← Back to ECPG filing summaryOriginal filing text · Part I
Item 2 — Management's Discussion and Analysis
Encore Capital Group, Inc. · 10-Q · Q2 FY2026 · Period ended Jun 30, 2026
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This Quarterly Report on Form 10-Q contains “forward-looking statements” relating to Encore Capital Group, Inc. (“Encore”) and its subsidiaries (which we may collectively refer to as the “Company,” “we,” “our” or “us”) within the meaning of the securities laws. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” “plan,” “will,” “may,” and similar expressions often characterize forward-looking statements. These statements may include, but are not limited to, projections of collections, revenues, income or loss, estimates of capital expenditures, plans for future operations, products or services, and financing needs or plans, as well as assumptions relating to these matters. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we caution that these expectations or predictions may not prove to be correct or we may not achieve the financial results, savings, or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control or cannot be predicted or quantified, that could cause actual results to differ materially from those suggested by the forward-looking statements. Many factors including, but not limited to, those set forth in our Annual Report on Form 10-K under “Part I, Item 1A—Risk Factors” could cause our actual results, performance, achievements, or industry results to be very different from the results, performance, achievements or industry results expressed or implied by these forward-looking statements. Our business, financial condition, or results of operations could also be materially and adversely affected by other factors besides those listed. Forward-looking statements speak only as of the date the statements were made. We do not undertake any obligation to update or revise any forward-looking statements to reflect new information or future events, or for any other reason, even if experience or future events make it clear that any expected results expressed or implied by these forward-looking statements will not be realized. In addition, it is generally our policy not to make any specific projections as to future earnings, and we do not endorse projections regarding future performance that may be made by third parties.
Our Business
We are an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. We primarily purchase portfolios of defaulted consumer receivables at deep discounts to face value and manage them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial obligations to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. We also provide debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.
Encore Capital Group, Inc. (“Encore”) has three business units: MCM, which consists of Midland Credit Management, Inc. and its subsidiaries and domestic affiliates; Cabot, which consists of Cabot Credit Management Limited and its subsidiaries and European affiliates, and LAAP, which is comprised of our investments and operations in Latin America and Asia-Pacific.
MCM (United States)
Through MCM, we are a market leader in portfolio purchasing and recovery in the United States.
Cabot (Europe)
Through Cabot, we are one of the largest credit management services providers in Europe and the United Kingdom. Cabot, in addition to its primary business of portfolio purchasing and recovery, also provides a range of debt servicing offerings such as early stage collections, business process outsourcing (“BPO”), and contingent collections, including through Wescot Credit Services Limited (“Wescot”).
LAAP (Latin America and Asia-Pacific)
We have purchased non-performing loans in Mexico. Additionally, we have a subsidiary Encore Asset Reconstruction Company (“EARC”) in India.
To date, operating results from LAAP have not been significant to our total consolidated operating results. Our long-term growth strategy is focused on continuing to invest in our core portfolio purchasing and recovery business in the United States and United Kingdom and strengthening and developing our business in France and Spain.
Government Regulation
MCM (United States)
As discussed in more detail under “Part I - Item 1 - Business - Government Regulation” contained in our Annual Report on Form 10-K, our operations in the United States are subject to federal, state and municipal statutes, rules, regulations and
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ordinances that establish specific guidelines and procedures that debt purchasers and collectors must follow when collecting consumer accounts, including among others, specific guidelines and procedures for communicating with consumers and prohibitions on unfair, deceptive or abusive debt collection practices.
Cabot (Europe)
As discussed in more detail under “Part I - Item 1 - Business - Government Regulation” contained in our Annual Report on Form 10-K, our operations in Europe are affected by foreign statutes, rules and regulations regarding debt collection and debt purchase activities. These statutes, rules, regulations, ordinances, guidelines and procedures are modified from time to time by the relevant authorities charged with their administration, which could affect the way we conduct our business.
Portfolio Purchasing and Recovery
MCM (United States)
In the United States, the defaulted consumer receivable portfolios we purchase are primarily charged-off credit card debt portfolios. A small percentage of our capital deployment in the United States is comprised of unsecured personal loans.
We purchase receivables based on robust, account-level valuation methods and employ proprietary statistical and behavioral models across our U.S. operations. These methods and models generally allow us to value portfolios accurately (limiting the risk of overpaying), avoid buying portfolios that are incompatible with our methods or strategies and align the accounts we purchase with our business channels to maximize future collections. As a result, we have generally been able to realize significant returns from the receivables we acquire. We maintain strong relationships with many of the largest financial service providers in the United States.
Cabot (Europe)
In Europe, our purchased defaulted debt portfolios primarily consist of credit card and consumer loan accounts. We purchase receivable portfolios using proprietary pricing models that utilize account-level statistical and behavioral data. These models generally allow us to accurately value portfolios and to develop collection strategies that maximize future returns. As a result, we have generally been able to realize significant returns from the assets we have acquired. We maintain strong relationships with many of the largest financial services providers in the United Kingdom and Europe.
Purchases and Collections
Portfolio Pricing, Supply and Demand
MCM (United States)
With lending and charge-off rates remaining near recent peak levels, U.S. portfolio supply continues to be robust. Issuers have continued to sell predominantly fresh portfolios. Fresh portfolios are portfolios that are generally sold within six months of the consumer’s account being charged-off by the financial institution. Pricing in the second quarter remained at favorable levels as a result of elevated market supply. Issuers continue to sell their volume in mostly forward flow arrangements that are often committed early in the calendar year. We believe steady lending and delinquency rates at elevated levels will result in stable and strong market supply.
We believe that smaller competitors continue to face difficulties in the portfolio purchasing market because of the high cost to operate due to regulatory pressure and increasing cost of capital. We believe this favors larger participants, like MCM, because the larger market participants are better able to adapt to these pressures and commit to larger forward flow agreements and fluctuating volumes.
Cabot (Europe)
The UK market for charged-off portfolios generally provides a relatively consistent pipeline of opportunities, despite a historically low level of charge-offs, as creditors have embedded debt sales as an integral part of their business models.
France and Spain continue to be two of the largest non-performing loan markets in Europe with significant portfolio sales. Financial institutions continue to look to dispose of non-performing loans in these markets.
While sales activity across all of our European markets remains stable, underlying default rates are generally low by historic levels, and consumer lending volumes have stagnated. Sales levels are expected to fluctuate from quarter to quarter. In general, portfolio pricing remains competitive across our European footprint, constraining the amount of capital we elect to deploy in Europe.
