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Form 8-K - Earnings Release 2014 1106
 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________________
FORM 8-K
______________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 6, 2014
______________________
ENCORE CAPITAL GROUP, INC.
(Exact Name of Registrant as Specified in Charter)
______________________
Delaware
(State or Other Jurisdiction of Incorporation)
000-26489
(Commission
File Number)
48-1090909
(IRS Employer
Identification No.)
3111 Camino Del Rio North, Suite 103, San Diego, California
(Address of Principal Executive Offices)
92108
(Zip Code)
(877) 445-4581
(Registrant’s telephone number, including area code)
______________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))








 


Item 2.02.    Results of Operations and Financial Condition.

On November 6, 2014, Encore Capital Group, Inc. issued a press release announcing its financial results for the third quarter ended September 30, 2014. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

The information in Item 2.02 of this Current Report on Form 8-K, including the information contained in Exhibit 99.1, is being furnished to the Securities and Exchange Commission pursuant to Item 2.02, and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by a specific reference in such filing.

Item 9.01.    Financial Statements and Exhibits.

Exhibit Number
Description 
99.1
Press release dated November 6, 2014




 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
ENCORE CAPITAL GROUP, INC.

 
 
Date: November 6, 2014
/s/ Paul Grinberg
 
Paul Grinberg
 
Executive Vice President, Chief Financial Officer and Treasurer




 

EXHIBIT INDEX
Exhibit Number
Description 
99.1
Press release dated November 6, 2014










ECPG Q3 2014 Earnings Press Release

 
Exhibit 99.1


Encore Capital Group Announces Third Quarter 2014 Financial Results;
Diversification Drives Record Quarter

•
GAAP EPS increases 35% to record $1.11
•
Non-GAAP Economic EPS increases 15% to record $1.17
•
Estimated Remaining Collections increase to record $5.1 billion
•
Encore deploys $336 million worldwide, $174 million in core U.S. market
•
Encore completes Atlantic Credit & Finance servicing platform and portfolio acquisition
SAN DIEGO, November 6, 2014 -- Encore Capital Group, Inc. (NASDAQ: ECPG), an international specialty finance company providing debt recovery solutions for consumers and property owners across a broad range of assets, today reported consolidated financial results for the third quarter ended September 30, 2014.
“Encore delivered record earnings per share during the third quarter, driven by our continued focus on growing the core business while diversifying into new geographies and asset classes,” said Kenneth A. Vecchione, President and Chief Executive Officer. “Our international operations contributed more than one fourth of the quarter’s collections, which grew meaningfully to $407 million. Similarly, we deployed more than one third of our capital overseas, enabling us to grow our Estimated Remaining Collections to a record $5.1 billion.”
“On the core business front, the acquisition of Atlantic Credit & Finance closed during the quarter, and the integration is progressing as we expected,” Vecchione said. “ACF’s continued success in collecting on recently charged-off, higher-balance accounts expands our capabilities and enables us to deploy additional capital in the recently charged-off market segment in the U.S. Our asset class expansion, coupled with our global diversification strategy, has positioned Encore to continue to thrive in a time of ongoing industry change and consolidation.”
Financial Highlights for the Third Quarter of 2014:

