Encore Capital Group Inc · NASDAQ:ECPG
Encore Capital — Q2 2025 Earnings Presentation
27 slides from Encore Capital's earnings presentation, Aug 6, 2025
Slide 1: Second Quarter 2025 Investor Presentation
Second Quarter 2025 Investor Presentation Encore Capital Group, Inc. August 6, 2025
Slide 2: Legal Disclaimers
Legal Disclaimers The statements in this presentation that are not historical facts, including, most importantly, those statements preceded by, or that include, the words “will,” “may,” “believe,” “projects,” “expects,” “anticipates” or the negation thereof, or similar expressions, constitute “forwa
Slide 3: MCM drives Encore's strong Q2 performance
MCM drives Encore’s strong Q2 performance Strong Q2 results across the board o Portfolio purchases of $367M up 32% o Record collections of $655M up 20% o Record ERC of $9.4B up 12% o EPS of $2.49 in Q2 2025 compared to $1.34 in Q2 2024 o Leverage1 improved to 2.6x from 2.7x year/year and flat quar
Slide 4: Our Strategy and Market Presence
Our Strategy and Market Presence Our Business o Purchase NPL portfolios at attractive cash returns Our Market Presence o Focus on the consumer and ensure the highest level of compliance • Market leader in the United States o Meet or exceed collection expectations • 25+ years in operation o Maintain
Slide 5: Record U.S. portfolio purchasing in Q2 2025
Record U.S. portfolio purchasing in Q2 2025 as we continue to allocate capital to the U.S. market, where returns are highest Portfolio Purchases (in $M) 495 200 368 367 51 50 14% Europe 279 282 42 52 86% 295 316 317 United 237 230 States Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 United States Europe E
Slide 6: Collections increased by 20% to a quarterly record $655 million
Collections increased by 20% to a quarterly record $655 million Collections by Geography (in $M) +20% 655 605 547 550 555 164 150 149 148 150 490 454 397 402 404 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 United States Europe Other Note: Global, U.S. and Europe collections YTD through Q2 2025 were 107%
Slide 7: Cash generation increased by 23%
Cash generation increased by 23% Encore TTM Cash Generation1 (in $M) +23% 1500 1200 900 600 300 0 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 2 TTM adjusted EBITDA TTM collections applied to principal balance 1) Trailing Twelve Month (“TTM”) cash generation defined as TTM adjusted EBITDA + TTM collectio
Slide 8: Robust U.S. portfolio supply driven by high charge off rate
Robust U.S. portfolio supply driven by high charge off rate combined with continued strong lending Outstanding U.S. Revolving Credit and U.S. Credit Card Charge Off Rate 1400 $1.32T Apr 6% 1200 2025 4.44% 5% 1000 Q1 4% 800 2025 $ Billions 3% 600 400 2% 200 1% 0 0% 2015 2016 2017 2018 2019 2020 2021
Slide 9: U.S. consumer credit card delinquency rates remain at high levels
U.S. consumer credit card delinquency rates remain at high levels U.S. Bankcard Balance Delinquency Rates 4.5% 4.0% 3.5% % of Balances Past Due 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 10: MCM continues to deliver very strong results
MCM continues to deliver very strong results MCM (U.S.) MCM Collections (in $M) +24% 490 454 Portfolio supply in the U.S. remains robust 397 402 404 Record MCM portfolio purchases of $317M in Q2 2025 were up 34% compared to Q2 2024 Record MCM collections of $490M in Q2 2025 increased by 24% co
Slide 11: Cabot delivered a solid Q2
Cabot delivered a solid Q2 Cabot (Europe) Cabot Collections (in $M) +10% 164 149 148 150 150 Cabot collections in Q2 2025 of $164M increased by 10% compared to Q2 2024 Cabot portfolio purchases of $50M in Q2 2025 in line with historical trend U.K. market remains impacted by subdued consumer le
Slide 12: Detailed Financial Discussion
Detailed Financial Discussion Encore Capital Group, Inc. 12
Slide 13: Financial Results
Financial Results Summary earnings statement Variance Key financial measures Variance $ in millions, except EPS Q2 25 Q2 24 $ % $ in millions Q2 25 Q2 24 $ % Portfolio revenue 361.2 321.9 39.2 12.2% Collections 655.0 546.7 108.3 19.8% Changes in recoveries 55.6 5.8 49.8 NM Portfolio purchases 367.1
Slide 14: Added $340M of liquidity and no significant maturities until 2028
As a result of amendments and extensions in May and July, added $340M of liquidity and have no significant maturities until 2028 Debt Maturity Profile at June 30, 2025 (in $M)1 2E+09 1.8E+09 1,683 1.6E+09 230 1.4E+09 1.2E+09 997 47 1E+09 953 850 800000000 343 600000000 350 400000000 300 100 607 500