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Purchases by Geographic Location
The following table summarizes purchases of receivable portfolios by geographic location during the periods presented (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
MCM (United States) $ 372,277 $ 317,264 $ 688,071 $ 633,630
Cabot (Europe) 71,538 49,835 118,585 101,320
Total purchases of receivable portfolios $ 443,815 $ 367,099 $ 806,656 $ 734,950
In the United States, capital deployments increased during the three and six months ended June 30, 2026, as compared to the corresponding periods in the prior year. The majority of our deployments in the U.S. come from forward flow agreements, and the timing, contract duration, and volumes for each contract can fluctuate leading to variation when comparing to prior periods. Portfolio purchases in the U.S. were robust as supply increased and pricing remained at favorable levels. Our record purchases in the U.S. during the second quarter included opportunistic spot market purchases.
In Europe, capital deployments increased during the three and six months ended June 30, 2026, as compared to the corresponding periods in the prior year. Capital deployment can fluctuate based on the timing of the forward flow contracts and spot purchases. Pricing continues to remain competitive in our European footprint, constraining the amount of capital we choose to deploy in Europe.
Collections from Purchased Receivables by Channel and Geographic Location
We utilize three channels for the collection of our receivable portfolios: call center and digital collections; legal collections; and collection agencies. The call center and digital collections channel consists of collections that result from our call centers, direct mail program and online collections. The legal collections channel consists of collections that result from our internal legal channel or from our network of retained law firms. The collection agencies channel consists of collections from third-party collections agencies to whom we pay a fee or commission. We utilize this channel to supplement capacity in our internal call centers, to service accounts in regions where we do not have collections operations or for accounts purchased where we maintain the collection agency servicing relationship.
The following table summarizes the total collections by collection channel and geographic area during the periods presented (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
MCM (United States):
Call center and digital collections $ 360,718 $ 320,152 $ 722,175 $ 618,374
Legal collections 209,186 166,811 401,579 318,486
Collection agencies 1,985 3,389 4,606 7,517
Subtotal 571,889 490,352 1,128,360 944,377
Cabot (Europe):
Call center and digital collections 65,323 66,495 130,615 128,765
Legal collections 59,700 59,033 117,224 112,806
Collection agencies 39,273 38,439 77,531 72,372
Subtotal 164,296 163,967 325,370 313,943
Other geographies: 679 666 1,548 1,472
Total collections from purchased receivables $ 736,864 $ 654,985 $ 1,455,278 $ 1,259,792
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Collections from purchased receivables increased by $81.9 million, or 12.5%, to $736.9 million during the three months ended June 30, 2026, as compared to $655.0 million during the three months ended June 30, 2025. Gross collections from purchased receivables increased by $195.5 million, or 15.5%, to $1,455.3 million during the six months ended June 30, 2026, as compared to $1,259.8 million during the six months ended June 30, 2025. The increases in collections in the United States were primarily a result of consistent increases in capital deployments in the United States in recent periods. Collections in Europe were favorably impacted by foreign currency translation by approximately $1.7 million and $13.9 million, during the three and six months ended June 30, 2026, respectively, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 0.5% and 3.6% for the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025, respectively.
Results of Operations
Results of operations, in dollars and as a percentage of total revenues, were as follows for the periods presented (in thousands, except percentages):
Three Months Ended June 30,
2026 2025
Revenues
Portfolio revenue $ 400,242 81.4 % $ 361,174 81.7 %
Changes in recoveries 71,115 14.5 % 55,599 12.6 %
Total debt purchasing revenue 471,357 95.9 % 416,773 94.3 %
Servicing revenue 18,228 3.6 % 22,300 5.0 %
Other revenues 2,287 0.5 % 3,049 0.7 %
Total revenues 491,872 100.0 % 442,122 100.0 %
Operating expenses
Salaries and employee benefits 119,585 24.3 % 117,738 26.6 %
Cost of legal collections 96,599 19.6 % 79,649 18.0 %
General and administrative expenses 38,724 7.9 % 41,327 9.3 %
Other operating expenses 36,831 7.6 % 36,990 8.4 %
Collection agency commissions 6,119 1.2 % 8,374 1.9 %
Depreciation and amortization 7,112 1.4 % 7,311 1.7 %
Total operating expenses 304,970 62.0 % 291,389 65.9 %
Income from operations 186,902 38.0 % 150,733 34.1 %
Other expense
Interest expense (73,907) (15.1) % (73,943) (16.7) %
Loss on extinguishment of debt (30,533) (6.2) % — 0.0 %
Other income 385 0.1 % 1,226 0.3 %
Total other expense (104,055) (21.2) % (72,717) (16.4) %
Income before income taxes 82,847 16.8 % 78,016 17.7 %
Provision for income taxes (18,848) (3.8) % (19,295) (4.4) %
Net income $ 63,999 13.0 % $ 58,721 13.3 %
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Six Months Ended June 30,
2026 2025
Revenues
Portfolio revenue $ 790,261 81.7 % $ 706,392 84.6 %
Changes in recoveries 133,855 13.8 % 77,063 9.2 %
Total debt purchasing revenue 924,116 95.5 % 783,455 93.8 %
Servicing revenue 38,866 4.1 % 44,847 5.4 %
Other revenues 4,301 0.4 % 6,595 0.8 %
Total revenues 967,283 100.0 % 834,897 100.0 %
Operating expenses
Salaries and employee benefits 234,126 24.2 % 223,670 26.8 %
Cost of legal collections 185,820 19.2 % 147,662 17.7 %
General and administrative expenses 78,353 8.2 % 82,345 10.0 %
Other operating expenses 71,664 7.5 % 71,242 8.5 %
Collection agency commissions 12,456 1.3 % 15,247 1.8 %
Depreciation and amortization 13,970 1.4 % 14,655 1.8 %
Total operating expenses 596,389 61.8 % 554,821 66.6 %
Income from operations 370,894 38.2 % 280,076 33.4 %
Other expense
Interest expense (146,957) (15.1) % (144,473) (17.3) %
Loss on extinguishment of debt (30,533) (3.2) % — 0.0 %
Other income 1,175 0.1 % 2,873 0.3 %
Total other expense (176,315) (18.2) % (141,600) (17.0) %
Income before income taxes 194,579 20.0 % 138,476 16.4 %
Provision for income taxes (44,337) (4.6) % (32,959) (3.9) %
Net income $ 150,242 15.4 % $ 105,517 12.5 %
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Comparison of Results of Operations
Revenues
Our revenues primarily include debt purchasing revenue, which is revenue recognized from engaging in debt purchasing and recovery activities. We apply our charge-off policy and fully write-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables we acquire immediately after purchasing the portfolio. We then record a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which is presented as “Receivable portfolios, net” in our condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) established based on the purchase price of the portfolio and the expected future cash flows at the time of purchase.