•
Estimated Remaining Collections (ERC) grew 27% to a record $5.1 billion, compared to $4.0 billion in the same period of the prior year.
•
Gross collections from the portfolio purchasing and recovery business grew 7% to $407.2 million, compared to $379.7 million in the same period of the prior year.
•
Investment in receivable portfolios in the portfolio purchasing and recovery business was $299.5 million, to purchase $4.0 billion in face value of debt, compared to $617.9 million, to purchase $13.4 billion in face value of debt in the same period of the prior year, which included the $559.0 million acquisition of Cabot's portfolio in July 2013.
•
Available capacity under Encore’s revolving credit facility, subject to borrowing base and applicable debt covenants, was $263.6 million as of September 30, 2014, not including the $250 million additional capacity provided by the facility’s accordion feature. Total debt was $2.8 billion as of September 30, 2014, compared to $1.9 billion as of December 31, 2013.
•
Total revenues increased 16% to a record $273.3 million, compared to $235.6 million in the same period of the prior year.
•
Total operating expenses increased 8% to $189.0 million, compared to $174.4 million in the same period of the prior year. Adjusted operating expenses (defined as operating expenses excluding stock-based compensation expense, expenses related to non-portfolio purchasing and recovery business, one-time charges, and acquisition and integration related expenses) per dollar collected for the portfolio purchasing and recovery business decreased to 38.9%, compared to 39.7% in the same period of the prior year.

Encore Capital Group, Inc.
Page 2 of 9



•
Adjusted EBITDA (defined as net income before interest, taxes, depreciation and amortization, stock-based compensation expenses, portfolio amortization, one-time items, and acquisition and integration related expenses), increased 9% to $251.8 million, compared to $231.4 million in the same period of the prior year.
•
Total interest expense increased to $43.5 million, as compared to $29.2 million in the same period of the prior year, reflecting the financing of Encore’s recent acquisitions.
•
Net income from continuing operations attributable to Encore was $30.3 million, or $1.11 per fully diluted share, compared to net income from continuing operations attributable to Encore of $22.2 million, or $0.82 per fully diluted share, in the same period of the prior year.
•
Adjusted income from continuing operations attributable to Encore (defined as net income from continuing operations attributable to Encore excluding the noncontrolling interest, non-cash interest and issuance cost amortization, one-time items, and acquisition and integration related expenses, all net of tax) increased to $30.8 million, compared to adjusted income from continuing operations attributable to Encore of $26.8 million in the same period of the prior year.
•
Adjusted income from continuing operations attributable to Encore per share (also referred to as Economic EPS) grew 15% to $1.17, compared to $1.02 in the same period of the prior year. In the third quarter, Economic EPS adjusts for approximately 1.0 million shares associated with convertible notes that will not be issued but are reflected in the fully diluted share count for accounting purposes.

Conference Call and Webcast
The Company will hold a conference call today at 2:00 p.m. Pacific time / 5:00 p.m. Eastern time to discuss third quarter financial results.
Members of the public are invited to listen to the event via a listen-only telephone conference call line or the Internet. To access the live telephone conference call, please dial (877) 670-9781 or (408) 940-3818. The Conference ID is 24228280. To access the live webcast via the Internet, log on to the Investors page of the Company's website at www.encorecapital.com.

Non-GAAP Financial Measures
This news release 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 adjusted income attributable to Encore and adjusted income from continuing operations attributable to Encore per share (also referred to as economic EPS when adjusted for certain shares associated with our convertible notes that will not be issued but are reflected in the fully diluted share count for accounting purposes) because management uses this measure to assess operating performance, in order to highlight trends in the Company’s business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. 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 revolving credit facility, 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 adjusted operating expenses in order to facilitate a comparison of approximate cash costs to cash collections for the portfolio purchasing and recovery business in the periods presented. Adjusted income attributable to Encore, adjusted income from continuing operations attributable to Encore per share/economic EPS, adjusted EBITDA, and adjusted operating expenses have not been prepared in accordance with GAAP. These non-GAAP financial measures should not be considered as alternatives to, or more meaningful than, net

Encore Capital Group, Inc.
Page 3 of 9



income, net income per share, and total operating expenses as indicators of the Company’s operating performance. Further, these non-GAAP financial measures, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. The Company has attached to this news release a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

