Encore Capital Group ((ECPG)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Encore Capital Group’s recent earnings call revealed a robust performance in the second quarter of 2025, marked by record portfolio purchases and collections, alongside significant earnings growth. The company showcased its success in the U.S. market, although it faced challenges in Europe and dealt with increased operating and interest expenses.
Record Portfolio Purchases and Collections
Encore Capital Group reported a remarkable 32% increase in portfolio purchases, reaching $367 million, and a 20% rise in collections, hitting a record $655 million compared to Q2 2024. The Estimated Remaining Collections (ERC) also saw a 12% increase, amounting to $9.4 billion, highlighting the company’s strong operational performance.
Strong Financial Performance
The company experienced significant financial growth, with earnings per share surging by 86% to $2.49 from the previous year. Net income rose by 82% to $59 million, while debt purchasing revenue increased by 27% to $417 million, underscoring Encore’s financial strength.
U.S. Market Success
Midland Credit Management (MCM) in the U.S. achieved impressive results, with portfolio purchases climbing by 34% to $317 million and collections increasing by 24% to $490 million. This success underscores the favorable conditions in the U.S. market.
Improved Leverage and Liquidity
Encore improved its leverage ratio to 2.6x from 2.7x a year ago. Additionally, the company expanded its revolving credit facility by $190 million, enhancing liquidity by up to $340 million, which strengthens its financial flexibility.
Favorable U.S. Purchasing Environment
The U.S. market continues to provide a favorable purchasing environment, characterized by strong lending and elevated charge-off rates. This has resulted in a robust supply of portfolios and attractive pricing for Encore.
Challenges in European Market
In contrast, Cabot Credit Management in Europe faced a subdued consumer lending environment, low delinquencies, and robust competition, which affected portfolio purchasing levels, posing challenges for Encore in the region.
Increased Operating Expenses
Operating expenses rose by 15% compared to Q2 2024, primarily due to the onboarding of new portfolios resulting from increased purchasing levels, reflecting the company’s expansion efforts.
Higher Interest Expenses
Interest expenses increased by 23% to $73 million, driven by higher debt balances and increased interest rates from bond issuances in 2024, impacting the company’s financials.
Forward-Looking Guidance
Encore Capital Group raised its guidance for global collections in 2025, anticipating a growth of 15.5% to $2.5 billion. The company expects continued robust financial performance, with portfolio purchases and collections projected to maintain their upward trajectory, supported by favorable market conditions in the U.S.
In summary, Encore Capital Group’s earnings call highlighted a strong quarter with record achievements in portfolio purchases and collections, particularly in the U.S. market. Despite facing challenges in Europe and rising expenses, the company remains optimistic about its future growth prospects, with an increased guidance for global collections in 2025.