Debt purchasing revenue includes two components:
(1) Portfolio revenue, which is the accretion of the discount on the negative allowance due to the passage of time (generally the receivable portfolio balance multiplied by the EIR), and
(2) Changes in recoveries, which includes
(a) Recoveries above (below) forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and
(b) Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases).
Certain pools already fully recovered their cost basis and became zero basis portfolios (“ZBA”) prior to our adoption of the accounting standard for Financial Instruments - Credit Losses (“CECL”) in January 2020. All subsequent collections to the ZBA pools are recognized as ZBA revenue, which is included in portfolio revenue in our condensed consolidated statements of income. We expect our ZBA revenue to continue to decline as we collect on these legacy pools. We do not expect to have new ZBA pools in the future.
Servicing revenue consists primarily of fee-based income earned on accounts collected on behalf of others, primarily credit originators. We earn fee-based income by providing debt servicing (such as early stage collections, BPO, contingent collections, trace services and litigation activities) to credit originators for non-performing loans in Europe.
Other revenues primarily include revenues recognized from the sale of real estate assets that are acquired as a result of our investments in non-performing secured residential mortgage portfolios and real estate assets in Europe and LAAP.
The following tables summarize revenues for the periods presented (in thousands, except percentages):
Three Months Ended June 30,
2026 2025 $ Change % Change
Revenue recognized from portfolio basis $ 395,885 $ 354,747 $ 41,138 11.6 %
ZBA revenue 4,357 6,427 (2,070) (32.2) %
Portfolio revenue 400,242 361,174 39,068 10.8 %
Recoveries above forecast 53,113 52,263 850
Changes in expected future recoveries 18,002 3,336 14,666
Changes in recoveries 71,115 55,599 15,516 27.9 %
Debt purchasing revenue 471,357 416,773 54,584 13.1 %
Servicing revenue 18,228 22,300 (4,072) (18.3) %
Other revenues 2,287 3,049 (762) (25.0) %
Total revenues $ 491,872 $ 442,122 $ 49,750 11.3 %
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Six Months Ended June 30,
2026 2025 $ Change % Change
Revenue recognized from portfolio basis $ 781,478 $ 694,503 $ 86,975 12.5 %
ZBA revenue 8,783 11,889 (3,106) (26.1) %
Portfolio revenue 790,261 706,392 83,869 11.9 %
Recoveries above forecast 99,157 79,215 19,942
Changes in expected future recoveries 34,698 (2,152) 36,850
Changes in recoveries 133,855 77,063 56,792 73.7 %
Debt purchasing revenue 924,116 783,455 140,661 18.0 %
Servicing revenue 38,866 44,847 (5,981) (13.3) %
Other revenues 4,301 6,595 (2,294) (34.8) %
Total revenues $ 967,283 $ 834,897 $ 132,386 15.9 %
Our operating results are impacted by foreign currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The strengthening of the U.S. dollar relative to other foreign currencies has an unfavorable impact on our international revenues, and the weakening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international revenues. Our revenue was favorably impacted by foreign currency translation by approximately $1.2 million and $10.4 million during the three and six months ended June 30, 2026, respectively, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 0.5% and 3.6% for the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025, respectively.
The increases in revenue recognized from portfolio basis during the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025, were primarily due to a higher portfolio basis (i.e. a higher receivable portfolios balance) in the U.S. driven by a consistent higher volume of purchases in recent periods.
Recoveries above or below forecast represent over and under-performance in the reporting period, respectively, and are expected to vary from period to period. Collections during the three and six months ended June 30, 2026 over-performed the forecasted collections by $53.1 million and $99.2 million, respectively, primarily as a result of collections over-performance in the U.S. The collections over-performance in the U.S. has been driven by the deployment of new technologies, enhanced digital capabilities and continued operational innovation, which has enabled us to reach more consumers, leading to more payments as well as a larger payer book. These initiatives have had a greater impact on the early stages of a portfolio’s lifecycle, leading to over-performance for our recent vintages. Collections during the three and six months ended June 30, 2025 over-performed the forecasted collections by $52.3 million and $79.2 million, respectively.
We reassess the forecasts of expected lifetime recoveries each quarter by considering, among other factors, historical and current collection performance, changes in consumer behaviors, and the macroeconomic environment. The significant recoveries above forecast during the three and six months ended June 30, 2026 were carefully evaluated. We concluded that the recoveries above forecast were primarily current period collections over-performance and did not represent any material shift in timing of the collections. Additionally, the sustained over-performance in recent quarters led to increases in forecasted future recoveries for recently acquired vintages. As a result, we recorded a net positive change of $18.0 million and $34.7 million in expected future recoveries during the three and six months ended June 30, 2026, respectively. During the three and six months ended June 30, 2025, we recorded a net positive change of $3.3 million and a net negative change of $2.2 million in expected future recoveries, respectively.
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The following tables summarize collections from receivable portfolios, portfolio revenue, changes in recoveries, end of period receivable portfolios balance and other related supplemental data, by year of purchase (in thousands, except percentages):
Three Months Ended June 30, 2026 As of June 30, 2026
Collections Portfolio Revenue Changes in Recoveries Receivable Portfolios Monthly EIR
United States:
ZBA $ 4,357 $ 4,357 $ — $ — — %
<2022 73,631 41,535 1,461 275,223 4.8 %
2022 30,431 13,881 1,172 140,100 3.1 %
2023 78,839 35,244 8,096 337,697 3.3 %
2024 150,651 65,893 15,146 618,327 3.3 %
2025 182,530 101,683 27,902 1,023,926 3.2 %
2026 51,450 43,735 2,396 685,214 3.3 %
Subtotal 571,889 306,328 56,173 3,080,487 3.4 %
Europe:
ZBA — — — — — %
<2022 75,605 47,667 4,866 667,996 2.3 %
2022 11,339 5,684 73 117,896 1.5 %
2023 15,650 7,291 3,572 162,122 1.5 %
2024 30,046 15,387 3,081 261,055 1.9 %
2025 22,723 12,542 2,152 195,668 2.1 %
2026 8,933 5,343 1,178 114,035 2.0 %
Subtotal 164,296 93,914 14,922 1,518,772 2.0 %
Other geographies(1):
All vintages 679 — 20 10,446 — %
Subtotal 679 — 20 10,446 — %
Total $ 736,864 $ 400,242 $ 71,115 $ 4,609,705 2.9 %
_______________________
(1)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.
