasted collections by approximately $15.4 million.
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When reassessing the forecasts of expected lifetime recoveries during the three months ended March 31, 2024, management considered, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment. The updated forecast resulted in changes in the timing and amount of total estimated remaining collections which in turn, when discounted to present value, resulted in a net negative change in expected future recoveries of approximately $13.3 million for the three months ended March 31, 2024. During the three months ended March 31, 2023, the Company recorded approximately $5.9 million in net positive change in expected future period recoveries.
Note 6: Other Assets
Other assets consist of the following (in thousands):
March 31,
2024		December 31,
2023
Real estate owned$63,961 $70,590 
Operating lease right-of-use assets63,243 67,019 
Prepaid expenses40,599 32,910 
Deferred tax assets, net13,709 17,277 
Derivative instruments10,039 17,311 
Service fee receivables9,669 9,080 
Income tax deposits7,427 8,735 
Other68,975 70,334 
Total$277,622 $293,256 
Note 7: Borrowings
The Company is in compliance in all material respects with all covenants under its financing arrangements as of March 31, 2024. The components of the Company’s consolidated borrowings were as follows (in thousands):
March 31,
2024		December 31,
2023
Global senior secured revolving credit facility$367,739 $816,880 
Encore private placement notes19,540 29,310 
Senior secured notes2,128,357 1,654,989 
Convertible senior notes
330,000 330,000 
Cabot securitisation senior facility322,110 324,646 
U.S. facility
175,000 175,000 
Other65,902 24,904 
Finance lease liabilities2,262 2,818 
3,410,910 3,358,547 
Less: debt discount and issuance costs, net of amortization(46,881)(40,516)
Total$3,364,029 $3,318,031 
Encore is the parent of the restricted group for the Global Senior Facility, the Senior Secured Notes and the Encore Private Placement Notes, each of which is guaranteed by the same group of material Encore subsidiaries and secured by the same collateral, which represents substantially all of the assets of those subsidiaries.
Global Senior Secured Revolving Credit Facility
In September 2020, the Company entered into a multi-currency senior secured revolving credit facility agreement (as amended and restated, the “Global Senior Facility”). As of March 31, 2024, the Global Senior Facility provided for a total committed facility of $1,203.0 million that matures in September 2027 and includes the following key provisions:
•Interest at Term SOFR (or EURIBOR for any loan drawn in Euro or a rate based on SONIA for any loan drawn in British Pound), with a Term SOFR (or EURIBOR or SONIA) floor of 0.00%, plus a margin of 2.50%, plus in the case of Term SOFR borrowings, a credit adjustment spread of 0.10%;
•An unused commitment fee of 0.40% per annum, payable quarterly in arrears;
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•A restrictive covenant that limits the LTV Ratio (defined in the Global Senior Facility) to 0.75 in the event that the Global Senior Facility is more than 20% utilized;
•A restrictive covenant that limits the SSRCF LTV Ratio (defined in the Global Senior Facility) to 0.275;
•A restrictive covenant that requires the Company to maintain a Fixed Charge Coverage Ratio (as defined in the Global Senior Facility) of at least 2.0;
•Additional restrictions and covenants which limit, among other things, the payment of dividends and the incurrence of additional indebtedness and liens; and
•Standard events of default which, upon occurrence, may permit the lenders to terminate the Global Senior Facility and declare all amounts outstanding to be immediately due and payable.
The Global Senior Facility is secured by substantially all of the assets of the Company and the guarantors. Pursuant to the terms of an intercreditor agreement entered into with respect to the relative positions of (1) the Global Senior Facility, any super priority hedging liabilities and the Encore Private Placement Notes (collectively, “Super Senior Liabilities”) and (2) the Senior Secured Notes, Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.
As of March 31, 2024, the outstanding borrowings under the Global Senior Facility were $367.7 million. The weighted average interest rate of the Global Senior Facility was 7.89% and 7.06% for the three months ended March 31, 2024 and 2023, respectively. Available capacity under the Global Senior Facility, after taking into account applicable debt covenants, was approximately $827.3 million as of March 31, 2024.
Encore Private Placement Notes
In August 2017, Encore entered into $325.0 million in senior secured notes with a group of insurance companies (the “Encore Private Placement Notes”). As of March 31, 2024, $19.5 million of the Encore Private Placement Notes remained outstanding. The Encore Private Placement Notes bear an annual interest rate of 5.625%, mature in August 2024 and require quarterly principal payments of $9.8 million. The covenants and material terms for the Encore Private Placement Notes are substantially similar to those for the Global Senior Facility.
Senior Secured Notes
The following table provides a summary of the Company’s senior secured notes (the “Senior Secured Notes”) ($ in thousands):
March 31,
2024		December 31,
2023		Issue
Currency		Maturity DateInterest Payment DatesInterest Rate
2025 Notes
$377,762 $386,324 EUROct 15, 2025Apr 15, Oct 154.875 %
2026 Notes
378,952 381,937 GBPFeb 15, 2026Feb 15, Aug 155.375 %
2028 Notes
315,794 318,280 GBPJun 1, 2028Jun 1, Dec 14.250 %
2028 Floating Rate Notes
555,849 568,448 EURJan 15, 2028Jan 15, Apr 15, Jul 15, Oct 15
EURIBOR +4.250%(1)
2029 Notes
500,000 — 
USD
Apr 1, 2029
Apr 1, Oct 1
9.250 %
$2,128,357 $1,654,989 
_______________________
(1)Interest rate is based on three-month EURIBOR (subject to a 0% floor) plus 4.250% per annum, resets quarterly.
The Senior Secured Notes are secured by the same collateral as the Global Senior Facility and the Encore Private Placement Notes. The guarantees provided in respect of the Senior Secured Notes are pari passu with each such guarantee given in respect of the Global Senior Facility and Encore Private Placement Notes. Subject to the intercreditor agreement described above under the section “Global Senior Secured Revolving Credit Facility,” Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.
In March 2024, Encore issued $500.0 million in aggregate principal amount of 9.250% Senior Secured Notes due April 2029 at an issue price of 100.000% (the “2029 Notes”). Interest on the 2029 Notes is payable semi-annually, in arrears, on April 1 and October 1 of each year, commencing on October 1, 2024. The Company used the proceeds from this offering to pay down $493.0 million of the drawings under its Global Senior Facility and to pay certain transaction fees and expenses incurred in connection with the offering of the 2029 Notes.
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The 2028 Floating Rate Notes had a weighted average interest rate of 8.12% and 6.38% for the three months ended March 31, 2024 and 2023, respectively. As discussed in “Note 4: Derivatives and Hedging Instruments,” the Company uses interest rate derivative contracts to manage its risk related to the interest rate fluctuation in its variable interest rate bearing debt. The weighted average interest rate of the 2028 Floating Rate Notes including the effect of the hedging instruments was 5.01% and 4.33% for the three months ended March 31, 2024 and 2023, respectively.
Convertible Notes
The following table provides a summary of the principal balance, maturity date and interest rate for the Company’s convertible senior notes (the “Convertible Notes”) ($ in thousands):
March 31,
2024		December 31,
2023		Maturity DateInterest Payment DatesInterest Rate
2025 Convertible Notes$100,000 $100,000 Oct 1, 2025Apr 1, Oct 13.250 %
2029 Convertible Notes230,000 230,000 Mar 15, 2029Mar 15, Sep 154.000 %
$330,000 $330,000 
In order to reduce the risk related to the potential dilution and/or the potential cash payments the Company may be required to make in the event that the market price of the Company’s common stock becomes greater than the conversion prices of the Convertible Notes, the Company may enter into hedge programs that increase the effective conversion price for the Convertible Notes. In connection with the issuance of the 2029 Convertible Notes, the Company entered into privately negotiated capped call transactions that effectively raised the conversion price of the 2029 Convertible Notes from $65.89 to $82.69. These hedging instruments have been determined to be indexed to the Company’s own stock and meet the criteria for equity classification. The Company recorded the cost of the hedge instruments as a reduction in additional paid-in capital, and does not recognize subsequent changes in fair value of these financial instruments in its condensed consolidated financial statements. The Company did not hedge the 2025 Convertible Notes.
Certain key terms related to the convertible features as of March 31, 2024 are listed below ($ in thousands, except conversion price):
2025 Convertible Notes2029 Convertible Notes
Initial conversion price
$40.00 $65.89 
Closing stock price at date of issuance$32.00 $51.68 
Closing stock price dateSep 4, 2019Feb 28, 2023
Initial conversion rate (shares per $1,000 principal amount)
25.0000 15.1763 
Adjusted conversion rate (shares per $1,000 principal amount)(1)
25.1310 15.1763 
Adjusted conversion price(1)
$39.79 $65.89 
Adjusted effective conversion price(2)
$39.79 $82.69 
Excess of if-converted value compared to principal(3)
$14,622 $— 
Conversion date
Jul 1, 2025Dec 15, 2028
_______________________
(1)Pursuant to the indenture for the Company’s 2025 Convertible Notes, the conversion rate for the 2025 Convertible Notes was adjusted upon the completion of the Company’s tender offer in December 2021.
(2)As discussed above, the Company maintains a hedge program that increases the effective conversion price for the 2029 Convertible Notes to $82.69.
(3)Represents the premium the Company would have to pay assuming the Convertible Notes were converted on March 31, 2024 using a hypothetical share price based on the closing stock price on March 28, 2024, the last trading day for the three months ended March 31, 2024.
In the event of conversion, the Convertible Notes are convertible into cash up to the aggregate principal amount of the notes and the excess conversion premium, if any, may be settled in cash or shares of the Company’s common stock at the Company’s election and subject to certain restrictions contained in each of the indentures governing the Convertible Notes.
Interest expense related to the Convertible Notes was $3.1 million and $2.9 million during the three months ended March 31, 2024 and 2023, respectively.


