Encore Capital (ECPG) 6 Nov 24 2024 Q3 Earnings call transcript

In Encore Capital Group's third quarter earnings call for 2024, the company reported a strong performance driven by its largest business, MCM, in the U.S. The record portfolio supply in the U.S. is being driven by the highest charge-off rate in over 10 years, coupled with growth in lending. This robust opportunity has led to portfolio purchases up 28% compared to the year ago quarter, with collections also up 22% to the highest level since 2021.

In Europe, the portfolio purchasing market continues to show signs of improvement but remains competitive. Despite this, Encore is maintaining its discipline and being selective, which has led to reduced Cabot portfolio purchases. The company is managing Cabot's cost structure accordingly while maintaining a focus on creating pathways to economic freedom for consumers.

The call highlighted the company's strategic focus on the U.S. market, where revolving credit has been steadily rising since early 2021 and credit card charge-off rates have also been on the rise. This combination of higher lending and growth in charge-off rates is driving record portfolio supply in the U.S., making it a highly favorable market for Encore.

Encore's global portfolio purchases increased 23% compared to Q3 a year ago, driven primarily by continued strong U.S. deployments in MCM. The company's collections in the third quarter were $550 million, up 18% compared to Q3 a year ago, demonstrating the strong financial performance of the business.

Despite the challenges faced by the industry, including competition and regulatory changes, Encore remains optimistic about its future prospects. The company is well-positioned with a strong balance sheet and a disciplined approach to portfolio purchasing and collections, enabling it to capitalize on opportunities in the market.

During the call, Encore also addressed investor concerns, clarifying its capital allocation priorities and providing insights into its future plans. The company emphasized its focus on buying portfolios at strong returns while maintaining a strong balance sheet and operating within its target leverage range. Encore's strategic focus on the U.S. market, combined with its operational efficiency and financial flexibility, positions the company well for continued growth and success.

In conclusion, Encore Capital Group's third quarter earnings call for 2024 highlighted the company's strong financial performance and strategic focus on the U.S. market. Despite challenges in the industry, Encore remains optimistic about its future prospects and is well-positioned to capitalize on opportunities in the market. With a disciplined approach to portfolio purchasing and collections, and a strong balance sheet, Encore is poised for continued growth and success.