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Three Months Ended June 30, 2025 As of June 30, 2025
Collections Portfolio Revenue Changes in Recoveries Receivable Portfolios Monthly EIR
United States:
ZBA $ 6,426 $ 6,426 $ — $ — — %
<2021 86,665 47,849 7,485 312,462 4.8 %
2021 22,961 12,247 (42) 96,971 3.9 %
2022 48,616 20,824 4,575 210,943 3.1 %
2023 110,961 51,408 3,406 491,813 3.3 %
2024 161,522 88,596 25,953 856,320 3.3 %
2025 53,201 40,434 3,429 627,098 3.2 %
Subtotal 490,352 267,784 44,806 2,595,607 3.4 %
Europe:
ZBA 1 1 — — — %
<2021 76,209 47,863 3,884 685,514 2.3 %
2021 11,365 6,731 705 121,998 1.9 %
2022 13,761 6,678 652 144,793 1.5 %
2023 20,602 8,197 5,048 188,506 1.5 %
2024 33,525 18,778 (689) 327,476 1.9 %
2025 8,504 5,142 803 104,967 2.2 %
Subtotal 163,967 93,390 10,403 1,573,254 2.0 %
Other geographies(1):
All vintages 666 — 390 15,919 — %
Subtotal 666 — 390 15,919 — %
Total $ 654,985 $ 361,174 $ 55,599 $ 4,184,780 2.9 %
_______________________
(1)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.
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Six Months Ended June 30, 2026 As of June 30, 2026
Collections Portfolio Revenue Changes in Recoveries Receivable Portfolios Monthly EIR
United States:
ZBA $ 8,782 $ 8,782 $ — $ — — %
<2022 151,205 87,823 (781) 275,223 4.8 %
2022 64,235 29,410 1,136 140,100 3.1 %
2023 166,315 73,670 23,570 337,697 3.3 %
2024 313,845 139,403 30,356 618,327 3.3 %
2025 362,698 208,975 52,271 1,023,926 3.2 %
2026 61,280 54,516 5,028 685,214 3.3 %
Subtotal 1,128,360 602,579 111,580 3,080,487 3.4 %
Europe:
ZBA 1 1 — — — %
<2022 151,216 97,428 4,175 667,996 2.3 %
2022 22,813 11,677 (396) 117,896 1.5 %
2023 32,897 14,886 7,560 162,122 1.5 %
2024 61,211 31,677 4,330 261,055 1.9 %
2025 46,517 25,767 3,876 195,668 2.1 %
2026 10,715 6,246 2,243 114,035 2.0 %
Subtotal 325,370 187,682 21,788 1,518,772 2.0 %
Other geographies(1):
All vintages 1,548 — 487 10,446 — %
Subtotal 1,548 — 487 10,446 — %
Total $ 1,455,278 $ 790,261 $ 133,855 $ 4,609,705 2.9 %
_______________________
(1)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.
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Six Months Ended June 30, 2025 As of June 30, 2025
Collections Portfolio Revenue Changes in Recoveries Receivable Portfolios Monthly EIR
United States:
ZBA $ 11,887 $ 11,887 $ — $ — — %
<2021 177,565 101,235 6,837 312,462 4.8 %
2021 48,183 25,894 (409) 96,971 3.9 %
2022 101,566 44,223 6,053 210,943 3.1 %
2023 227,183 109,141 (41) 491,813 3.3 %
2024 315,016 182,598 37,323 856,320 3.3 %
2025 62,977 50,506 6,929 627,098 3.2 %
Subtotal 944,377 525,484 56,692 2,595,607 3.4 %
Europe:
ZBA 2 2 — — — %
<2021 148,114 94,204 8,362 685,514 2.3 %
2021 21,833 13,243 763 121,998 1.9 %
2022 27,697 13,253 1,542 144,793 1.5 %
2023 41,392 16,362 7,172 188,506 1.5 %
2024 63,920 37,166 391 327,476 1.9 %
2025 10,985 6,678 1,273 104,967 2.2 %
Subtotal 313,943 180,908 19,503 1,573,254 2.0 %
Other geographies(1):
All vintages 1,472 — 868 15,919 — %
Subtotal 1,472 — 868 15,919 — %
Total $ 1,259,792 $ 706,392 $ 77,063 $ 4,184,780 2.9 %
_______________________
(1)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.
Servicing revenue decreased during the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025, primarily driven by decreases in BPO revenue and collection service fees. Other revenues decreased during the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025, primarily driven by decreases in gains recognized on the sale of real estate assets.
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Operating Expenses
The following tables summarize operating expenses during the periods presented (in thousands, except percentages):
Three Months Ended June 30,
2026 2025 $ Change % Change
Salaries and employee benefits $ 119,585 $ 117,738 $ 1,847 1.6 %
Cost of legal collections 96,599 79,649 16,950 21.3 %
General and administrative expenses 38,724 41,327 (2,603) (6.3) %
Other operating expenses 36,831 36,990 (159) (0.4) %
Collection agency commissions 6,119 8,374 (2,255) (26.9) %
Depreciation and amortization 7,112 7,311 (199) (2.7) %
Total operating expenses $ 304,970 $ 291,389 $ 13,581 4.7 %
Six Months Ended June 30,
2026 2025 $ Change % Change
Salaries and employee benefits $ 234,126 $ 223,670 $ 10,456 4.7 %
Cost of legal collections 185,820 147,662 38,158 25.8 %
General and administrative expenses 78,353 82,345 (3,992) (4.8) %
Other operating expenses 71,664 71,242 422 0.6 %
Collection agency commissions 12,456 15,247 (2,791) (18.3) %
Depreciation and amortization 13,970 14,655 (685) (4.7) %
Total operating expenses $ 596,389 $ 554,821 $ 41,568 7.5 %
Our operating results are impacted by foreign currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The strengthening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international operating expenses, and the weakening of the U.S. dollar relative to other foreign currencies has an unfavorable impact on our international operating expenses. Our operating expenses were unfavorably impacted by foreign currency translation by approximately $0.9 million and $7.4 million, during the three and six months ended June 30, 2026, respectively, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 0.5% and 3.6% for the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025, respectively.