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Cabot Securitisation Senior Facility
Cabot Securitisation UK Ltd (“Cabot Securitisation”), an indirect subsidiary of Encore, has a senior facility for a committed amount of £255.0 million (as amended, the “Cabot Securitisation Senior Facility”). Funds drawn under the Cabot Securitisation Senior Facility bear interest at a rate per annum equal to SONIA plus a margin of 3.20% plus, for periods after September 18, 2026, a step up margin ranging from 0% to 1.00%. The Cabot Securitisation Senior Facility matures in September 2028.
As of March 31, 2024, the outstanding borrowings under the Cabot Securitisation Senior Facility were £255.0 million (approximately $322.1 million based on an exchange rate of $1.00 to £0.79, the exchange rate as of March 31, 2024). The obligations of Cabot Securitisation under the Cabot Securitisation Senior Facility are secured by first ranking security interests over all of Cabot Securitisation’s property, assets and rights (including receivables purchased from Cabot Financial UK from time to time), the book value of which was approximately £329.2 million (approximately $415.8 million based on an exchange rate of $1.00 to £0.79, the exchange rate as of March 31, 2024) as of March 31, 2024. The weighted average interest rate of the Cabot Securitisation Senior Facility was 8.40% and 6.87% for the three months ended March 31, 2024 and 2023, respectively. As discussed in “Note 4, Derivatives and Hedging Instruments,” the Company uses interest rate cap contracts to manage its risk related to the interest rate fluctuations in its variable interest rate bearing debt. The weighted average interest rate of the Cabot Securitisation Senior Facility including the effect of the hedging instruments was 5.51% and 5.25% for the three months ended March 31, 2024 and 2023, respectively.
Cabot Securitisation is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 8: Variable Interest Entities” for further details.
U.S. Facility
In October 2023, an indirect subsidiary of Encore (“U.S. Financing Subsidiary”), entered into a facility for a committed amount of $175.0 million (the “U.S. Facility”). The U.S. Facility matures in October 2026. Funds drawn under the U.S. Facility bear interest at a rate per annum equal to Term SOFR plus a margin of 3.5%.
As of March 31, 2024, the outstanding borrowings under the U.S. Facility were $175.0 million. The obligations under the U.S. Facility are secured by first ranking security interests over all of U.S. Financing Subsidiary’s assets and rights. As of March 31, 2024, this included receivables acquired from MCM, the book value of which was approximately $319.8 million. The weighted average interest rate of the U.S. Facility was 8.93% for the three months ended March 31, 2024. As discussed in “Note 4: Derivatives and Hedging Instruments,” the Company uses interest rate derivative contracts to manage its risk related to the interest rate fluctuation in its variable interest rate bearing debt. The weighted average interest rate of the U.S. Facility including the effect of the hedging instruments was 8.08% for the three months ended March 31, 2024.
The U.S. Facility is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 8: Variable Interest Entities” for further details.
Note 8: Variable Interest Entities
A VIE is defined as a legal entity whose equity owners do not have sufficient equity at risk, or, as a group, the holders of the equity investment at risk lack any of the following three characteristics: decision-making rights, the obligation to absorb expected losses, or the right to receive expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and the obligation to absorb expected losses or the right to receive residual returns from the entity that could potentially be significant to the VIE. The Company consolidates VIEs when it is the primary beneficiary.
As of March 31, 2024, the Company’s VIEs include certain securitized financing vehicles and other immaterial special purpose entities that were created to purchase receivable portfolios in certain geographies. The Company is the primary beneficiary of these VIEs. The Company has the power to direct the activities of the VIEs including the ability to exercise discretion in the servicing of the financial assets and has the right to receive residual returns that could potentially be significant to the VIEs. The Company’s exposure to loss is limited to the total of the carrying value of the VIEs. The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary.
Most assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the VIE.
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Note 9: Accumulated Other Comprehensive Loss
A summary of the Company’s changes in accumulated other comprehensive loss by component is presented below (in thousands):
Three Months Ended March 31, 2024
 DerivativesCurrency Translation AdjustmentsAccumulated Other Comprehensive Loss
Balance at beginning of period$(3,093)$(120,827)$(123,920)
Other comprehensive loss before reclassification
(7,987)(6,146)(14,133)
Reclassification13,462 — 13,462 
Tax effect(2,685)(160)(2,845)
Balance at end of period$(303)$(127,133)$(127,436)
Three Months Ended March 31, 2023
 DerivativesCurrency Translation AdjustmentsAccumulated Other Comprehensive Loss
Balance at beginning of period$36,494 $(135,310)$(98,816)
Other comprehensive (loss) income before reclassification
(4,858)16,008 11,150 
Reclassification(3,195)— (3,195)
Tax effect876 (383)493 
Balance at end of period$29,317 $(119,685)$(90,368)
Note 10: Income Taxes
The Company’s effective tax rate for the three months ended March 31, 2024 was 23.8%. For the three months ended March 31, 2023, the Company’s effective tax rate was 25.6%. For the three months ended March 31, 2024, the difference between the effective tax rate and the federal statutory rate was primarily due to state income taxes offset by other foreign adjustments. For the three months ended March 31, 2023, the difference between the effective tax rate and the federal statutory rate was primarily due to state income taxes offset by other foreign adjustments.
Each interim period is considered an integral part of the annual period and tax expense or benefit is measured using an estimated annual effective income tax rate. The estimated annual effective tax rate for the full year is applied to the respective interim period, taking into account year-to-date amounts and projected amounts for the year. Since the Company operates in foreign countries with varying tax rates, the Company’s quarterly effective tax rate is dependent on the level of income or loss from international operations in the reporting period.
The Company’s subsidiary in Costa Rica is operating under a 100% tax holiday through December 31, 2026. The impact of the tax holiday in Costa Rica for the three months ended March 31, 2024 and 2023, was immaterial.
The Company is subject to income taxes in the U.S. and foreign jurisdictions. Significant judgement is required in evaluating uncertain tax positions and determining the provision for income taxes.
In December 2021, the Organization for Economic Cooperation and Development (“OECD”) enacted model rules for a new global minimum tax framework (“Pillar Two”). Under the Pillar Two rules, a company is required to determine a combined effective tax rate for each jurisdiction. If the jurisdictional effective tax rate determined under the Pillar Two rules is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. In December 2022, European Union Member States adopted a directive implementing the Pillar Two rules requiring Member States to enact the directive into their national laws and these began to go into effect from January 1, 2024. The Company has estimated the applicable top-up tax and recorded this in tax expense for the three months ended March 31, 2024. The estimated impact of top-up tax for the quarter was immaterial.
Note 11: Commitments and Contingencies
Litigation and Regulatory
The Company is involved in disputes, legal actions, regulatory investigations, inquiries, and other actions from time to time in the ordinary course of business. The Company, along with others in its industry, is routinely subject to legal actions asserting various claims, including those based on the Fair Debt Collection Practices Act (“FDCPA”), the Fair Credit Reporting
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Act (“FCRA”), the Telephone Consumer Protection Act (“TCPA”), comparable state statutes, state and federal unfair competition statutes, and common law causes of action. The violations of law investigated or alleged in these actions often include claims that the Company lacks specified licenses to conduct its business, attempts to collect debts on which the statute of limitations has run, has made inaccurate or unsupported assertions of fact in support of its collection actions and/or has acted improperly in connection with its efforts to contact consumers. Such litigation and regulatory actions could involve potential compensatory or punitive damage claims, fines, sanctions, injunctive relief, or changes in business practices. Many continue on for some length of time and involve substantial investigation, litigation, negotiation, and other expense and effort before a result is achieved, and during the process the Company often cannot determine the substance or timing of any eventual outcome.
As of March 31, 2024, there were no material developments in any of the legal proceedings disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 or any new material legal proceedings during the three months ended March 31, 2024.
In certain legal proceedings, the Company may have recourse to insurance or third-party contractual indemnities to cover all or portions of its litigation expenses, judgments, or settlements. The Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. The Company continuously assesses the potential liability related to its pending litigation and regulatory matters and revises its estimates when additional information becomes available. The Company’s legal costs are recorded to expense as incurred. As of March 31, 2024, the Company has no material reserves for legal matters.
Purchase Commitments
In the normal course of business, the Company enters into forward flow purchase agreements. A forward flow purchase agreement is a commitment to purchase receivables over a duration that is typically three to twelve months, but can be longer, generally with a specifically defined volume range, frequency, and pricing. Typically, these forward flow contracts have provisions that allow for early termination or price re-negotiation should the underlying quality of the portfolio deteriorate over time or if any particular month’s delivery is materially different than the original portfolio used to price the forward flow contract. Certain of these forward flow purchase agreements may also have termination clauses, whereby the agreements can be canceled by either party upon providing a certain specified amount of notice.
As of March 31, 2024, the Company had entered into forward flow purchase agreements for the purchase of nonperforming loans with an estimated minimum aggregate purchase price of approximately $598.9 million. The Company expects actual purchases under these forward flow purchase agreements to be significantly greater than the estimated minimum aggregate purchase price.
Note 12: Segment and Geographic Information
The Company conducts business through several operating segments. The Company’s Chief Operating Decision Maker relies on internal management reporting processes that provide segment revenue, segment operating income, and segment asset information in order to make financial decisions and allocate resources. The Company determined its operating segments meet the aggregation criteria, and therefore, it has one reportable segment, portfolio purchasing and recovery, based on similarities among the operating units including economic characteristics, the nature of the services, the nature of the production process, customer types for their services, the methods used to provide their services and the nature of the regulatory environment.
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The following table presents information about geographic areas in which the Company operates (in thousands):
 Three Months Ended
March 31,
 20242023
Total revenues:
United States$219,136 $200,218 
Europe
United Kingdom72,427 77,985 
Other European countries(1)
36,104 34,238 
Total Europe108,531 112,223 
Other geographies(1)
719 189 
Total$328,386 $312,630 
________________________
(1)None of these countries comprise greater than 10% of the Company's consolidated revenues.