About Encore Capital Group, Inc.
Encore Capital Group, an international specialty finance company with operations spanning seven countries, provides debt recovery solutions for consumers and property owners across a broad range of assets. Through its subsidiaries, the Company purchases portfolios of consumer receivables from major banks, credit unions, and utility providers, and partners with individuals as they repay their obligations and work toward financial recovery. Through its Propel Financial Services subsidiary, the Company assists property owners who are delinquent on their property taxes by structuring affordable monthly payment plans and purchases delinquent tax liens directly from selected taxing authorities. Through its subsidiaries in the United Kingdom, Cabot Credit Management, Marlin Financial Services and Grove Capital Management, the Company is a market-leading acquirer and manager of consumer debt in the United Kingdom, Spain and Ireland. Through its Refinancia subsidiary, the Company services distressed consumer debt in Colombia and Peru. Encore's success and future growth are driven by its sophisticated and widespread use of analytics, its broad investments in data and behavioral science, the significant cost advantages provided by its highly efficient operating model and proven investment strategy, and the Company's demonstrated commitment to conducting business ethically and in ways that support its consumers' financial recovery.
Headquartered in San Diego, Encore is a publicly traded NASDAQ Global Select company (ticker symbol: ECPG) and a component stock of the Russell 2000, the S&P SmallCap 600, and the Wilshire 4500. More information about the Company can be found at www.encorecapital.com. More information about the Company's Cabot Credit Management subsidiary can be found at www.cabotcm.com. Information found on the Company's website or Cabot's website is not incorporated by reference.

Encore Capital Group, Inc.
Page 4 of 9



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 “will,” "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 our future operating results, performance, business plans or prospects. 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 in the reports filed by the Company with the Securities and Exchange Commission, including the most recent reports on Forms 10-K and 10-Q, as they may be amended from time to time. The Company disclaims any intent or obligation to update these forward-looking statements.

Contact:
Encore Capital Group, Inc.
Paul Grinberg (858) 309-6904
paul.grinberg@encorecapital.com

Bruce Thomas (858) 309-6442
bruce.thomas@encorecapital.com



FINANCIAL TABLES FOLLOW

Encore Capital Group, Inc.
Page 5 of 9



ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Financial Condition
(In Thousands, Except Par Value Amounts)
(Unaudited)
 
September 30,
2014
 
December 31,
2013
Assets
 
 
 
Cash and cash equivalents
$
115,440

 
$
126,213

Investment in receivable portfolios, net
2,073,232

 
1,590,249

Deferred court costs, net
53,130

 
41,219

Receivables secured by property tax liens, net
276,081

 
212,814

Property and equipment, net
64,565

 
55,783

Other assets
218,119

 
154,783

Goodwill
921,519

 
504,213

Total assets
$
3,722,086

 
$
2,685,274

Liabilities and equity
 
 
 
Liabilities:
 
 
 
Accounts payable and accrued liabilities
$
192,309

 
$
137,272

Debt
2,790,746

 
1,850,431

Other liabilities
98,864

 
95,100

Total liabilities
3,081,919

 
2,082,803

Commitments and contingencies
 
 
 
Redeemable noncontrolling interest
30,280

 
26,564

Redeemable equity component of convertible senior notes
9,787

 
—

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, 25,720 shares and 25,457 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively
257

 
255

Additional paid-in capital
121,491

 
171,819

Accumulated earnings
471,704

 
394,628

Accumulated other comprehensive gain
3,274

 
5,195

Total Encore Capital Group, Inc. stockholders’ equity
596,726

 
571,897

Noncontrolling interest
3,374

 
4,010

Total equity
600,100

 
575,907

Total liabilities, redeemable equity and equity
$
3,722,086

 
$
2,685,274

The following table includes assets that can only be used to settle the liabilities of the Company’s consolidated variable interest entities (“VIEs”). These assets and liabilities are included in the consolidated statements of financial condition above.
 