Operating expenses are explained in more detail as follows:
Salaries and Employee Benefits
The increase in salaries and employee benefits during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, was primarily due to the following reasons:
•An increase in employee benefits of $1.3 million, primarily attributable to higher health insurance costs; and
•An increase in stock-based compensation expense of $0.8 million attributable to increased stock price in the recent periods and higher vesting of performance-based awards.
The increase in salaries and employee benefits during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, was primarily due to the following reasons:
•An increase in salaries and bonuses of $6.0 million, primarily attributable to higher performance-based bonuses awarded to employees as a result of our strong overall performance for the year ended December 31, 2025;
•An increase in stock-based compensation expense of $1.9 million attributable to increased stock price in the recent periods and higher vesting of performance-based awards; and
•An increase in employee benefits of $1.3 million, primarily attributable to higher health insurance costs.
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Cost of Legal Collections
Cost of legal collections primarily includes contingent fees paid to our external network of attorneys and the cost of litigation. We pursue legal collections using a network of attorneys that specialize in collection matters and through our internal legal channel. Under the agreements with our contracted attorneys, we advance certain out-of-pocket court costs. Cost of legal collections does not include internal legal channel employee costs, which are included in salaries and employee benefits in our condensed consolidated statements of income.
The following tables summarize our cost of legal collections during the periods presented (in thousands, except percentages):
Three Months Ended June 30,
2026 2025 $ Change % Change
Court costs $ 65,927 $ 54,050 $ 11,877 22.0 %
Legal collection fees 30,672 25,599 5,073 19.8 %
Total cost of legal collections $ 96,599 $ 79,649 $ 16,950 21.3 %
Six Months Ended June 30,
2026 2025 $ Change % Change
Court costs $ 126,894 $ 98,864 $ 28,030 28.4 %
Legal collection fees 58,926 48,798 10,128 20.8 %
Total cost of legal collections $ 185,820 $ 147,662 $ 38,158 25.8 %
The increases of cost of legal collections during the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025, were primarily due to increased legal placements in this channel in the United States.
General and Administrative Expenses
The decrease in general and administrative expense during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, was primarily attributable to a decrease in consulting fees of $4.4 million. The decrease was partially offset by an increase in information technology expenses of $1.8 million.
The decrease in general and administrative expense during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, was primarily attributable to a decrease in consulting fees of $6.0 million. The decrease was partially offset by an increase in information technology expenses of $2.9 million.
Other Operating Expenses
Other operating expenses remained relatively consistent during the three and six months ended June 30, 2026, as compared to the three and six months ended June 30, 2025.
Collection Agency Commissions
Collection agency commissions are commissions paid to third-party collection agencies. Collections through the collections agencies channel are predominately in Europe and vary from period to period depending on, among other things, the number of accounts placed with an agency versus accounts collected internally. Commission rates vary depending on, among other things, the amount of time that has passed since the charge-off of the accounts placed with an agency, the asset class, and the geographic location of the receivables. Generally, freshly charged-off accounts have a lower commission rate than accounts that have been charged off for a longer period of time, and commission rates for purchased bankruptcy portfolios are lower than the commission rates for charged-off credit card accounts. Collection agency commissions decreased during the three and six months ended June 30, 2026, as compared to the same periods in the prior year, primarily due to fewer accounts placed with external agencies in the United States.
Depreciation and Amortization
Depreciation and amortization expenses decreased by $0.2 million and $0.7 million during the three and six months ended June 30, 2026, respectively, as compared to the three and six months ended June 30, 2025. The decreases were primarily due to smaller depreciable and amortizable asset balances during the three and six months ended June 30, 2026, as compared to the corresponding periods in the prior year.
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Interest Expense
The following tables summarize our interest expense for the periods presented (in thousands, except percentages):
Three Months Ended June 30,
2026 2025 $ Change % Change
Stated interest on debt obligations $ 71,255 $ 70,276 $ 979 1.4 %
Amortization of debt issuance costs 2,535 3,428 (893) (26.1) %
Amortization of debt discount 117 239 (122) (51.0) %
Total interest expense $ 73,907 $ 73,943 $ (36) — %
Six Months Ended June 30,
2026 2025 $ Change % Change
Stated interest on debt obligations $ 141,768 $ 137,262 $ 4,506 3.3 %
Amortization of debt issuance costs 4,890 6,757 (1,867) (27.6) %
Amortization of debt discount 299 454 (155) (34.1) %
Total interest expense $ 146,957 $ 144,473 $ 2,484 1.7 %
The slight increase in stated interest expense during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, was primarily due to the following reasons:
•The effect resulting from increased average debt balance of approximately $4.6 million; and
•The effect resulting from a slightly unfavorable impact of foreign currency translation of approximately $0.2 million driven by the weakening of the U.S. dollar against the British Pound.
•The increase was partially offset by the effect resulting from a decrease in interest rates of approximately $3.8 million.
The increase in stated interest expense during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, was primarily due to the following reasons:
•The effect resulting from increased average debt balance of approximately $8.6 million; and
•The effect resulting from an unfavorable impact of foreign currency translation of approximately $1.9 million driven by the weakening of the U.S. dollar against the British Pound.
•The increase was partially offset by the effect resulting from a decrease in interest rates of approximately $6.0 million.
Loss on Extinguishment of Debt
Loss on extinguishment of debt associated with the early redemptions of the Encore 2028 Floating Rate Notes and the Encore 2029 Notes in May 2026 was $30.5 million for the three and six months ended June 30, 2026. There was no loss on extinguishment of debt during the corresponding periods in 2025. Refer to “Note 7: Borrowings” in the notes to our condensed consolidated financial statements for details of our financing activities.
Other Income, net of Other Expense
Other income or expense consists primarily of foreign currency exchange gains or losses, interest income, and gains or losses recognized on certain transactions outside of our normal course of business. Other income, net, was $0.4 million and $1.2 million during the three and six months ended June 30, 2026, respectively. Other income, net, was $1.2 million and $2.9 million during the three and six months ended June 30, 2025, respectively. Interest income included in other income, net of other expense, was $1.1 million and $2.2 million during the three and six months ended June 30, 2026, respectively. Interest income included in other income, net of other expense, was $1.4 million and $2.9 million during the three and six months ended June 30, 2025, respectively.
Provision for Income Taxes
Provision for income taxes and effective tax rate are as follows for the periods presented ($ in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Provision for income taxes $ 18,848 $ 19,295 $ 44,337 $ 32,959
Effective tax rate 22.8% 24.7% 22.8% 23.8%
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For the three and six months ended June 30, 2026 and 2025, the differences between our effective tax rate and the federal statutory rate were primarily due to state income taxes offset by other foreign adjustments.
