Profits Up at Encore Capital Group

Encore Capital Group reported net income of $36.8 million for the second quarter of 2019, up from $26.9 million in the same period a year ago, with the release of the company’s quarterly financials.

During the second quarter, the company purchased $243 million in portfolios, $180 million of which was in the United States. The company collected $515 million — which it says is a record — up from $496 million in the same quarter last year.

“Similar to the past several quarters, the second quarter for Encore was another period of strong financial and operational performance, which drove record outcomes in several key measures across our business,” said Ashish Masih, President and Chief Executive Officer, in a statement. “We achieved new highs in global cash collections and estimated remaining collections, reflecting our focus on operational innovation and increased productivity. Importantly, we are driving improved operating leverage as we collect more efficiently, and as the majority of our collections are now derived from portfolios with higher returns when compared to prior years.”

In a filing with the Securities and Exchange Commission, the company noted that pricing on portfolios continues to remain “favorable”, especially for larger debt buyers, like Encore, “because the larger market participants are better able to adapt to these pressures and commit to larger forward flow agreements.” The company also said that increases in delinquency and charge-off rates have created more portfolios available to be purchased, many of which are “fresh,” meaning the account has been charged off within the past six months.

The company collected $333 million during the second quarter, up from $311 million in the same period a year ago. The increase was largely in the company’s “call center and digital collections” operation, which includes “our call centers, direct mail program and online collections.” Encore does appear to be reducing the amount of accounts it is placing with third-party agencies. Those partners collected $2.9 million during the second quarter, compared with $4.5 million a year ago.

In the United States, the company’s cost-per-dollar collected decreased to 39.2% in the second quarter, from 40.8% a year earlier.

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