Note 13: Goodwill and Identifiable Intangible Assets
The Company’s goodwill is tested for impairment at the reporting unit level annually and in interim periods if certain events occur that indicate that the fair value of a reporting unit may be below its carrying value. Determining the number of reporting units and the fair value of a reporting unit requires the Company to make judgments and involves the use of significant estimates and assumptions.
The annual goodwill testing date for the reporting units that are included in the portfolio purchasing and recovery reportable segment is October 1st. There have been no events or circumstances during the three months ended March 31, 2024, that have required the Company to perform an interim assessment of goodwill carried at these reporting units. Management continues to evaluate and monitor all key factors impacting the carrying value of the Company’s recorded goodwill and intangible assets. Adverse changes in the Company’s actual or expected operating results, market capitalization, business climate, economic factors or other negative events that may be outside the control of management could result in a material non-cash impairment charge in the future.
The Company’s goodwill is attributable to the MCM and Cabot reporting units included in its portfolio purchasing and recovery segment. The following table summarizes the activity in the Company’s goodwill balance (in thousands):
MCM
Cabot(1)
Total
Balance as of December 31, 2023$148,936 $457,539 $606,475 
Effect of foreign currency translation— (4,075)(4,075)
Balance as of March 31, 2024
$148,936 $453,464 $602,400 
______________________
(1)The amount is net of accumulated goodwill impairment loss of $238.2 million as of March 31, 2024 and December 31, 2023, related to the Cabot reporting unit.
MCM
Cabot
Total
Balance as of December 31, 2022
$148,936 $672,278 $821,214 
Effect of foreign currency translation— 12,960 12,960 
Balance as of March 31, 2023
$148,936 $685,238 $834,174 
There was no accumulated goodwill impairment loss as of March 31, 2023 and December 31, 2022.
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The Company’s acquired intangible assets are summarized as follows (in thousands):
 As of March 31, 2024As of December 31, 2023
 Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount		Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount
Trade name and other$918 $(918)$— $918 $(870)$48 
Total intangible assets$918 $(918)$— $918 $(870)$48 