Slide 15: Our capital allocation priorities
Our capital allocation priorities Balance Sheet Objectives Capital Allocation Priorities Preserve financial flexibility Portfolio purchases at attractive returns Target leverage1 between 2.0x and 3.0x Share Repurchases Maintain a strong BB debt Strategic M&A rating Deliver strong ROIC th
Slide 16: Updating our full-year guidance
Updating our full-year guidance Original 2025 Guidance1 Updated 2025 Guidance1 Portfolio Purchases Exceed $1.35B Exceed $1.35B Collections +11% to $2.4B +15.5% to $2.5B Guidance Interest expense in 2025 of $285M Effective tax rate in 2025 to be in the mid-20’s % 1) In constant currency Encore Ca
Slide 17: Appendix
Appendix Encore Capital Group, Inc. 17
Slide 18: Receivable portfolios and annualized yields
Receivable portfolios and annualized yields Receivable portfolios $ in millions Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 Balance, beginning of period 3,531.4 3,583.3 3,719.3 3,776.4 3,952.5 Definitions: Portfolio purchases 278.7 282.5 495.1 367.9 367.1 Collections (546.7) (550.3) (554.6) (604.8) (655.0) Collec
Slide 19: Supporting financial modeling formulas
Supporting financial modeling formulas Average receivable portfolios x Portfolio yield = Portfolio revenue Average receivable portfolios x Collections yield = Collections Servicing & other Collections + = Cash receipts revenue Cash receipts x ( 1 - Cashmargin efficiency ) = Operating expenses Encore
Slide 20: Quarterly Cash Efficiency Margin
Quarterly Cash Efficiency Margin Quarterly Cash Efficiency Margin and Cash Receipts (in $M) 90.0% 750 680 80.0% 631 650 574 577 579 70.0% 550 56.2% 58.3% 57.3% 60.0% 54.8% 52.6% 450 50.0% 350 40.0% 250 30.0% 150 20.0% 10.0% 50 0.0% Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q2 2025 -50 Cash Receipts Quarterly
Slide 21: Q2 2025 Cash Collections and Revenue Reconciliation
Q2 2025 Cash Collections and Revenue Reconciliation Q2 2025 Collections and Revenue Reconciliation (in $M) 700 +52 $603M Expected Cash Collections, equal to the sum of A Q1 2025 ERC plus expected collections from portfolios 600 purchased in Q2 2025 500 -294 $52M Recoveries Above Forecast, cash colle
Slide 22: Components of Debt Purchasing Revenue in Q2 2025
Components of Debt Purchasing Revenue in Q2 2025 Q2 2025 Debt Purchasing Revenue (in $M) E1. Portfolio Revenue is revenue from expected collections and is a formulaic calculation based on the investment in receivable balance and an effective interest rate (EIR) that 450 is established at the time of
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation includes certain financial measures that exclude the impact of certain items and therefore have not been calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). The Company has included information concerning Adjusted EBITDA
Slide 24: Calculation of Quarterly Cash Efficiency Margin
Calculation of Quarterly Cash Efficiency Margin Quarterly cash efficiency margin 1 $ in millions, except percentages Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 Collections 546.7 550.3 554.6 604.8 655.0 Servicing revenues 21.1 22.8 20.5 22.5 22.3 Other revenues 6.5 3.5 4.2 3.5 3.0 Cash receipts (A) 574.3 576.5 57
Slide 25: Calculation of Cash Generation: Reconciliation of Adjusted EBITDA to GAAP Net Income
Calculation of Cash Generation Reconciliation of Adjusted EBITDA to GAAP Net Income LTM Adjusted EBITDA $ in millions Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 LTM GAAP net income, as reported (196.0) (184.7) (139.2) (115.7) (89.1) Adjustments: Interest expense 222.2 238.5 252.5 267.3 279.9 Interest income (5.8
Slide 26: Calculation of Net Debt and Leverage
Calculation of Net Debt and Leverage Net debt and leverage $ in millions, except leverage Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 GAAP Borrowings 3,455.1 3,550.6 3,672.8 3,790.7 3,965.5 Debt issuance costs and debt discounts 49.7 46.8 37.3 34.2 33.1 Cash & cash equivalents (250.6) (247.4) (199.9) (187.1) (172
Slide 27: Calculation of ROIC: Reconciliation of Adjusted Income from Operations
Calculation of ROIC Reconciliation of Adjusted Income from Operations Adjusted income from operations and ROIC $ in millions, except percentages Q2 24 Q3 24 Q4 24 Q1 25 Q2 25 Numerator LTM income from operations 43.8 74.3 157.3 203.1 252.0 Adjustments: 1 Acquisition, integration and restructuring re