Home / General News / Encore Releases 1Q Results; Touts New ‘Customer-Centric’ Collections Model, Talks About Impact of Proposed Rule

Encore Releases 1Q Results; Touts New ‘Customer-Centric’ Collections Model, Talks About Impact of Proposed Rule

Revenue and net income at Encore Capital Group were up in the first quarter, compared with the same period a year ago, and the company touted the success of its new “customer-centric” collection model and how it is “turning a substantially higher percentages of accounts into paying accounts during the first year,” company President and Chief Executive Ashish Masih said during a conference call discussing the results.

Total revenue for the first three months of the year was $347 million, compared with $327 million during the same period last year. Net income for the first quarter was $49 million, up from $22 million a year ago.

For debts that the company purchased between 2016 and 2018, the average number of accounts that paid was 44% higher than for debts that were purchased between 2013 and 2015, the company said. Call center and digital collections were up 15% in the first quarter, compared with the same period last year.

“Our investments in our digital platform continue to drive online collections growth,” Masih said. “In addition, speech analytics and other technology based initiatives provide opportunities to increase our productivity and make the best use of our scale. We are now seeing what we believe is just the beginning of the collections growth we expect from our [Midland Credit Management] business going forward.”

The timing of Encore’s release also allowed Masih to discuss the impact of the Consumer Financial Protection Bureau’s proposed debt collection rule on the company’s performance going forward. Responding to a question about the a limit on the number of times a company can call a consumer in the proposed rule, Masih said:

Yeah, that’s a pretty major change in the proposed rules. And we’ve been thinking about it for quite a while actually not just for the last 24 hours when the rules came out. The advance notice came out and then there was another interim set of proposals couple of years ago. So we have had opportunity to think about this problem for a while, but not knowing what the exact rule was going to come out to, we haven’t implemented changes So here’s a few examples I would give you.

Given the nature of our business has turned more to fresh and a consumer centric call model, we’ve been very focused on reducing the dialing intensity which is — was an old way of doing things. And of course you have to dial, but people have cellphones much more. You don’t want to dial multiple times because you were trying to find them when they are at home. Now they have the phone with them.

A couple of years ago, we gave some metrics in one of our earnings calls. We had indicated kind of a project we did in which we reduced the dialing volume by two-thirds for the U.S. business, MCM business and without losing any — without having any negative impact on total right party contacts. So that give you an example — hopefully gives you a color on use of data, using better phone numbers, dialing more strategically, thinking about when to dial, which number to dial, and just pure analytics and innovation and operational excellence helping reduce the dialing there.

Now, those are the kind of things we’ll be thinking at a much more accelerated — in a much more accelerated manner to figure out how best to address this call cap, the seven calls over seven-period cap issue that might come. That is negated in many ways by the positives in the rules which are opportunity to email, text, leave voice mails in a much more safe way, and on a larger scale. And those are the technologies we actually use in U.S. a bit, but much more in our global operations.


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