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Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains “forward-looking statements” relating to Encore Capital Group, Inc. (“Encore”) and its subsidiaries (which we may collectively refer to as the “Company,” “we,” “our” or “us”) within the meaning of the securities laws. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” “plan,” “will,” “may,” and similar expressions often characterize forward-looking statements. These statements may include, but are not limited to, projections of collections, revenues, income or loss, estimates of capital expenditures, plans for future operations, products or services, and financing needs or plans, as well as assumptions relating to these matters. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we caution that these expectations or predictions may not prove to be correct or we may not achieve the financial results, savings, or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control or cannot be predicted or quantified, that could cause actual results to differ materially from those suggested by the forward-looking statements. Many factors including, but not limited to, those set forth in our Annual Report on Form 10-K under “Part I, Item 1A—Risk Factors” could cause our actual results, performance, achievements, or industry results to be very different from the results, performance, achievements or industry results expressed or implied by these forward-looking statements. Our business, financial condition, or results of operations could also be materially and adversely affected by other factors besides those listed. Forward-looking statements speak only as of the date the statements were made. We do not undertake any obligation to update or revise any forward-looking statements to reflect new information or future events, or for any other reason, even if experience or future events make it clear that any expected results expressed or implied by these forward-looking statements will not be realized. In addition, it is generally our policy not to make any specific projections as to future earnings, and we do not endorse projections regarding future performance that may be made by third parties.
Our Business
We are an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. We purchase portfolios of defaulted consumer receivables at deep discounts to face value and manage them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial commitments to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. We also provide debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.
Encore Capital Group, Inc. (“Encore”) has three business units: MCM, which consists of Midland Credit Management, Inc. and its subsidiaries and domestic affiliates; Cabot, which consists of Cabot Credit Management Limited (“CCM”) and its subsidiaries and European affiliates, and LAAP, which is comprised of our investments and operations in Latin America and Asia-Pacific.
MCM (United States)
Through MCM, we are a market leader in portfolio purchasing and recovery in the United States.
Cabot (Europe)
Through Cabot, we are one of the largest credit management services providers in Europe and the United Kingdom. Cabot, in addition to its primary business of portfolio purchasing and recovery, also provides a range of debt servicing offerings such as early stage collections, business process outsourcing (“BPO”), and contingent collections, including through Wescot Credit Services Limited (“Wescot”), a leading UK contingency debt collection and BPO services company.
LAAP (Latin America and Asia-Pacific)
We have purchased non-performing loans in Mexico. Additionally, we have invested in Encore Asset Reconstruction Company (“EARC”) in India.
To date, operating results from LAAP have not been significant to our total consolidated operating results. Our long-term growth strategy is focused on continuing to invest in our core portfolio purchasing and recovery business in the United States and United Kingdom and strengthening and developing our business in the rest of Europe.
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Government Regulation
MCM (United States)
As discussed in more detail under “Part I - Item 1 - Business - Government Regulation” contained in our Annual Report on Form 10-K, our operations in the United States are subject to federal, state and municipal statutes, rules, regulations and ordinances that establish specific guidelines and procedures that debt purchasers and collectors must follow when collecting consumer accounts, including among others, specific guidelines and procedures for communicating with consumers and prohibitions on unfair, deceptive or abusive debt collection practices.
Cabot (Europe)
As discussed in more detail under “Part I - Item 1 - Business - Government Regulation” contained in our Annual Report on Form 10-K, our operations in Europe are affected by foreign statutes, rules and regulations regarding debt collection and debt purchase activities. These statutes, rules, regulations, ordinances, guidelines and procedures are modified from time to time by the relevant authorities charged with their administration, which could affect the way we conduct our business.
Portfolio Purchasing and Recovery
MCM (United States)
In the United States, the defaulted consumer receivable portfolios we purchase are primarily charged-off credit card debt portfolios. A small percentage of our capital deployment in the United States is comprised of receivable portfolios subject to Chapter 13 and Chapter 7 bankruptcy proceedings.
We purchase receivables based on robust, account-level valuation methods and employ proprietary statistical and behavioral models across our U.S. operations. These methods and models generally allow us to value portfolios accurately (limiting the risk of overpaying), avoid buying portfolios that are incompatible with our methods or strategies and align the accounts we purchase with our business channels to maximize future collections. As a result, we have been able to realize significant returns from the receivables we acquire. We maintain strong relationships with many of the largest financial service providers in the United States.
Cabot (Europe)
In Europe, our purchased defaulted debt portfolios primarily consist of paying and non-paying consumer loan accounts. We also purchase: (1) portfolios that are in insolvency status, in particular, individual voluntary arrangements; and (2) non-performing secured mortgage portfolios and real estate assets previously securing mortgage portfolios. When we take possession of the underlying real estate assets or purchase real estate assets, we refer to those as real estate-owned assets, or REO assets.
We purchase paying and non-paying receivable portfolios using a proprietary pricing model that utilizes account-level statistical and behavioral data. This model generally allows us to value portfolios accurately and quantify portfolio performance in order to maximize future collections. As a result, we have been able to realize significant returns from the assets we have acquired. We maintain strong relationships with many of the largest financial services providers in the United Kingdom and Europe.
Purchases and Collections
Portfolio Pricing, Supply and Demand
MCM (United States)
With lending surpassing pre-pandemic levels and with rising delinquency rates, we have seen an increase in supply. Issuers have continued to sell predominantly fresh portfolios. Fresh portfolios are portfolios that are generally sold within six months of the consumer’s account being charged-off by the financial institution. Pricing in the first quarter remained at favorable levels as a result of elevated market supply. Issuers continue to sell their volume in mostly forward flow arrangements that are often committed early in the calendar year. We believe growth in lending and rising delinquency rates will drive continued growth in supply.
We believe that smaller competitors continue to face difficulties in the portfolio purchasing market because of the high cost to operate due to regulatory pressure and increasing cost of capital. We believe this favors larger participants, like MCM, because the larger market participants are better able to adapt to these pressures and commit to larger forward flow agreements and fluctuating volumes.
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Cabot (Europe)
The UK market for charged-off portfolios prior to the COVID-19 pandemic generally provided a relatively consistent pipeline of opportunities, despite a historically low level of charge-off rates, as creditors had embedded debt sales as an integral part of their business models. The percentage of volume that is sold in multi-year forward flow arrangements is increasing.
The Spain and France debt markets continue to be two of the largest in Europe with significant debt sales and an expectation of a significant amount of debt to be sold in the future. Financial institutions continue to look to dispose of non-performing loans in these markets.
Banks decreased portfolio sales at the beginning of the COVID-19 pandemic in order to focus on customers’ needs. While we have seen a resumption of sales activity across all of our European markets, underlying default rates are generally low by historic levels, and sales levels are expected to fluctuate from quarter to quarter. In general, supply remains slightly below pre-pandemic levels while portfolio pricing remains competitive across our European footprint.
Purchases by Geographic Location
The following table summarizes purchases of receivable portfolios by geographic location during the periods presented (in thousands):
 Three Months Ended
March 31,
 20242023
MCM (United States)$236,509 $213,452 
Cabot (Europe)59,205 62,979 
Total purchases of receivable portfolios$295,714 $276,431 
In the United States, capital deployment increased during the three months ended March 31, 2024, as compared to the corresponding period in the prior year. The majority of our deployments in the U.S. come from forward flow agreements, and the timing, contract duration, and volumes for each contract can fluctuate leading to variation when comparing to prior periods. Portfolio purchases in the U.S. were robust as supply increased and pricing improved.
In Europe, capital deployment decreased during the three months ended March 31, 2024, as compared to the corresponding period in the prior year, primarily driven by continued competitive pricing environment in Europe. The decrease was partially offset by the favorable impact from foreign currency translation driven by the weakening of the U.S. dollar against the British Pound.
During the three months ended March 31, 2024 and 2023, we invested $0.2 million and $22.6 million in REO assets, respectively.
Collections from Purchased Receivables by Channel and Geographic Location
We utilize three channels for the collection of our purchased receivables: call center and digital collections; legal collections; and collection agencies. The call center and digital collections channel consists of collections that result from our call centers, direct mail program and online collections. The legal collections channel consists of collections that result from our internal legal channel or from our network of retained law firms. The collection agencies channel consists of collections from third-party collections agencies to whom we pay a fee or commission. We utilize this channel to supplement capacity in our internal call centers, to service accounts in regions where we do not have collections operations or for accounts purchased where we maintain the collection agency servicing relationship. The following table summarizes the total collections by collection channel and geographic area during the periods presented (in thousands):
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 Three Months Ended
March 31,
 20242023
MCM (United States):
Call center and digital collections$235,091 $191,105 
Legal collections128,903 137,511 
Collection agencies5,484 54 
Subtotal369,478 328,670 
Cabot (Europe):
Call center and digital collections56,647 56,998 
Legal collections48,694 43,709 
Collection agencies35,356 32,081 
Subtotal140,697 132,788 
Other geographies:712 898 
Total collections from purchased receivables$510,887 $462,356 
Gross collections from purchased receivables increased by $48.5 million, or 10.5%, to $510.9 million during the three months ended March 31, 2024, as compared to $462.4 million during the three months ended March 31, 2023. The increase in collections in the United States was primarily a result of consistent increases in capital deployments in the United States in recent quarters. Collections in Europe was favorably impacted by foreign currency translation by approximately $4.5 million, primarily as a result of the weakening of the U.S. dollar against the British Pound for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

