Encore Capital Group Announces First Quarter 2009 Results and Board Appointments
For the first quarter of 2009:
-- Gross collections were
-- Investment in receivable portfolios was
-- Revenue from receivable portfolios was
-- Revenue from bankruptcy servicing was
-- Total operating expenses were
-- Adjusted EBITDA, defined as net income before interest, taxes,
depreciation and amortization, stock-based compensation expense and
portfolio amortization, was
-- Total interest expense was
-- Net income was
-- Tangible book value per share, computed by dividing total
stockholders' equity less goodwill and identifiable intangible assets
by the number of diluted shares outstanding, was
Additional Financial Information:
Certain events affected the comparability of 2009 versus 2008 quarterly
results, as outlined below. For a more detailed comparison of 2009 versus
2008 results, refer to Management's Discussion and Analysis of Financial
Condition and Results of Operations included in the Company's Quarterly Report
on Form 10-Q for the quarter ended
-- In the first quarter of 2009, the Company recorded a net impairment
provision of
-- In the first quarter of 2009, the Company expensed
-- Effective
-- In the first quarter of 2009, the Company repurchased
-- Effective
Board Appointments
In response to the favorable conditions in the distressed consumer debt
market and Encore's unique opportunity to capitalize on them, the Company's
Board of Directors has named
The Company is also pleased to announce the nomination of H Ronald
Weissman to serve on its Board of Directors, effective
Non-GAAP Financial Measures
The Company has included information concerning Adjusted EBITDA because
management utilizes this information, which is materially similar to a
financial measure contained in covenants used in the Company's credit
agreement, in the evaluation of its operations and believes that this measure
is a useful indicator of the Company's ability to generate cash collections in
excess of operating expenses through the liquidation of its receivable
portfolios. The Company has included information concerning total operating
expenses excluding stock-based compensation expense and bankruptcy servicing
operating expenses in order to facilitate a comparison of approximate cash
costs to cash collections for the debt purchasing business in the periods
presented. The Company has included information concerning tangible book
value per share because management believes that this metric is a meaningful
measure that reflects the equity deployed in the business. These non-GAAP
financial measures should not be considered as alternatives to, or more
meaningful than, net income and total operating expenses as indicators of
About
Forward Looking Statements
The statements in this press release that are not historical facts,
including, most importantly, those statements preceded by, or that include,
the words "may," "believe," "projects," "expects," "anticipates" or the
negation thereof, or similar expressions, constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). These statements may include, but are not limited
to, statements regarding effectiveness of Board appointments, future operating
results and industry trends. For all "forward-looking statements," the
Company claims the protection of the safe harbor for forward-looking
statements contained in the Reform Act. Such forward-looking statements
involve risks, uncertainties and other factors which may cause actual results,
performance or achievements of the Company and its subsidiaries to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. These risks,
uncertainties and other factors are discussed from time to time in the reports
filed by the Company with the
Contact:
Encore Capital Group, Inc.
Paul Grinberg (858) 309-6904
paul.grinberg@encorecapitalgroup.com
or
Ren Zamora (858) 560-3598
ren.zamora@encorecapitalgroup.com
FINANCIAL TABLES FOLLOW
ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Financial Condition
(In Thousands, Except Par Value Amounts)
(Unaudited)
March 31, December 31,
2009 2008
Adjusted
Assets
Cash and cash equivalents $4,261 $10,341
Accounts receivable, net 1,775 1,757
Investment in receivable portfolios, net 473,484 461,346
Deferred court costs 30,645 28,335
Property and equipment, net 6,279 6,272
Prepaid income tax 2,515 7,935
Forward flow asset 10,302 10,302
Other assets 4,703 5,067
Goodwill 15,985 15,985
Identifiable intangible assets, net 1,578 1,739
Total assets $551,527 $549,079
Liabilities and stockholders' equity
Liabilities:
Accounts payable and accrued liabilities $17,805 $18,204
Deferred tax liabilities, net 15,253 15,108
Deferred revenue and purchased servicing
obligation 5,229 5,203
Debt 296,356 303,655
Other liabilities 3,176 3,483
Total liabilities 337,819 345,653
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock, $.01 par
value, 5,000 shares authorized, no
shares issued and outstanding - -
Common stock, $.01 par value, 50,000
shares authorized, 23,061 shares and