September 30,
2014
 
December 31,
2013
Assets
 
 
 
Cash and cash equivalents
$
34,261

 
$
62,403

Investment in receivable portfolios, net
1,008,885

 
620,312

Deferred court costs, net
9,407

 
—

Receivables secured by property tax liens, net
116,980

 
—

Property and equipment, net
13,491

 
13,755

Other assets
89,911

 
33,772

Goodwill
695,825

 
376,296

Liabilities
 
 
 
Accounts payable and accrued liabilities
$
104,200

 
$
47,219

Debt
1,622,302

 
846,676

Other liabilities
6,885

 
1,897



Encore Capital Group, Inc.
Page 6 of 9



ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Income
(In Thousands, Except Per Share Amounts)
(Unaudited)
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2014
 
2013
 
2014
 
2013
Revenues
 
 
 
 
 
 
 
Revenue from receivable portfolios, net
$
251,785

 
$
225,387

 
$
737,584

 
$
518,094

Other revenues
13,445

 
5,792

 
38,943

 
6,473

Net interest income
8,052

 
4,379

 
19,691

 
11,698

Total revenues
273,282

 
235,558

 
796,218

 
536,265

Operating expenses
 
 
 
 
 
 
 
Salaries and employee benefits
61,175

 
52,253

 
183,667

 
114,054

Cost of legal collections
53,742

 
50,953

 
153,596

 
137,694

Other operating expenses
22,061

 
19,056

 
72,196

 
46,118

Collection agency commissions
9,517

 
14,158

 
25,275

 
22,717

General and administrative expenses
35,532

 
33,486

 
110,508

 
77,429

Depreciation and amortization
6,933

 
4,523

 
19,879

 
8,527

Total operating expenses
188,960

 
174,429

 
565,121

 
406,539

Income from operations
84,322

 
61,129

 
231,097

 
129,726

Other expense
 
 
 
 
 
 
 
Interest expense
(43,498
)
 
(29,186
)
 
(124,678
)
 
(43,522
)
Other expense
(532
)
 
(299
)
 
(192
)
 
(4,262
)
Total other expense
(44,030
)
 
(29,485
)
 
(124,870
)
 
(47,784
)
Income before income taxes
40,292

 
31,644

 
106,227

 
81,942

Provision for income taxes
(10,154
)
 
(10,272
)
 
(35,906
)
 
(30,110
)
Income from continuing operations
30,138

 
21,372

 
70,321

 
51,832

Loss from discontinued operations, net of tax
 
 
(308
)
 
—

 
(308
)
Net income
30,138

 
21,064

 
70,321

 
51,524

Net loss attributable to noncontrolling interest
197

 
822

 
6,755

 
822

Net income attributable to Encore Capital Group, Inc. stockholders
$
30,335

 
$
21,886

 
$
77,076

 
$
52,346

Amounts attributable to Encore Capital Group, Inc.:
 
 
 
 
 
 
 
Income from continuing operations
$
30,335

 
$
22,194

 
$
77,076

 
$
52,654

Loss from discontinued operations, net of tax
—

 
(308
)
 
—

 
(308
)
Net income
$
30,335

 
$
21,886

 
$
77,076

 
$
52,346

Earnings per share attributable to Encore Capital Group, Inc.:
 
 
 
 
 
 
 
Basic earnings (loss) per share from:
 
 
 
 
 
 
 
Continuing operations
$
1.17

 
$
0.87

 
$
2.99

 
$
2.16

Discontinued operations
$
—

 
$
(0.01
)
 
$
—

 
$
(0.01
)
Basic
$
1.17

 
$
0.86

 
$
2.99

 
$
2.15

Diluted earnings (loss) per share from:
 
 
 
 
 
 
 
Continuing operations
$
1.11

 
$
0.82

 
$
2.79

 
$
2.06

Discontinued operations
$
—

 
$
(0.01
)
 
$
—

 
$
(0.01
)
Diluted
$
1.11

 
$
0.81

 
$
2.79

 
$
2.05

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
25,879

 
25,535

 
25,811

 
24,323

Diluted
27,332

 
27,183

 
27,622

 
25,561


Encore Capital Group, Inc.
Page 7 of 9



ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, In Thousands)
 