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Results of Operations
Results of operations, in dollars and as a percentage of total revenues, were as follows for the periods presented (in thousands, except percentages):
 Three Months Ended March 31,
 20242023
Revenues
Revenue from receivable portfolios$315,852 96.2 %$295,674 94.6 %
Changes in recoveries(12,409)(3.8)%(9,501)(3.1)%
Total debt purchasing revenue303,443 92.4 %286,173 91.5 %
Servicing revenue20,379 6.2 %22,585 7.2 %
Other revenues4,564 1.4 %3,872 1.3 %
Total revenues328,386 100.0 %312,630 100.0 %
Operating expenses
Salaries and employee benefits104,184 31.7 %103,850 33.2 %
Cost of legal collections58,721 17.9 %54,101 17.4 %
General and administrative expenses36,241 11.0 %37,965 12.1 %
Other operating expenses30,367 9.2 %27,556 8.8 %
Collection agency commissions7,434 2.3 %8,150 2.6 %
Depreciation and amortization7,848 2.4 %10,870 3.5 %
Total operating expenses244,795 74.5 %242,492 77.6 %
Income from operations83,591 25.5 %70,138 22.4 %
Other expense
Interest expense(55,765)(17.0)%(46,835)(15.0)%
Other income, net
2,666 0.8 %1,732 0.6 %
Total other expense(53,099)(16.2)%(45,103)(14.4)%
Income before income taxes30,492 9.3 %25,035 8.0 %
Provision for income taxes(7,253)(2.2)%(6,409)(2.0)%
Net income $23,239 7.1 %$18,626 6.0 %
Comparison of Results of Operations
Revenues
Our revenues primarily include debt purchasing revenue, which is revenue recognized from engaging in debt purchasing and recovery activities. We apply our charge-off policy and fully write-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables we acquire immediately after purchasing the portfolio. We then record a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which is presented as “Investment in receivable portfolios, net” in our condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) established based on the purchase price of the portfolio and the expected future cash flows at the time of purchase.
Debt purchasing revenue includes two components:
(1)     Revenue from receivable portfolios, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR), and also includes all revenue from zero basis portfolio (“ZBA”) collections, and
(2)     Changes in recoveries, which includes
(a)     Recoveries above or below forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and
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(b)     Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases).
Certain pools already fully recovered their cost basis and became zero basis portfolios (“ZBA”) prior to our adoption of the accounting standard for Financial Instruments - Credit Losses (“CECL”) in January 2020. We did not establish a negative allowance for these pools as we elected the Transition Resource Group for Credit Losses’ practical expedient to retain the integrity of these legacy pools. Similar to how we treated ZBA collections prior to the adoption of CECL, all subsequent collections to the ZBA pools are recognized as ZBA revenue, which is included in revenue from receivable portfolios in our condensed consolidated statements of income.
Servicing revenue consists primarily of fee-based income earned on accounts collected on behalf of others, primarily credit originators. We earn fee-based income by providing debt servicing (such as early stage collections, BPO, contingent collections, trace services and litigation activities) to credit originators for non-performing loans in Europe.
Other revenues primarily include revenues recognized from the sale of real estate assets that are acquired as a result of our investments in non-performing secured residential mortgage portfolios as well as direct acquisition of real estate assets in Europe and LAAP.
The following table summarizes revenues for the periods presented (in thousands, except percentages):
Three Months Ended March 31,
20242023$ Change
% Change
Revenue recognized from portfolio basis$309,748 $288,390 $21,358 7.4 %
ZBA revenue6,104 7,284 (1,180)(16.2)%
Revenue from receivable portfolios315,852 295,674 20,178 6.8 %
Recoveries above (below) forecast
853 (15,358)16,211 
Changes in expected future recoveries(13,262)5,857 (19,119)
Changes in recoveries(12,409)(9,501)(2,908)30.6 %
Debt purchasing revenue303,443 286,173 17,270 6.0 %
Servicing revenue20,379 22,585 (2,206)(9.8)%
Other revenues4,564 3,872 692 17.9 %
Total revenues$328,386 $312,630 $15,756 5.0 %
Our operating results are impacted by foreign currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The strengthening of the U.S. dollar relative to other foreign currencies has an unfavorable impact on our international revenues, and the weakening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international revenues. Our revenues were favorably impacted by foreign currency translation by approximately $4.4 million, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 4.2% for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
The increase in revenue recognized from portfolio basis during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to a higher portfolio basis (i.e. a higher investment in receivable balance) in the U.S. driven by a consistent higher volume of purchases in the past several quarters. The increase was also attributable to the favorable impact from foreign currency translation as discussed above.
As discussed above, ZBA revenue represents collections from our legacy ZBA pools. We expect our ZBA revenue to continue to decline as we collect on these legacy pools. We do not expect to have new ZBA pools in the future.
Recoveries above or below forecast represent over and under-performance in the reporting period, respectively. Collections during the three months ended March 31, 2024, were slightly above the forecasted collections. Collections during the three months ended March 31, 2023, under-performed the forecasted collections by approximately $15.4 million.
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When reassessing the forecasts of expected lifetime recoveries during the three months ended March 31, 2024, management considered, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment. The updated forecast resulted in changes in timing and amount of total estimated remaining collections which in turn, when discounted to present value, resulted in a net negative change in expected future recoveries of approximately $13.3 million during the three months ended March 31, 2024. During the three months ended March 31, 2023, we recorded approximately $5.9 million in net positive change in expected future period recoveries.
The following tables summarize collections from purchased receivables, revenue from receivable portfolios, end of period receivable balance and other related supplemental data, by year of purchase (in thousands, except percentages):
 Three Months Ended March 31, 2024As of March 31, 2024
 CollectionsRevenue from Receivable PortfoliosChanges in RecoveriesInvestment in Receivable PortfoliosMonthly EIR
United States:
ZBA$6,103 $6,103 $— $— — %
20112,537 2,561 (135)893 88.6 %
20123,005 3,016 (254)2,237 42.0 %
20136,862 6,591 (239)5,091 40.5 %
20144,270 3,190 (338)14,853 6.7 %
20154,087 2,175 868 17,997 3.9 %
20167,072 4,041 832 31,303 4.2 %
201710,514 6,915 (226)38,986 5.5 %
201817,787 9,812 136 75,984 4.0 %
201931,241 17,841 (1,666)145,804 3.8 %
202036,725 20,177 (1,779)168,902 3.7 %
202138,179 20,035 135 157,792 3.9 %
202271,316 35,683 (2,728)360,126 3.1 %
2023120,713 76,539 1,036 747,765 3.3 %
2024
9,067 8,919 (105)236,192 3.6 %
Subtotal369,478 223,598 (4,463)2,003,925 3.7 %
Europe:
ZBA1 1 — — — %
201313,638 12,018 (1,727)121,115 3.2 %
201412,267 10,572 (1,507)114,907 3.0 %
20158,316 6,505 (1,040)85,297 2.5 %
2016(1)
8,052 5,915 (359)72,667 2.8 %
201710,083 6,680 (1,231)114,382 1.9 %
201811,405 7,211 (3,683)147,508 1.6 %
201912,181 7,338 (629)126,348 1.9 %
20208,252 5,442 (303)79,466 2.2 %
202113,898 9,177 (41)158,910 1.9 %
202216,913 9,112 (117)187,886 1.6 %
202322,424 10,725 1,268 234,198 1.5 %
2024
3,267 1,558 741 57,959 2.2 %
Subtotal140,697 92,254 (8,628)1,500,643 2.0 %
Other geographies:(2)
All vintages712 — 682 26,819 — %
Subtotal712 — 682 26,819 — %
Total$510,887 $315,852 $(12,409)$3,531,387 3.0 %
_______________________
(1)Portfolio balance includes non-accrual pool groups. The EIR presented is only for pool groups that accrete portfolio revenue.
(2)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.
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 Three Months Ended March 31, 2023As of March 31, 2023
 CollectionsRevenue from Receivable PortfoliosChanges in RecoveriesInvestment in Receivable PortfoliosMonthly EIR
United States:
ZBA$7,282 $7,282 $— $— — %
20113,369 3,456 (270)1,142 88.6 %
20124,268 3,788 236 2,846 42.0 %
20139,091 8,958 (232)7,036 40.5 %
20145,068 3,807 223 18,309 6.7 %
20155,391 3,019 307 24,302 3.9 %
20169,909 5,628 388 42,713 4.1 %
201717,050 10,094 1,523 57,095 5.5 %
201826,778 14,792 (1,590)115,323 4.0 %
201949,207 26,266 1,932 215,788 3.8 %
202058,497 30,246 1,290 254,268 3.7 %
202154,488 31,920 (3,395)254,059 3.9 %
202270,880 49,136 (8,799)510,213 3.1 %
2023
7,392 6,182 4,031 216,193 2.9 %
Subtotal328,670 204,574 (4,356)1,719,287 3.9 %
Europe:
ZBA2 2 — — — %
201315,407 13,229 (896)136,996 3.2 %
201413,830 11,400 (430)127,413 3.0 %
20158,701 6,980 (721)94,781 2.5 %
2016(1)
9,347 6,548 (314)79,759 2.8 %
201713,114 7,757 (693)134,957 1.9 %
201811,960 8,320 (2,564)176,504 1.6 %
201913,885 8,258 (1,317)144,718 1.9 %
202010,359 6,215 272 91,109 2.2 %
202116,079 10,495 (344)186,092 1.9 %
202217,432 10,582 621 225,140 1.6 %
2023
2,672 1,314 1,241 64,047 1.2 %
Subtotal132,788 91,100 (5,145)1,461,516 2.1 %
Other geographies:(2)
All vintages898 — — 33,989 — %
Subtotal898 — — 33,989 — %
Total$462,356 $295,674 $(9,501)$3,214,792 3.0 %
______________________
(1)Portfolio balance includes non-accrual pool groups. The EIR presented is only for pool groups that accrete portfolio revenue.
(2)Annual pool groups for other geographies have been aggregated for disclosure purposes.
Servicing revenues during the three months ended March 31, 2024 decreased as compared to servicing revenues during the three months ended March 31, 2023. The decrease was primarily attributable to reduced demand from BPO clients.
Other revenues increased during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily driven by increase of gains recognized on the sale of real estate assets.
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Operating Expenses
The following table summarizes operating expenses for the periods presented (in thousands, except percentages):
Three Months Ended March 31,
20242023$ Change% Change
Salaries and employee benefits$104,184 $103,850 $334 0.3 %
Cost of legal collections58,721 54,101 4,620 8.5 %
General and administrative expenses36,241 37,965 (1,724)(4.5)%
Other operating expenses30,367 27,556 2,811 10.2 %
Collection agency commissions7,434 8,150 (716)(8.8)%
Depreciation and amortization7,848 10,870 (3,022)(27.8)%
Total operating expenses$244,795 $242,492 $2,303 0.9 %
Our operating results are impacted by foreign currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The strengthening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international operating expenses, and the weakening of the U.S. dollar relative to other foreign currencies has an unfavorable impact on our international operating expenses. Our operating expenses were unfavorably impacted by foreign currency translation, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 4.2% for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.
Operating expenses are explained in more detail as follows:
Salaries and Employee Benefits
The increase in salaries and employee benefits during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to the following reasons:
•Increase in employee benefits of approximately $1.6 million;
•An unfavorable impact of foreign currency translation of approximately $1.8 million driven by the weakening of the U.S. dollar against the British Pound; and
•The increase was partially offset by a decrease in costs relating to headcount reductions in Europe of approximately $2.5 million.
Cost of Legal Collections
Cost of legal collections primarily includes contingent fees paid to our external network of attorneys and the cost of litigation. We pursue legal collections using a network of attorneys that specialize in collection matters and through our internal legal channel. Under the agreements with our contracted attorneys, we advance certain out-of-pocket court costs. Cost of legal collections does not include internal legal channel employee costs, which are included in salaries and employee benefits in our condensed consolidated statements of income.
The following table summarizes our cost of legal collections during the periods presented (in thousands, except percentages):
Three Months Ended March 31,
20242023$ Change% Change
Court costs$38,087 $30,017 $8,070 26.9 %
Legal collection fees20,634 24,084 (3,450)(14.3)%
Total cost of legal collections$58,721 $54,101 $4,620 8.5 %
The increase of cost of legal collections during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to increased legal placement in this channel. The increase was also due to the unfavorable impact of foreign currency translation of approximately $0.5 million driven by the weakening of the U.S. dollar against the British Pound.

