UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
______________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 9, 2018
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ENCORE CAPITAL GROUP, INC.
(Exact Name of Registrant as Specified in Charter)
(Exact Name of Registrant as Specified in Charter)
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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) | ||
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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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 7.01. Regulation FD Disclosure.
In connection with the exploration of various financings, Encore Capital Group, Inc., a Delaware corporation (the “Company”), provided the information furnished as Exhibit 99.1 to this Current Report on Form 8-K to potential investors.
The information in Exhibit 99.1 relates to the Company’s “Restricted Subsidiaries” as defined in the Company’s Third Amended and Restated Credit Agreement, dated December 20, 2016.
The information contained in Item 7.01 of this Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for any purpose, and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, regardless of any general incorporation language in any such filing. In addition, the Company does not assume any obligation to update such information in the future.
Item 9.01. Financial Statements and Exhibits.
Exhibit Number | Description |
99.1 | Information Disclosed |
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: July 9, 2018 | /s/ Jonathan Clark |
Jonathan Clark | |
Executive Vice President and Chief Financial Officer | |
EXHIBIT INDEX
Exhibit Number | Description |
99.1 | |
Exhibit 99.1
Twelve Months Ended March 31, | Three Months Ended March 31, | Year Ended December 31, | |||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2016 | |||||||||||||||
(in thousands, except ratios, unaudited) | |||||||||||||||||||
Other Financial Data (Company and Restricted Subsidiaries): | |||||||||||||||||||
Total revenues, adjusted by net allowances | $ | 667,423 | $ | 171,944 | $ | 170,316 | $ | 665,795 | $ | 669,636 | |||||||||
Net income | $ | 46,188 | $ | 12,676 | $ | 20,536 | $ | 54,048 | $ | 75,280 | |||||||||
Adjustments: | |||||||||||||||||||
Loss from discontinued operations, net of tax | — | — | 199 | 199 | 2,353 | ||||||||||||||
Interest expense | 67,825 | 18,896 | 15,435 | 64,364 | 57,161 | ||||||||||||||
Interest income | (1,731 | ) | (541 | ) | (408 | ) | (1,598 | ) | (1,404 | ) | |||||||||
Provision for income taxes | 22,527 | 3,379 | 11,319 | 30,467 | 41,367 | ||||||||||||||
Depreciation and amortization | 16,883 | 3,936 | 4,755 | 17,702 | 19,204 | ||||||||||||||
Stock-based compensation expense | 9,769 | 1,694 | 750 | 8,825 | 12,627 | ||||||||||||||
Acquisition, integration and restructuring related expenses | — | — | 129 | 129 | 3,227 | ||||||||||||||
Expenses related to Cabot IPO | 1,564 | 193 | — | 1,371 | — | ||||||||||||||
Settlement fees and related administrative expenses | — | — | — | — | 6,299 | ||||||||||||||
Adjusted EBITDA(1) | 163,025 | 40,233 | 52,715 | 175,507 | 216,114 | ||||||||||||||
Collections applied to principal balance(2) | 445,241 | 127,023 | 117,159 | 435,377 | 412,258 | ||||||||||||||
Adjusted EBITDA plus collections applied to principal balance | $ | 608,266 | $ | 167,256 | $ | 169,874 | $ | 610,884 | $ | 628,372 | |||||||||
(Net debt)(3) / (Adjusted EBITDA plus collections applied to principal balance)(2) | 2.10x | — | — | 1.97x | 1.77x | ||||||||||||||
(Adjusted EBITDA plus collections applied to principal balance)(2) / interest expense | 8.97x | — | — | 9.49x | 10.99x | ||||||||||||||
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(1) | Adjusted EBITDA is defined as net income before discontinued operations, interest income and expense, taxes, depreciation and amortization, stock-based compensation expenses, acquisition, integration and restructuring expenses, settlement fees and related administrative expenses and other charges or gains that are not indicative of ongoing operations. We have included information concerning Adjusted EBITDA because management utilizes this information in the evaluation of our operations and believes that this measure is a useful indicator of our ability to generate cash collections in excess of operating expenses through the liquidation of our receivable portfolios. While providing useful information, Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income, income from operations or net cash provided by operating activities as indicators of our operating performance or liquidity. Further, Adjusted EBITDA, as presented by us, may not be comparable to similarly titled measures reported by other companies since each company may define such measures differently. |
(2) | Amount represents (a) gross collections from receivable portfolios less (b) revenue from receivable portfolios and (c) allowance charges or allowance reversals on receivable portfolios. |
(3) | For purposes of this calculation, net debt is total debt less cash and cash equivalents. |
As of March 31, | As of December 31, | ||||||||||
2018 | 2017 | 2016 | |||||||||
(in thousands, unaudited) | |||||||||||
Statement of Financial Condition Data (Company and Restricted Subsidiaries): | |||||||||||
Cash and cash equivalents | $ | 73,190 | $ | 88,419 | $ | 60,532 | |||||
Investment in receivable portfolios, net | 1,300,800 | 1,251,528 | 1,158,277 | ||||||||
Total assets | 2,232,600 | 2,180,842 | 1,988,011 | ||||||||
Total debt | 1,349,264 | 1,291,187 | 1,170,193 | ||||||||
Total liabilities | 1,440,577 | 1,399,956 | 1,279,987 | ||||||||
Total stockholders’ equity | 792,023 | 780,886 | 705,029 | ||||||||