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ecpg-20240930
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________________________________________________________
FORM 10-Q
(Mark One)
☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024 or
☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to__________.
COMMISSION FILE NUMBER: 000-26489
ENCORE CAPITAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware48-1090909
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)
350 Camino De La Reina, Suite 100
San Diego, California 92108
(Address of principal executive offices, including zip code)
(877) 445 - 4581
(Registrant’s telephone number, including area code)
(Not Applicable)
(Former name, former address and former fiscal year, if changed since last report)
_______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 Par Value Per ShareECPG
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐
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.    ☐    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding at October 30, 2024
Common Stock, $0.01 par value23,691,291 shares

Table of Contents
ENCORE CAPITAL GROUP, INC.
INDEX TO FORM 10-Q
 
 Page


Table of Contents
PART I – FINANCIAL INFORMATION
Item 1—Condensed Consolidated Financial Statements (Unaudited)
ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Financial Condition
(In Thousands, Except Par Value Amounts)
(Unaudited)
September 30,
2024		December 31,
2023
Assets
Cash and cash equivalents$247,353 $158,364 
Investment in receivable portfolios, net3,719,260 3,468,432 
Property and equipment, net103,550 103,959 
Other assets295,422 293,256 
Goodwill628,131 606,475 
Total assets
$4,993,716 $4,630,486 
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities$222,841 $189,928 
Borrowings3,550,574 3,318,031 
Other liabilities172,196 185,989 
Total liabilities
3,945,611 3,693,948 
Commitments and contingencies (Note 11)
Equity:
Convertible preferred stock, $0.01 par value, 5,000 shares authorized, no shares issued and outstanding
— — 
Common stock, $0.01 par value, 75,000 shares authorized, 23,691 and 23,545 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
237 235 
Additional paid-in capital17,016 11,052 
Accumulated earnings1,135,234 1,049,171 
Accumulated other comprehensive loss(104,382)(123,920)
Total stockholders’ equity1,048,105 936,538 
Total liabilities and stockholders’ equity$4,993,716 $4,630,486 
The following table presents certain assets and liabilities of consolidated variable interest entities (“VIEs”) included in the condensed consolidated statements of financial condition above. The liabilities in the table below can only be settled from assets in the respective VIEs. Creditors of the VIEs do not have recourse to the general credit of the Company. See “Note 8: Variable Interest Entities” for additional information on the Company’s VIEs.
September 30,
2024		December 31,
2023
Assets
Cash and cash equivalents$28,740 $24,472 
Investment in receivable portfolios, net818,540 717,556 
Other assets5,485 19,358 
Liabilities
Accounts payable and accrued liabilities2,129 1,854 
Borrowings484,105 494,925 
Other liabilities2,915 2,452 
See accompanying notes
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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,
 2024202320242023
Revenues
Revenue from receivable portfolios$328,119 $302,687 $965,901 $899,545 
Changes in recoveries12,675 (17,067)6,020 (30,054)
Total debt purchasing revenue340,794 285,620 971,921 869,491 
Servicing revenue22,772 19,893 64,258 63,486 
Other revenues3,505 4,106 14,563 12,316 
Total revenues367,071 309,619 1,050,742 945,293 
Operating expenses
Salaries and employee benefits107,502 95,067 318,294 294,772 
Cost of legal collections67,339 56,274 190,309 167,525 
General and administrative expenses38,808 35,559 111,828 108,053 
Other operating expenses31,804 27,959 93,016 81,864 
Collection agency commissions7,370 8,046 22,308 26,583 
Depreciation and amortization8,158 11,196 23,467 32,768 
Total operating expenses260,981 234,101 759,222 711,565 
Income from operations106,090 75,518 291,520 233,728 
Other expense
Interest expense(66,906)(50,558)(184,047)(147,376)
Other income
1,578 5,103 6,291 5,080 
Total other expense(65,328)(45,455)(177,756)(142,296)
Income before income taxes40,762 30,063 113,764 91,432 
Provision for income taxes(10,119)(10,724)(27,701)(27,162)
Net income $30,643 $19,339 $86,063 $64,270 
Earnings per share:
Basic$1.28 $0.82 $3.61 $2.72 
Diluted$1.26 $0.79 $3.54 $2.62 
Weighted average shares outstanding:
Basic23,912 23,712 23,859 23,644 
Diluted24,407 24,382 24,324 24,535 