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General and Administrative Expenses
The decrease in general and administrative expense during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, was primarily due to the following reasons:
•Decrease in costs associated with legal expenses of approximately $2.2 million;
•Decrease in consulting fees of approximately $1.6 million; and
•The decrease was partially offset by an increase in information technology expenses of $2.0 million and the unfavorable impact of foreign currency translation of approximately $0.5 million driven by the weakening of the U.S. dollar against the British Pound.
Other Operating Expenses
The increase in other operating expenses during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to an increase in postage and printing expenses of approximately $2.1 million.
Collection Agency Commissions
Collection agency commissions are commissions paid to third-party collection agencies. Collections through the collections agencies channel are predominately in Europe and vary from period to period depending on, among other things, the number of accounts placed with an agency versus accounts collected internally. Commission rates vary depending on, among other things, the amount of time that has passed since the charge-off of the accounts placed with an agency, the asset class, and the geographic location of the receivables. Generally, freshly charged-off accounts have a lower commission rate than accounts that have been charged off for a longer period of time, and commission rates for purchased bankruptcy portfolios are lower than the commission rates for charged-off credit card accounts. Collection agency commissions were consistent during the three months ended March 31, 2024, compared to the three months ended March 31, 2023.
Depreciation and Amortization
The decrease in depreciation and amortization expenses during the three months ended March 31, 2024, as compared to three months ended March 31, 2023, was primarily due to a decrease in depreciation expenses of approximately $1.8 million and a decrease in amortizable expenses of approximately $1.2 million as a result of smaller depreciable and amortizable asset balances during the three months ended March 31, 2024, as compared to three months ended March 31, 2023. The intangible assets balance subject to amortization for the three months ended March 31, 2024 was negligible.
Interest Expense
The following table summarizes our interest expense for the periods presented (in thousands, except percentages):
 Three Months Ended March 31,
 20242023$ Change% Change
Stated interest on debt obligations$52,038 $42,241 $9,797 23.2 %
Amortization of debt issuance costs3,300 4,244 (944)(22.2)%
Amortization of debt discount
427 350 77 22.0 %
Total interest expense$55,765 $46,835 $8,930 19.1 %
The increase in interest expense during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to the following reasons:
•The effect resulting from increased average debt balance of approximately $6.3 million;
•The effect resulting from rising interest rates of approximately $2.1 million; and
•An unfavorable impact of foreign currency translation of approximately $0.6 million driven by the weakening of the U.S. dollar against the British Pound.
Other Income, net of Other Expense
Other income or expense consists primarily of foreign currency exchange gains or losses, interest income, and gains or losses recognized on certain transactions outside of our normal course of business. Other income, net, was $2.7 million and $1.7 million during the three months ended March 31, 2024 and 2023, respectively. The increase in other income, net, during the three months ended three months ended March 31, 2024 was primarily due to an increase in interest income of approximately $0.4 million and an increase in gain on derivative instruments of approximately $0.2 million.
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Provision for Income Taxes
Provision for income taxes and effective tax rate are as follows for the periods presented ($ in thousands):
 Three Months Ended
March 31,
20242023
Provision for income taxes$7,253 $6,409 
Effective tax rate23.8 %25.6 %
For the three months ended March 31, 2024 and 2023, the differences between our effective tax rate and the federal statutory rate were primarily due to state income taxes offset by other foreign adjustments.
Non-GAAP Disclosure
In addition to the financial information prepared in conformity with Generally Accepted Accounting Principles (“GAAP”), we provide historical non-GAAP financial information. Management believes that the presentation of such non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of our operations. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of our business that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business.
Management believes that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments, and amortization methods, which provide a more complete understanding of our financial performance, competitive position, and prospects for the future. Readers should consider the information in addition to, but not instead of, our financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of these measures for comparative purposes.
Adjusted EBITDA. Management utilizes adjusted EBITDA (defined as net income before interest income and expense, taxes, depreciation and amortization, stock-based compensation expenses, acquisition, integration and restructuring related expenses, and other charges or gains that are not indicative of ongoing operations), in the evaluation of our operating performance. Adjusted EBITDA for the periods presented is as follows (in thousands):
 Three Months Ended
March 31,
20242023
GAAP net income, as reported$23,239 $18,626 
Adjustments:
Interest expense55,765 46,835 
Interest income(1,368)(944)
Provision for income taxes7,253 6,409 
Depreciation and amortization7,848 10,870 
Net gain on derivative instruments(1)
(195)— 
Stock-based compensation expense3,357 4,052 
Acquisition, integration and restructuring related expenses(2)
2,319 5,526 
Adjusted EBITDA$98,218 $91,374 
Collections applied to principal balance(3)
$214,551 $182,981 
________________________
(1)Amount represents gain or loss recognized on derivative instruments that are not designated as hedging instruments or gain or loss recognized on derivative instruments upon dedesignation of hedge relationships. We adjust for this amount because we believe the gain or loss on derivative contracts is not indicative of ongoing operations.
(2)Amount represents acquisition, integration and restructuring related expenses. We adjust for this amount because we believe these expenses are not indicative of ongoing operations; therefore, adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.
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(3)Collections applied to principal balance is calculated in the table below:
Three Months Ended
March 31,
20242023
Collections applied to investment in receivable portfolios, net$195,035 $166,682 
Changes in recoveries12,409 9,501 
REO proceeds applied to basis
7,107 6,798 
Collections applied to principal balance$214,551 $182,981 
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Supplemental Performance Data
The tables included in this supplemental performance data section include detail for purchases, collections and ERC by year of purchase.
Our collection expectations are based on account characteristics and economic variables. Additional adjustments are made to account for qualitative factors that may affect the payment behavior of our consumers and servicing related adjustments to ensure our collection expectations are aligned with our operations. We continue to refine our process of forecasting collections both domestically and internationally with a focus on operational enhancements. Our collection expectations vary between types of portfolio and geographic location. As a result, past performance of pools in certain geographic locations or of certain types of portfolio are not necessarily a suitable indicator of future results in other locations or for other types of portfolio.
The supplemental performance data presented in this section is impacted by foreign currency translation, which represents the effect of translating financial results where the functional currency of our foreign subsidiary is different than our U.S. dollar reporting currency. For example, the strengthening of the U.S. dollar relative to other foreign currencies has an unfavorable reporting impact on our international purchases, collections, and ERC, and the weakening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international purchases, collections, and ERC.
We utilize proprietary forecasting models to continuously evaluate the economic life of each pool.
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Cumulative Collections Money Multiple - Cumulative Collections from Purchased Receivables to Purchase Price Multiple
The following table summarizes our receivable purchases, related gross collections, and cumulative collections money multiples (in thousands, except multiples):
Year of
Purchase
Purchase
Price(1)
Cumulative Collections through March 31, 2024
<20152015201620172018201920202021202220232024
Total(2)
CCMM(3)
United States:
<2015$3,762,057 $7,258,767 $1,076,324 $739,743 $519,613 $372,705 $290,351 $216,962 $186,927 $140,814 $112,180 $22,776 $10,937,162 2.9 
2015499,035 — 105,610 231,102 186,391 125,673 85,042 64,133 42,774 25,655 19,518 4,087 889,985 1.8 
2016552,972 — — 110,875 283,035 234,690 159,279 116,452 87,717 51,650 35,130 7,072 1,085,900 2.0 
2017527,471 — — — 111,902 315,853 255,048 193,328 144,243 85,348 57,985 10,514 1,174,221 2.2 
2018629,302 — — — — 175,042 351,696 308,302 228,919 144,566 89,548 17,787 1,315,860 2.1 
2019675,269 — — — — — 174,693 416,315 400,250 256,444 164,106 31,241 1,443,049 2.1 
2020537,903 — — — — — — 213,450 430,514 311,573 194,522 36,725 1,186,784 2.2 
2021403,981 — — — — — — — 120,354 240,605 188,895 38,179 588,033 1.5 
2022550,254 — — — — — — — — 98,277 268,516 71,316 438,109 0.8 
2023809,483 — — — — — — — — — 184,182 120,713 304,895 0.4 
2024236,452 — — — — — — — — — — 9,068 9,068 — 
Subtotal9,184,179 7,258,767 1,181,934 1,081,720 1,100,941 1,223,963 1,316,109 1,528,942 1,641,698 1,354,932 1,314,582 369,478 19,373,066 2.1 
Europe:
<20151,242,208 519,115 410,256 322,275 284,799 261,696 218,565 177,458 178,076 134,094 112,284 25,905 2,644,523 2.1 
2015419,941 — 65,870 127,084 103,823 88,065 72,277 55,261 57,817 42,660 36,249 8,317 657,423 1.6 
2016258,218 — — 44,641 97,587 83,107 63,198 51,609 51,017 40,214 35,278 8,052 474,703 1.8 
2017461,571 — — — 68,111 152,926 118,794 87,549 86,107 61,762 48,763 10,083 634,095 1.4 
2018432,258 — — — — 49,383 118,266 78,846 80,629 61,691 49,675 11,405 449,895 1.0 
2019273,354 — — — — — 44,118 80,502 88,448 63,607 54,544 12,181 343,400 1.3 
2020116,227 — — — — — — 22,721 59,803 45,757 37,363 8,252 173,896 1.5 
2021255,788 — — — — — — — 43,082 66,529 58,515 13,898 182,024 0.7 
2022244,508 — — — — — — — — 36,957 70,385 16,913 124,255 0.5 
2023259,255 — — — — — — — — — 40,975 22,424 63,399 0.2 
202459,205 — — — — — — — — — — 3,267 3,267 0.1 
Subtotal4,022,533 519,115 476,126 494,000 554,320 635,177 635,218 553,946 644,979 553,271 544,031 140,697 5,750,880 1.4 
Other geographies(4):
All vintages340,283 40,293 42,665 109,884 112,383 108,480 75,601 28,960 20,682 3,334 3,954 712 546,948 1.6 
Subtotal340,283 40,293 42,665 109,884 112,383 108,480 75,601 28,960 20,682 3,334 3,954 712 546,948 1.6 
Total$13,546,995 $7,818,175 $1,700,725 $1,685,604 $1,767,644 $1,967,620 $2,026,928 $2,111,848 $2,307,359 $1,911,537 $1,862,567 $510,887 $25,670,894 1.9 
________________________
(1)Adjusted for Put-Backs and Recalls. Put-Backs (“Put-Backs”) and recalls (“Recalls”) represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreement.
(2)Cumulative collections from inception through March 31, 2024, excluding collections on behalf of others.
(3)Cumulative Collections Money Multiple (“CCMM”) through March 31, 2024 refers to cumulative collections as a multiple of purchase price.
(4)Annual pool groups for other geographies have been aggregated for disclosure purposes.
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Purchase Price Multiple - Total Estimated Collections from Purchased Receivables to Purchase Price Multiple
The following table summarizes our purchases, resulting historical gross collections, estimated remaining gross collections from purchased receivables, and purchase price multiple (in thousands, except multiples):
Purchase Price(1)
Historical
Collections(2)
Estimated
Remaining
Collections		Total Estimated
Gross Collections
Purchase Price Multiple(3)
United States:
<2015(4)
$3,762,057 $10,937,162 $221,463 $11,158,625 3.0 
2015499,035 889,985 39,490 929,475 1.9 
2016552,972 1,085,900 70,405 1,156,305 2.1 
2017527,471 1,174,221 107,919 1,282,140 2.4 
2018629,302 1,315,860 174,719 1,490,579 2.4 
2019675,269 1,443,049 318,311 1,761,360 2.6 
2020537,903 1,186,784 368,014 1,554,798 2.9 
2021403,981 588,033 357,435 945,468 2.3 
2022550,254 438,109 695,606 1,133,715 2.1 
2023809,483 304,895 1,594,252 1,899,147 2.3 
2024236,452 9,068 553,847 562,915 2.4 
Subtotal9,184,179 19,373,066 4,501,461 23,874,527 2.6 
Europe:
<2015(4)
1,242,208 2,644,523 907,408 3,551,931 2.9 
2015(4)
419,941 657,423 254,784 912,207 2.2 
2016258,218 474,703 208,976 683,679 2.6 
2017461,571 634,095 264,459 898,554 1.9 
2018432,258 449,895 308,994 758,889 1.8 
2019273,354 343,400 284,781 628,181 2.3 
2020116,227 173,896 184,952 358,848 3.1 
2021255,788 182,024 348,657 530,681 2.1 
2022244,508 124,255 354,251 478,506 2.0 
2023259,255 63,399 415,699 479,098 1.8 
202459,205 3,267 117,814 121,081 2.0 
Subtotal4,022,533 5,750,880 3,650,775 9,401,655 2.3 
Other geographies(5):
All vintages340,283 546,948 43,103 590,051 1.7 
Subtotal340,283 546,948 43,103 590,051 1.7 
Total$13,546,995 $25,670,894 $8,195,339 $33,866,233 2.5 
________________________
(1)Purchase price refers to the cash paid to a seller to acquire a portfolio less Put-backs, Recalls, and other adjustments. Put-Backs and Recalls represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreement.
(2)Cumulative collections from inception through March 31, 2024, excluding collections on behalf of others.
(3)Purchase Price Multiple represents total estimated gross collections divided by the purchase price.
(4)Includes portfolios acquired in connection with certain business combinations.
(5)Annual pool groups for other geographies have been aggregated for disclosure purposes.