Non-GAAP Disclosure
In addition to the financial information prepared in conformity with Generally Accepted Accounting Principles (“GAAP”), we provide historical non-GAAP financial information. Management believes that the presentation of such non-GAAP financial information is meaningful and useful in understanding the activities and business metrics of our operations. Management believes that these non-GAAP financial measures reflect an additional way of viewing aspects of our business that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business.
Management believes that the presentation of these measures provides investors with greater transparency and facilitates comparison of operating results across a broad spectrum of companies with varying capital structures, compensation strategies, derivative instruments, and amortization methods, which provide a more complete understanding of our financial performance, competitive position, and prospects for the future. Readers should consider the information in addition to, but not instead of, our financial statements prepared in accordance with GAAP. This non-GAAP financial information may be determined or calculated differently by other companies, limiting the usefulness of these measures for comparative purposes.
Adjusted EBITDA. Management utilizes adjusted EBITDA (defined as net income before interest income and expense, taxes, depreciation and amortization, stock-based compensation expenses, acquisition, integration and restructuring related expenses, and other charges or gains that are not indicative of ongoing operations), in the evaluation of our operating performance. Adjusted EBITDA for the periods presented is as follows (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
GAAP net income, as reported $ 63,999 $ 58,721 $ 150,242 $ 105,517
Adjustments:
Interest expense 73,907 73,943 146,957 144,473
Interest income (1,092) (1,362) (2,186) (2,908)
Provision for income taxes 18,848 19,295 44,337 32,959
Depreciation and amortization 7,112 7,311 13,970 14,655
Stock-based compensation expense 6,043 5,283 10,618 8,707
Acquisition, integration and restructuring related expenses(1) 3,213 1,042 4,678 1,290
Loss on extinguishment of debt 30,533 — 30,533 —
Adjusted EBITDA $ 202,563 $ 164,233 $ 399,149 $ 304,693
Collections applied to principal balance(2) $ 269,880 $ 244,677 $ 539,349 $ 488,977
_______________________
(1)Amount represents acquisition, integration and restructuring related expenses. We adjust for this amount because we believe these expenses are not indicative of ongoing operations; therefore, adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.
(2)Collections applied to principal balance is calculated in the table below:
Three Months Ended June 30, Six Months Ended June 30,
2026 2025 2026 2025
Collections applied to receivable portfolios, net $ 336,622 $ 293,811 $ 665,017 $ 553,400
Changes in recoveries (71,115) (55,599) (133,855) (77,063)
Other proceeds applied to basis 4,373 6,465 8,187 12,640
Collections applied to principal balance $ 269,880 $ 244,677 $ 539,349 $ 488,977
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Supplemental Performance Data
The tables included in this supplemental performance data section include detail for purchases, collections and ERC by year of purchase.
Our collection expectations are based on account characteristics and economic variables. Additional adjustments are made to account for qualitative factors that may affect the payment behavior of our consumers and servicing related adjustments to ensure our collection expectations are aligned with our operations. We continue to refine our process of forecasting collections both domestically and internationally with a focus on operational enhancements. Our collection expectations vary between types of portfolio and geographic location. As a result, past performance of pools in certain geographic locations or of certain types of portfolio are not necessarily a suitable indicator of future results in other locations or for other types of portfolio.
The supplemental performance data presented in this section is impacted by foreign currency translation, which represents the effect of translating financial results where the functional currency of our foreign subsidiary is different than our U.S. dollar reporting currency. Generally, international purchases reflect the exchange rates at the time of purchase and international cumulative collections are aggregated each month based on respective month-end exchange rates. For example, the strengthening of the U.S. dollar relative to other foreign currencies has an unfavorable reporting impact on our international purchases, collections, and ERC, and the weakening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international purchases, collections, and ERC.
We utilize proprietary forecasting models to continuously evaluate the economic life of each pool.
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Cumulative Collections Money Multiple - Cumulative Collections from Receivable Portfolios to Purchase Price Multiple
The following table summarizes our receivable purchases, related collections, and cumulative collections money multiples (in thousands, except multiples):
Year of Purchase PurchasePrice(1) Cumulative Collections through June 30, 2026
<2022 2022 2023 2024 2025 2026 Total(2) CCMM(3)
United States:
<2022 $ 7,585,789 $ 16,334,075 $ 1,256,655 $ 861,884 $ 606,852 $ 432,143 $ 159,987 $ 19,651,596 2.6
2022 548,704 — 98,277 268,516 254,329 179,247 64,235 864,604 1.6
2023 805,455 — — 184,182 471,838 419,265 166,315 1,241,600 1.5
2024 990,400 — — — 238,635 625,051 313,845 1,177,531 1.2
2025 1,167,998 — — — — 293,593 362,698 656,291 0.6
2026 686,949 — — — — — 61,280 61,280 0.1
Subtotal 11,785,295 16,334,075 1,354,932 1,314,582 1,571,654 1,949,299 1,128,360 23,652,902 2.0
Europe:
<2022 3,421,004 4,512,881 516,314 432,671 383,208 336,631 151,217 6,332,922 1.9
2022 231,869 — 36,957 70,385 64,555 52,865 22,813 247,575 1.1
2023 259,255 — — 40,975 89,799 78,352 32,897 242,023 0.9
2024 353,182 — — — 50,469 128,970 61,211 240,650 0.7
2025 234,058 — — — — 44,123 46,517 90,640 0.4
2026 118,585 — — — — — 10,715 10,715 0.1
Subtotal 4,617,953 4,512,881 553,271 544,031 588,031 640,941 325,370 7,164,525 1.6
Other geographies(4):
All vintages 340,283 538,948 3,334 3,954 2,793 2,546 1,548 553,123 1.6
Subtotal 340,283 538,948 3,334 3,954 2,793 2,546 1,548 553,123 1.6
Total $ 16,743,531 $ 21,385,904 $ 1,911,537 $ 1,862,567 $ 2,162,478 $ 2,592,786 $ 1,455,278 $ 31,370,550 1.9
________________________
(1)Adjusted for Put-Backs and Recalls. Put-Backs (“Put-Backs”) and recalls (“Recalls”) represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreement.
(2)Cumulative collections from inception through June 30, 2026, excluding collections on behalf of others.
(3)Cumulative Collections Money Multiple (“CCMM”) through June 30, 2026 refers to cumulative collections as a multiple of purchase price.
(4)Annual pool groups for other geographies have been aggregated for disclosure purposes.