23,053 shares issued and outstanding
as of March 31, 2009 , and December 31,
2008, respectively 231 231
Additional paid-in capital 99,622 98,521
Accumulated earnings 115,792 106,795
Accumulated other comprehensive loss (1,937) (2,121)
Total stockholders' equity 213,708 203,426
Total liabilities and
stockholders' equity $551,527 $549,079
ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Income
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended
March 31,
2009 2008
Adjusted
Revenue
Revenue from receivable portfolios, net $72,275 $64,068
Servicing fees and other related revenue 4,171 3,486
Total revenue 76,446 67,554
Operating expenses
Salaries and employee benefits
(excluding stock-based compensation
expense) 13,957 14,851
Stock-based compensation expense 1,080 1,094
Cost of legal collections 29,947 20,306
Other operating expenses 5,980 5,651
Collection agency commissions 2,891 4,031
General and administrative expenses 5,697 4,460
Depreciation and amortization 623 722
Total operating expenses 60,175 51,115
Income before other (expense) income and
income taxes 16,271 16,439
Other (expense) income
Interest expense (4,273) (5,200)
Gain on repurchase of convertible notes 3,053 -
Other (expense) income (81) 21
Total other expense (1,301) (5,179)
Income before income taxes 14,970 11,260
Provision for income taxes (5,973) (4,509)
Net income $8,997 $6,751
Weighted average shares outstanding:
Basic 23,122 22,992
Diluted 23,631 23,431
Earnings per share:
Basic $0.39 $0.29
Diluted $0.38 $0.29
ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, In Thousands)
Three Months Ended
March 31,
2009 2008
Adjusted
Operating activities:
Net Income $8,997 $6,751
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 623 722
Amortization of loan costs and debt discount 1,221 1,567
Stock-based compensation expense 1,080 1,094
Gain on repurchase of convertible notes,
Net (3,053) -
Deferred income tax expense (benefit) 145 (559)
Tax benefit from stock-based payment
Arrangements (21) (5)
Provision for impairment on receivable
portfolios, net 5,427 5,335
Changes in operating assets and liabilities
Other assets (165) 1,386
Deferred court costs (2,310) (2,906)
Prepaid income tax 5,441 4,819
Deferred revenue and purchased service
Obligation 26 185
Accounts payable and accrued liabilities (523) (2,559)
Net cash provided by operating activities 16,888 15,830
Investing activities:
Purchases of receivable portfolios, net of
forward flow allocation (55,913) (44,976)
Collections applied to investment in
receivable portfolios, net 37,424 34,877
Proceeds from put-backs of receivable
Portfolios 924 1,692
Purchases of property and equipment (469) (1,117)
Net cash used in investing activities (18,034) (9,524)
Financing activities:
Proceeds from revolving credit facility 32,000 9,000
Repayment of revolving credit facility (17,000) (11,169)
Repurchase of convertible notes (19,834) -
Proceeds from exercise of stock options - 2
Tax benefit from stock-based payment
Arrangements 21 5
Repayment of capital lease obligations (121) (83)
Net cash used in financing activities (4,934) (2,245)
Net (decrease) increase in cash (6,080) 4,061
Cash and cash equivalents, beginning of
Period 10,341 8,676
Cash and cash equivalents, end of period $4,261 $12,737
Supplemental disclosures of cash flow
information:
Cash paid for interest $3,699 $4,172
Income tax payment (refund) $499 $(407)
Supplemental schedule of non-cash investing
and financing activities:
Allocation of forward flow asset to
acquired receivable portfolios $- $2,926
ENCORE CAPITAL GROUP, INC.
Supplemental Financial Information
Reconciliation of Adjusted EBITDA to GAAP Net Income, Operating Expenses,
Excluding Stock-based Compensation Expense and Bankruptcy Servicing
Operating Expenses to GAAP Total Operating Expenses, and Tangible Book
Value Per Share to GAAP Total Stockholders' Equity
(Unaudited, In Thousands)
Three Months Ended
March 31,
2009 2008
Adjusted
GAAP net income, as reported $8,997 $6,751
Interest expense 4,273 5,200
Provision for income taxes 5,973 4,509
Depreciation and amortization 623 722
Amount applied to principal on receivable
portfolios 42,851 40,212
Stock-based compensation expense 1,080 1,094
Adjusted EBITDA $63,797 $58,488
Three Months Ended
March 31,
2009 2008
GAAP total operating expenses, as reported $60,175 $51,115
Stock-based compensation expense (1,080) (1,094)
Bankruptcy servicing operating expenses (3,386) (2,738)
Operating expenses, excluding stock-based
compensation expense and bankruptcy
servicing operating expenses $55,709 $47,283
As of As of
March 31, December 31,
2009 2008
Adjusted
GAAP total stockholders' equity, as
Reported $213,708 $203,426
Goodwill (15,985) (15,985)
Identifiable intangible assets, net (1,578) (1,739)
Tangible book value $196,145 $185,702
Diluted shares outstanding 23,631 23,632
Tangible book value per share $8.30 $7.86
SOURCE
CONTACT:
paul.grinberg@encorecapitalgroup.com,
or
ren.zamora@encorecapitalgroup.com, both of
Web Site: http://www.encorecapitalgroup.com
(ECPG)