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Estimated Remaining Gross Collections by Year of Purchase
The following table summarizes our estimated remaining gross collections from purchased receivable portfolios and estimated future cash flows from real estate-owned assets (in thousands):
 
Estimated Remaining Gross Collections by Year of Purchase(1)
 
2024(3)
20252026202720282029203020312032
>2032
Total(2)
United States:
<2015(4)
$57,945 $56,070 $36,948 $25,489 $17,367 $11,540 $7,477 $4,597 $2,623 $1,407 $221,463 
201510,384 9,917 5,898 4,107 2,895 2,043 1,444 1,024 727 1,051 39,490 
201618,545 18,025 10,583 7,097 4,990 3,515 2,481 1,754 1,244 2,171 70,405 
201726,766 26,290 17,393 11,461 7,886 5,560 3,930 2,786 1,980 3,867 107,919 
201842,639 41,874 28,664 19,501 12,869 8,860 6,255 4,429 3,146 6,482 174,719 
201982,006 76,490 51,099 34,584 23,530 15,622 10,805 7,611 5,375 11,189 318,311 
202090,770 89,150 60,147 40,788 27,821 18,927 12,644 8,799 6,206 12,762 368,014 
202187,530 84,633 59,634 39,528 26,912 18,603 12,845 8,783 6,114 12,853 357,435 
2022188,396 165,431 106,768 73,089 49,315 34,393 24,376 17,385 12,171 24,282 695,606 
2023305,239 423,358 301,016 180,714 121,199 81,781 56,503 39,703 28,057 56,682 1,594,252 
2024105,092 131,837 109,075 65,871 43,466 30,279 21,007 14,843 10,407 21,970 553,847 
Subtotal1,015,312 1,123,075 787,225 502,229 338,250 231,123 159,767 111,714 78,050 154,716 4,501,461 
Europe:
<2015(4)
79,011 97,628 89,272 81,307 75,441 69,471 63,385 58,352 53,194 240,347 907,408 
2015(4)
24,697 30,118 26,519 24,177 21,268 19,572 17,353 15,851 14,551 60,678 254,784 
201626,332 26,771 24,404 21,565 17,702 15,679 13,608 11,906 9,981 41,028 208,976 
201729,850 35,135 30,384 27,424 22,809 19,864 17,308 15,006 13,082 53,597 264,459 
201834,311 40,241 35,662 31,530 27,295 23,618 20,386 17,793 15,904 62,254 308,994 
201935,095 41,008 33,458 27,879 23,421 20,652 17,957 15,474 13,590 56,247 284,781 
202026,634 28,548 24,541 19,290 14,594 11,862 10,439 8,444 7,407 33,193 184,952 
202142,096 50,399 44,686 38,836 33,133 27,058 21,624 18,072 15,530 57,223 348,657 
202249,319 56,895 47,709 39,765 32,127 26,402 21,528 17,187 14,297 49,022 354,251 
202360,127 70,479 58,164 48,258 38,913 30,919 24,469 19,802 16,025 48,543 415,699 
202419,453 22,896 16,658 12,726 9,942 7,760 6,178 4,970 4,050 13,181 117,814 
Subtotal426,925 500,118 431,457 372,757 316,645 272,857 234,235 202,857 177,611 715,313 3,650,775 
Other geographies(5):
All vintages5,417 6,120 5,086 4,415 3,844 3,471 3,106 2,735 2,312 6,597 43,103 
Subtotal5,417 6,120 5,086 4,415 3,844 3,471 3,106 2,735 2,312 6,597 43,103 
Portfolio ERC1,447,654 1,629,313 1,223,768 879,401 658,739 507,451 397,108 317,306 257,973 876,626 8,195,339 
REO ERC(6)
22,814 24,127 25,228 17,867 12,819 4,817 3,285 998 — — 111,955 
Total ERC$1,470,468 $1,653,440 $1,248,996 $897,268 $671,558 $512,268 $400,393 $318,304 $257,973 $876,626 $8,307,294 
________________________
(1)As of March 31, 2024, ERC for Zero Basis Portfolios include approximately $46.6 million for purchased consumer and bankruptcy receivables in the United States. ERC for Zero Basis Portfolios in Europe and other geographies was immaterial. ERC also includes approximately $47.7 million from cost recovery portfolios, primarily in other geographies.
(2)Represents the expected remaining gross cash collections over a 180-month period. As of March 31, 2024, ERC for 84-month and 120-month periods were:
84-Month ERC120-Month ERC
   United States$4,188,706 $4,411,612 
   Europe2,608,353 3,127,674 
   Other geographies32,181 38,782 
Portfolio ERC6,829,240 7,578,068 
REO ERC111,330 111,955 
Total ERC$6,940,570 $7,690,023 
(3)Amount for 2024 consists of nine months data from April 1, 2024 to December 31, 2024.
(4)Includes portfolios acquired in connection with certain business combinations.
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(5)Annual pool groups for other geographies have been aggregated for disclosure purposes.
(6)Real estate-owned assets ERC includes approximately $110.9 million and $1.0 million of estimated future cash flows for Europe and Other Geographies, respectively.
Estimated Future Collections Applied to Investment in Receivable Portfolios
As of March 31, 2024, we had $3.5 billion in investment in receivable portfolios. The estimated future collections applied to the investment in receivable portfolios net balance is as follows (in thousands):
Years Ending December 31,
United States
Europe
Other Geographies		Total
2024(1)
$400,736 $164,810 $4,315 $569,861 
2025506,973 193,264 4,894 705,131 
2026379,369 166,672 4,051 550,092 
2027229,427 143,356 3,511 376,294 
2028151,090 119,332 3,043 273,465 
2029101,748 102,079 2,712 206,539 
203069,856 86,681 2,411 158,948 
203149,335 75,074 1,882 126,291 
203235,047 67,383 — 102,430 
203325,058 62,197 — 87,255 
203418,087 59,020 — 77,107 
203513,490 57,604 — 71,094 
203610,614 58,436 — 69,050 
20378,116 60,662 — 68,778 
20384,492 67,112 — 71,604 
2039487 16,961 — 17,448 
Total$2,003,925 $1,500,643 $26,819 $3,531,387 
________________________
(1)Amount for 2024 consists of nine months data from April 1, 2024 to December 31, 2024.
Liquidity and Capital Resources
Liquidity
The following table summarizes our cash flow activities for the periods presented (in thousands):
 Three Months Ended March 31,
 20242023
(Unaudited)
Net cash provided by operating activities$50,984 $35,913 
Net cash used in investing activities(90,882)(130,715)
Net cash provided by financing activities55,790 110,374 
Operating Cash Flows
Cash flows from operating activities represent the cash receipts and disbursements related to all of our activities other than investing and financing activities.
Net cash provided by operating activities was $51.0 million and $35.9 million during the three months ended March 31, 2024 and 2023, respectively. Operating cash flows are derived by adjusting net income for non-cash operating items such as depreciation and amortization, changes in recoveries, stock-based compensation charges, and changes in operating assets and liabilities which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations. Changes in recoveries increased the operating cash flows by $12.4 million and $9.5 million during the three months ended March 31, 2024 and 2023, respectively. Refer to “Note 5: Investment in Receivable Portfolios, Net” in the notes to our consolidated financial statements for discussion relating to changes in recoveries.
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Investing Cash Flows
Net cash used in investing activities was $90.9 million and $130.7 million during the three months ended March 31, 2024 and 2023, respectively. Cash provided by or used in investing activities is primarily affected by receivable portfolio purchases offset by collection proceeds applied to the principal of our receivable portfolios. Receivable portfolio purchases, net of put-backs, were $291.4 million and $274.6 million during the three months ended March 31, 2024 and 2023, respectively. Collection proceeds applied to the investment in receivable portfolios, were $195.0 million and $166.7 million during the three months ended March 31, 2024 and 2023, respectively. Refer to Purchases and Collections within “Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion relating to purchases and collections.
Financing Cash Flows