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Purchase Price Multiple - Total Estimated Collections from Receivable Portfolios to Purchase Price Multiple
The following table summarizes our purchases, resulting historical collections, estimated remaining collections from receivable portfolios, and purchase price multiple (in thousands, except multiples):
Purchase Price(1) HistoricalCollections(2) Estimated Remaining Collections Total EstimatedCollections Purchase Price Multiple(3)
United States:
<2022 $ 7,585,789 $ 19,651,596 $ 700,679 $ 20,352,275 2.7
2022 548,704 864,604 284,815 1,149,419 2.1
2023 805,455 1,241,600 703,252 1,944,852 2.4
2024 990,400 1,177,531 1,273,208 2,450,739 2.5
2025 1,167,998 656,291 2,133,130 2,789,421 2.4
2026 686,949 61,280 1,542,139 1,603,419 2.3
Subtotal 11,785,295 23,652,902 6,637,223 30,290,125 2.6
Europe:
<2022 3,421,004 6,332,922 1,759,935 8,092,857 2.4
2022 231,869 247,575 216,082 463,657 2.0
2023 259,255 242,023 288,489 530,512 2.0
2024 353,182 240,650 563,977 804,627 2.3
2025 234,058 90,640 434,829 525,469 2.2
2026 118,585 10,715 249,913 260,628 2.2
Subtotal 4,617,953 7,164,525 3,513,225 10,677,750 2.3
Other geographies(4):
All vintages 340,283 553,123 13,897 567,020 1.7
Subtotal 340,283 553,123 13,897 567,020 1.7
Total $ 16,743,531 $ 31,370,550 $ 10,164,345 $ 41,534,895 2.5
________________________
(1)Purchase price refers to the cash paid to a seller to acquire a portfolio less Put-backs, Recalls, and other adjustments. Put-Backs and Recalls represent ineligible accounts that are returned by us or recalled by the seller pursuant to specific guidelines as set forth in the respective purchase agreement.
(2)Cumulative collections from inception through June 30, 2026, excluding collections on behalf of others.
(3)Purchase Price Multiple represents total estimated collections divided by the purchase price.
(4)Annual pool groups for other geographies have been aggregated for disclosure purposes.
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Estimated Remaining Collections by Year of Purchase
The following table summarizes our estimated remaining collections from receivable portfolios and estimated future cash flows from real estate-owned assets (in thousands):
Estimated Remaining Collections by Year of Purchase(1)
2026(3) 2027 2028 2029 2030 2031 2032 2033 2034 >2034 Total(2)
United States:
<2022 $ 126,847 $ 185,086 $ 125,010 $ 85,051 $ 58,019 $ 39,782 $ 27,417 $ 18,716 $ 12,721 $ 22,030 $ 700,679
2022 47,082 73,079 49,788 34,372 24,460 17,364 12,089 8,374 5,894 12,313 284,815
2023 117,495 178,926 126,702 84,762 58,724 41,723 29,662 20,589 14,322 30,347 703,252
2024 233,083 324,892 214,981 151,775 106,720 75,768 53,083 37,067 25,697 50,142 1,273,208
2025 318,609 587,538 371,868 253,617 181,467 128,405 91,325 63,968 44,694 91,639 2,133,130
2026 177,777 392,919 312,327 198,966 135,879 95,886 68,440 48,963 34,390 76,592 1,542,139
Subtotal 1,020,893 1,742,440 1,200,676 808,543 565,269 398,928 282,016 197,677 137,718 283,063 6,637,223
Europe:
<2022 137,899 246,397 213,647 182,707 155,771 133,925 116,600 102,483 90,560 379,946 1,759,935
2022 21,976 37,678 30,930 25,060 20,291 16,699 13,646 10,932 9,039 29,831 216,082
2023 29,866 50,532 42,145 33,842 27,052 21,843 17,870 14,586 11,849 38,904 288,489
2024 49,794 86,923 73,419 61,290 50,641 41,997 35,520 30,821 26,846 106,726 563,977
2025 40,176 71,666 59,395 48,556 39,430 32,132 26,525 22,644 19,195 75,110 434,829
2026 20,437 40,949 36,016 28,927 23,429 18,958 15,533 12,990 10,905 41,769 249,913
Subtotal 300,148 534,145 455,552 380,382 316,614 265,554 225,694 194,456 168,394 672,286 3,513,225
Other geographies(4):
All vintages 3,239 4,220 2,728 1,777 913 482 251 148 77 62 13,897
Subtotal 3,239 4,220 2,728 1,777 913 482 251 148 77 62 13,897
Portfolio ERC 1,324,280 2,280,805 1,658,956 1,190,702 882,796 664,964 507,961 392,281 306,189 955,411 10,164,345
REO ERC(5) 10,272 3,718 — — — — — — — — 13,990
Total ERC $ 1,334,552 $ 2,284,523 $ 1,658,956 $ 1,190,702 $ 882,796 $ 664,964 $ 507,961 $ 392,281 $ 306,189 $ 955,411 $ 10,178,335
________________________
(1)As of June 30, 2026, ERC for Zero Basis Portfolios includes $20.1 million for purchased consumer and bankruptcy receivables in the United States. ERC for Zero Basis Portfolios in Europe and other geographies was immaterial. ERC also includes $13.9 million from non-accrual portfolios, primarily in other geographies.
(2)Represents the expected remaining cash collections over a 180-month period. As of June 30, 2026, ERC for 84-months was $8,733.1 million.
(3)Amount for 2026 consists of six months data from July 1, 2026 to December 31, 2026.
(4)Annual pool groups for other geographies have been aggregated for disclosure purposes.
(5)Real estate-owned assets (“REO”) ERC includes $14.0 million of estimated future cash flows for Europe.
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Estimated Future Collections Applied to Receivable Portfolios
As of June 30, 2026, we had $4.6 billion in receivable portfolios. The estimated future collections applied to the receivable portfolios net balance is as follows (in thousands):
Years Ending December 31, United States Europe Other Geographies Total Amortization
2026(1) $ 427,598 $ 122,061 $ 2,653 $ 552,312
2027 821,616 219,134 3,284 1,044,034
2028 573,555 189,995 1,995 765,545
2029 374,100 156,927 1,222 532,249
2030 259,812 127,503 523 387,838
2031 184,032 104,274 349 288,655
2032 131,390 87,468 191 219,049
2033 93,006 75,844 116 168,966
2034 64,938 67,092 61 132,091
2035 45,941 62,597 33 108,571
2036 33,772 58,365 15 92,152
2037 25,160 55,315 4 80,479
2038 19,889 56,063 — 75,952
2039 15,056 56,378 — 71,434
2040 8,727 51,774 — 60,501
2041 1,895 27,982 — 29,877
Total $ 3,080,487 $ 1,518,772 $ 10,446 $ 4,609,705
________________________
(1)Amount for 2026 consists of six months data from July 1, 2026 to December 31, 2026.