Nine Months Ended 
 September 30,
 
2014
 
2013
Operating activities:
 
 
 
Net income
$
70,321

 
$
51,524

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
19,879

 
8,527

Other non-cash interest expense
20,989

 
5,411

Stock-based compensation expense
13,560

 
9,163

Recognized loss on termination of derivative contract
—

 
3,630

Deferred income taxes
(11,863
)
 
(217
)
Excess tax benefit from stock-based payment arrangements
(11,422
)
 
(5,238
)
Reversal of allowances on receivable portfolios, net
(12,455
)
 
(7,658
)
Changes in operating assets and liabilities
 
 
 
Deferred court costs and other assets
(16,498
)
 
1,897

Prepaid income tax and income taxes payable
2,402

 
(25,785
)
Accounts payable, accrued liabilities and other liabilities
23,850

 
(1,388
)
Net cash provided by operating activities
98,763

 
39,866

Investing activities:
 
 
 
Cash paid for acquisitions, net of cash acquired
(495,519
)
 
(413,055
)
Purchases of receivable portfolios, net of put-backs
(666,470
)
 
(156,438
)
Collections applied to investment in receivable portfolios, net
488,086

 
418,024

Originations and purchases of receivables secured by tax liens
(108,739
)
 
(100,278
)
Collections applied to receivables secured by tax liens
93,986

 
51,111

Purchases of property and equipment
(13,598
)
 
(8,178
)
Other
(1,987
)
 
(5,580
)
Net cash used in investing activities
(704,241
)
 
(214,394
)
Financing activities:
 
 
 
Payment of loan costs
(15,271
)
 
(17,152
)
Proceeds from credit facilities
993,449

 
522,065

Repayment of credit facilities
(878,883
)
 
(491,462
)
Proceeds from senior secured notes
288,645

 
151,670

Repayment of senior secured notes
(11,250
)
 
(10,000
)
Proceeds from issuance of convertible senior notes
161,000

 
172,500

Proceeds from issuance of securitized notes
134,000

 
—

Repayment of securitized notes
(20,599
)
 
—

Repayment of preferred equity certificates, net
(702
)
 
(39,743
)
Purchases of convertible hedge instruments
(33,576
)
 
(18,113
)
Repurchase of common stock
(16,815
)
 
—

Taxes paid related to net share settlement of equity awards
(19,356
)
 
(9,270
)
Excess tax benefit from stock-based payment arrangements
11,422

 
5,238

Other, net
987

 
(1,073
)
Net cash provided by financing activities
593,051

 
264,660

Net (decrease) increase in cash and cash equivalents
(12,427
)
 
90,132

Effect of exchange rate changes on cash
1,654

 
2,514

Cash and cash equivalents, beginning of period
126,213

 
17,510

Cash and cash equivalents, end of period
$
115,440

 
$
110,156

Supplemental disclosures of cash flow information:
 
 
 
Cash paid for interest
$
120,125

 
$
48,243

Cash paid for income taxes
54,452

 
54,499

Supplemental schedule of non-cash investing and financing activities:
 
 
 
Fixed assets acquired through capital lease
$
6,852

 
$
1,189


Encore Capital Group, Inc.
Page 8 of 9



ENCORE CAPITAL GROUP, INC.
Supplemental Financial Information
Reconciliation of Adjusted Income From Continuing Operations Attributable to Encore to GAAP Net Income From Continuing Operations Attributable to Encore, Adjusted EBITDA to GAAP Net Income, and Adjusted Operating Expenses to GAAP Total Operating Expenses
(In Thousands, Except Per Share amounts) (Unaudited)
 
Three Months Ended September 30,
 
2014
 
2013
 
$
 
Per Diluted
Share—
Accounting
 
Per  Diluted
Share—
Economic
 
$
 
Per Diluted
Share—
Accounting
 
Per  Diluted
Share—
Economic
GAAP net income from continuing operations attributable to Encore, as reported
$
30,335