Net cash provided by financing activities was $55.8 million and $110.4 million during the three months ended March 31, 2024 and 2023, respectively. Financing cash flows are generally affected by borrowings under our credit facilities and proceeds from various debt offerings, offset by repayments of amounts outstanding under our credit facilities and repayments of various notes. Borrowings under our credit facilities were $248.5 million and $229.1 million during the three months ended March 31, 2024 and 2023, respectively. Repayments of amounts outstanding under our credit facilities were $696.4 million and $140.0 million during the three months ended March 31, 2024 and 2023, respectively. During the three months ended March 31, 2024, we issued $500.0 million 9.25% senior secured notes that mature in 2029, and used the proceeds from the senior secured notes to repay drawings under our Global Senior Facility. During the three months ended March 31, 2023, we issued $230.0 million 4.00% convertible senior notes that mature in 2029, and used $192.5 million of the proceeds from the convertible senior notes to partially repurchase our exchangeable senior notes due 2023.
Capital Resources
Our primary sources of capital are cash collections from our investment in receivable portfolios, bank borrowings, debt offerings, and equity offerings. Depending on the capital markets, we consider additional financings to fund our operations and any potential acquisitions. From time to time, we may repurchase outstanding debt or equity and/or restructure or refinance debt obligations. Our primary cash requirements include funding the purchase of receivable portfolios, operating expenses, the payment of interest and principal on borrowings, the payment of income taxes, funding any entity acquisitions and share repurchases.
We are in material compliance with all covenants under our financing arrangements. See “Note 7: Borrowings” in the notes to our condensed consolidated financial statements for a further discussion of our debt. Available capacity under our Global Senior Facility, was $827.3 million as of March 31, 2024.
In March 2024, we issued $500.0 million in aggregate principal amount of 9.250% Senior Secured Notes due 2029 at an issue price of 100.000% through a private placement offering.
Our Board of Directors has approved a $300.0 million share repurchase program. Repurchases under this program are expected to be made from cash on hand and/or a drawing from our Global Senior Facility and may be made from time to time, subject to market conditions and other factors, in the open market, through private transactions, block transactions, or other methods as determined by our management and Board of Directors, and in accordance with market conditions, other corporate considerations, and applicable regulatory requirements. The program does not obligate us to acquire any particular amount of common stock, and it may be modified or suspended at our discretion. During the three months ended March 31, 2024 and 2023, the Company did not make any repurchases under the share repurchase program. Our practice is to retire the shares repurchased. As of March 31, 2024, authorization for $91.9 million of share repurchases remained under the share repurchase program.
Our cash and cash equivalents as of March 31, 2024, consisted of $43.6 million held by U.S.-based entities and $129.4 million held by foreign entities. Most of our cash and cash equivalents held by foreign entities is indefinitely reinvested and may be subject to material tax effects if repatriated. However, we believe that our sources of cash and liquidity are sufficient to meet our business needs in the United States and do not expect that we will need to repatriate the funds.
Included in cash and cash equivalents is cash that was collected on behalf of, and remains payable to, third-party clients. The balance of cash held for clients was $19.6 million as of March 31, 2024.
Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, timing of cash collections from our consumers, and other risks detailed in our Risk Factors. However, we believe that we have sufficient liquidity to fund our operations for at least the next twelve months, given our expectation of continued positive cash flows from operations, our cash and cash equivalents, our access to capital markets, and availability under our credit facilities. Our future cash needs will depend on our acquisitions of portfolios and businesses.
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Critical Accounting Estimates
Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions based on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Our actual results could differ from these estimates under different assumptions or conditions. Refer to “Critical Accounting Estimates” contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, for a complete discussion of our critical accounting estimates. Other than the ongoing reassessment of expected future recoveries of our investment in receivable portfolios during each reporting period under our CECL accounting policy as discussed in “Note 5: Investment in Receivable Portfolios, Net” to our condensed consolidated financial statements, there have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2023.
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Item 3 – Quantitative and Qualitative Disclosures About Market Risk
Foreign Currency Exchange Rates. As of March 31, 2024, there had not been a material change in any of the foreign currency risk information disclosed in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Interest Rates. As of March 31, 2024, there had not been a material change in the interest rate risk information disclosed in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Item 4 – Controls and Procedures
Attached as exhibits to this Form 10-Q are the certifications required by Rule 13a-14 of the Securities Exchange Act of 1934, as amended. This section includes information concerning the controls and controls evaluation referred to in the certifications.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”) and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and accordingly, management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on their most recent evaluation, as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act are effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION

Item 1 – Legal Proceedings
Information with respect to this item may be found in “Note 11: Commitments and Contingencies,” to the condensed consolidated financial statements.

Item 1A – Risk Factors
There is no material change in the information reported under “Part I-Item 1A-Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
None.

Item 5 - Other Information
On March 18, 2024, Andrew Asch, Senior Vice President and General Counsel, adopted a trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) to sell up to 2,025 shares of Encore Capital Group, Inc. common stock between June 17, 2024, and June 18, 2025, subject to certain conditions.

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Item 6 – Exhibits
NumberDescription
3.1.1
3.1.2
3.1.3
3.2
4.1
31.1
31.2
32.1
101.INSInline XBRL Instance Document - The instance document does not appear in the interactive data file because XBRL tags are embedded within the inline XBRL document. (filed herewith)
101.SCHInline XBRL Taxonomy Extension Schema Document (filed herewith)
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)
101.LABInline XBRL Taxonomy Extension Label Linkbase Document (filed herewith)
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
ENCORE CAPITAL GROUP, INC.
By: /s/ Jonathan C. Clark
 Jonathan C. Clark
 Executive Vice President,
 Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)


Date: May 8, 2024

46

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