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Liquidity and Capital Resources
Liquidity
The following table summarizes our cash flow activities for the periods presented (in thousands):
Six Months Ended June 30,
2026 2025
(Unaudited)
Net cash provided by operating activities $ 52,946 $ 54,807
Net cash used in investing activities (130,650) (169,652)
Net cash provided by financing activities 106,832 87,230
Operating Cash Flows
Cash flows from operating activities represent the cash receipts and disbursements related to all of our activities other than investing and financing activities.
Net cash provided by operating activities was $52.9 million and $54.8 million during the six months ended June 30, 2026 and 2025, respectively. Operating cash flows are derived by adjusting net income for non-cash operating items such as depreciation and amortization, changes in recoveries, stock-based compensation charges, deferred income tax, and changes in operating assets and liabilities which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations. Adjusting for the changes in recoveries resulted in a decrease in operating cash flows by $133.9 million and $77.1 million during the six months ended June 30, 2026 and 2025, respectively. Refer to “Note 5: Receivable Portfolios, Net” in the notes to our condensed consolidated financial statements for discussion relating to changes in recoveries.
Investing Cash Flows
Net cash used in investing activities was $130.7 million and $169.7 million during the six months ended June 30, 2026 and 2025, respectively. Cash provided by or used in investing activities is primarily affected by receivable portfolio purchases offset by collection proceeds applied to the principal of our receivable portfolios. Receivable portfolio purchases, net of put-backs, were $800.3 million and $725.4 million during the six months ended June 30, 2026 and 2025, respectively. Collection proceeds applied to the principal of our receivable portfolios were $665.0 million and $553.4 million during the six months ended June 30, 2026 and 2025, respectively. Refer to Purchases and Collections within “Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion relating to purchases and collections.
Financing Cash Flows
Net cash provided by financing activities was $106.8 million and $87.2 million during the six months ended June 30, 2026 and 2025, respectively. Financing cash flows are generally affected by borrowings under our credit facilities and proceeds from various debt offerings, offset by repayments of amounts outstanding under our credit facilities and repayments of various notes. Borrowings under our credit facilities were $791.1 million and $549.6 million during the six months ended June 30, 2026 and 2025, respectively. Repayments of amounts outstanding under our credit facilities were $723.8 million and $418.5 million during the six months ended June 30, 2026 and 2025, respectively. During the six months ended June 30, 2026, we issued $750.0 million in senior secured notes that mature in 2032. We used a portion of the proceeds from this offering to redeem the $500.0 million principal outstanding under the Encore 2029 Notes in full. During the six months ended June 30, 2026, we issued €325.0 million (approximately $371.2 million based on an exchange rate of $1.00 to €0.88, the exchange rate as of June 30, 2026) in floating rate senior secured notes due 2033. We used the proceeds from this offering, together with drawings under our Global Senior Facility, to redeem the €415.0 million (approximately $474.0 million based on an exchange rate of $1.00 to €0.88, the exchange rate as of June 30, 2026) principal outstanding under the Encore 2028 Floating Rate Notes in full.
Capital Resources
Our primary sources of capital are cash collections from our receivable portfolios, bank borrowings, debt offerings, and equity offerings. Depending on the capital markets, we consider additional financings to fund our operations and any potential acquisitions. From time to time, we may repurchase outstanding debt or equity and/or restructure or refinance debt obligations. Our primary cash requirements include funding the purchase of receivable portfolios, operating expenses, the payment of interest and principal on borrowings, the payment of income taxes, funding any entity acquisitions and share repurchases.
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We are in material compliance with all covenants under our financing arrangements. See “Note 7: Borrowings” in the notes to our condensed consolidated financial statements for a further discussion of our debt. Available capacity under our Global Senior Facility, was $793.4 million as of June 30, 2026.
In May 2021, our Board of Directors authorized a $300.0 million share repurchase program. In November 2025, our Board of Directors authorized an increase of an additional $300.0 million under the share repurchase program. Repurchases under this program are expected to be made from cash on hand and/or a drawing from our Global Senior Facility and may be made from time to time, subject to market conditions and other factors, in the open market, through private transactions, block transactions, or other methods as determined by our management and Board of Directors, and in accordance with market conditions, other corporate considerations, and applicable regulatory requirements. The program does not obligate us to acquire any particular amount of common stock, and it may be modified or suspended at our discretion. During the three and six months ended June 30, 2026, we repurchased 330,121 and 675,669 shares of our common stock for $26.7 million and $46.7 million, respectively, under the share repurchase program. During the three and six months ended June 30, 2025, we repurchased 418,499 and 707,924 shares of our common stock for $15.0 million and $25.0 million, respectively, under the share repurchase program. As of June 30, 2026, we had remaining authority to purchase $255.7 million of our common stock. Our practice is to retire the shares repurchased.
Our cash and cash equivalents as of June 30, 2026, consisted of $58.4 million held by U.S.-based entities and $124.5 million held by foreign entities. Most of our cash and cash equivalents held by foreign entities is indefinitely reinvested and may be subject to material tax effects if repatriated. However, we believe that our sources of cash and liquidity are sufficient to meet our business needs in the United States and do not expect that we will need to repatriate the funds.
Included in cash and cash equivalents is cash that was collected on behalf of, and remains payable to, third-party clients. The balance of cash held for clients was $14.1 million as of June 30, 2026.
Cash from operations could also be affected by various risks and uncertainties, including, but not limited to, timing of cash collections from our consumers, and other risks detailed in our Risk Factors. However, we believe that we have sufficient liquidity to fund our operations for at least the next twelve months, given our expectation of continued positive cash flows from operations, our cash and cash equivalents, our access to capital markets, and availability under our credit facilities. Our future cash needs will depend on our acquisitions of portfolios and businesses.
Critical Accounting Estimates
Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions based on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Our actual results could differ from these estimates under different assumptions or conditions. Refer to “Critical Accounting Estimates” contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025, for a complete discussion of our critical accounting estimates. Other than the ongoing reassessment of expected future recoveries of our receivable portfolios during each reporting period under our CECL accounting policy as discussed in “Note 5: Receivable Portfolios, Net” to our condensed consolidated financial statements, there have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2025.
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