 
$
1.11

 
$
1.15

 
$
22,194

 
$
0.82

 
$
0.84

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Convertible notes non-cash interest and issuance cost amortization, net of tax
1,773

 
0.06

 
0.07

 
1,103

 
0.04

 
0.05

Acquisition and integration related expenses, net of tax
1,001

 
0.04

 
0.04

 
4,775

 
0.18

 
0.18

Net effect of non-recurring tax adjustments
(2,291
)
 
(0.08
)
 
(0.09
)
 
(1,236
)
 
(0.05
)
 
(0.05
)
Adjusted income from continuing operations attributable to Encore
$
30,818

 
$
1.13

 
$
1.17

 
$
26,836

 
$
0.99

 
$
1.02

 
Nine Months Ended September 30,
 
2014
 
2013
 
$
 
Per Diluted
Share—
Accounting
 
Per  Diluted
Share—
Economic
 
$
 
Per Diluted
Share—
Accounting
 
Per  Diluted
Share—
Economic
GAAP net income from continuing operations attributable to Encore, as reported
$
77,076

 
$
2.79

 
$
2.91

 
$
52,346

 
$
2.05

 
$
2.08

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
Convertible notes non-cash interest and issuance cost amortization, net of tax
4,758

 
0.17

 
0.18

 
2,103

 
0.08

 
0.08

Acquisition and integration related expenses, net of tax
9,195

 
0.33

 
0.35

 
13,060

 
0.51

 
0.52

Acquisition related other expenses, net of tax
—

 
—

 
—

 
2,198

 
0.09

 
0.09

Net effect of non-recurring tax adjustments
(2,291
)
 
(0.08
)
 
(0.09
)
 
(712
)
 
(0.03
)
 
(0.03
)
Adjusted income from continuing operations attributable to Encore
$
88,738

 
$
3.21

 
$
3.35

 
$
69,303

 
$
2.71

 
$
2.74




Encore Capital Group, Inc.
Page 9 of 9



ENCORE CAPITAL GROUP, INC.
Supplemental Financial Information - continued

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
2014
 
2013
 
2014
 
2013
GAAP net income, as reported
$
30,138

 
$
21,064

 
$
70,321

 
$
51,524

Adjustments:
 
 
 
 
 
 
 
Loss from discontinued operations, net of tax
—

 
308

 
—

 
308

Interest expense
43,498

 
29,186

 
124,678

 
43,522

Provision for income taxes
10,154

 
10,272

 
35,906

 
30,110

Depreciation and amortization
6,933

 
4,523

 
19,879

 
8,527

Amount applied to principal on receivable portfolios
155,435

 
154,283

 
475,590

 
410,134

Stock-based compensation expense
4,009

 
3,983

 
13,560

 
9,163

Acquisition and integration related expenses
1,622

 
7,752

 
17,348

 
21,431

Acquisition related other expenses
—

 
—

 
—

 
3,630

Adjusted EBITDA
$
251,789

 
$
231,371

 
$
757,282

 
$
578,349


 
Three Months Ended September 30,
 
Nine Months Ended September 30,
2014
 
2013
 
2014
 
2013
GAAP total operating expenses, as reported
$
188,960

 
$
174,429

 
$
565,121

 
$
406,539

Adjustments:
 
 
 
 
 
 
 
Stock-based compensation expense
(4,009
)
 
(3,983
)
 
(13,560
)
 
(9,163
)
Operating expenses related to non-portfolio purchasing and recovery business
(25,058
)
 
(12,115
)
 
(71,299
)
 
(23,756
)
Acquisition and integration related expenses
(1,622
)
 
(7,752
)
 
(17,348
)
 
(21,431
)
Adjusted operating expenses
$
158,271

 
$
150,579

 
$
462,914

 
$
352,189