See accompanying notes
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ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited, In Thousands)
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Net income$30,643 $19,339 $86,063 $64,270 
Other comprehensive income (loss), net of tax:
Change in unrealized loss on derivative instruments:
Unrealized loss on derivative instruments
(23,315)(6,310)(18,571)(12,401)
Income tax effect6,014 (1,903)2,241 (774)
Unrealized loss on derivative instruments, net of tax
(17,301)(8,213)(16,330)(13,175)
Change in foreign currency translation:
Unrealized gain (loss) on foreign currency translation
42,237 (50,121)34,945 (16,581)
Income tax effect640 (257)923 (919)
Unrealized gain (loss) on foreign currency translation, net of tax
42,877 (50,378)35,868 (17,500)
Other comprehensive income (loss), net of tax:
25,576 (58,591)19,538 (30,675)
Total comprehensive income (loss)
$56,219 $(39,252)$105,601 $33,595 
See accompanying notes
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ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Equity
(Unaudited, In Thousands)

Three Months Ended September 30, 2024
Common StockAdditional Paid-In CapitalAccumulated Earnings
Accumulated Other Comprehensive (Loss)/ Income
Total Equity
SharesPar
Balance as of June 30, 202423,691 $237 $13,257 $1,104,591 $(129,958)$988,127 
Net income— — — 30,643 — 30,643 
Other comprehensive income, net of tax
— — — — 25,576 25,576 
Issuance of share-based awards, net of shares withheld for employee taxes
— — 22 — — 22 
Stock-based compensation— — 3,737 — — 3,737 
Balance as of September 30, 202423,691 $237 $17,016 $1,135,234 $(104,382)$1,048,105 

Three Months Ended September 30, 2023
Common StockAdditional Paid-In CapitalAccumulated EarningsAccumulated Other Comprehensive LossTotal Equity
SharesPar
Balance as of June 30, 202323,485 $235 $3,906 $1,300,594 $(70,900)$1,233,835 
Net income— — — 19,339 — 19,339 
Other comprehensive loss, net of tax
— — — — (58,591)(58,591)
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes44 — 1,105 — — 1,105 
Stock-based compensation
— — 3,092 — — 3,092 
Exercise of capped call options— — 2,371 — — 2,371 
Settlement of convertible notes— — (2,368)— — (2,368)
Balance as of September 30, 202323,529 $235 $8,106 $1,319,933 $(129,491)$1,198,783 

Nine Months Ended September 30, 2024
Common StockAdditional Paid-In CapitalAccumulated Earnings
Accumulated Other Comprehensive (Loss)/ Income
Total Equity
SharesPar
Balance as of December 31, 2023
23,545 $235 $11,052 $1,049,171 $(123,920)$936,538 
Net income— — — 86,063 — 86,063 
Other comprehensive income, net of tax
— — — — 19,538 19,538 
Issuance of share-based awards, net of shares withheld for employee taxes
146 2 (5,767)— — (5,765)
Stock-based compensation— — 11,731 — — 11,731 
Balance as of September 30, 202423,691 $237 $17,016 $1,135,234 $(104,382)$1,048,105 
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Nine Months Ended September 30, 2023
Common StockAdditional Paid-In Capital
Accumulated Earnings (Loss)
Accumulated Other Comprehensive LossTotal Equity
SharesPar
Balance as of December 31, 2022
23,323 $233 $— $1,278,210 $(98,816)$1,179,627 
Net income— — — 64,270 — 64,270 
Other comprehensive loss, net of tax
— — — — (30,675)(30,675)
Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes206 2 (5,217)— — (5,215)
Stock-based compensation
— — 11,017 — — 11,017 
Purchase of capped call options, net of tax effect— — (13,865)— — (13,865)
Unwind and exercise of capped call options— — 30,913 — — 30,913 
Settlement of convertible notes— — (14,742)(22,547)— (37,289)
Balance as of September 30, 202323,529 $235 $8,106 $1,319,933 $(129,491)$1,198,783 


See accompanying notes

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ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, In Thousands)
 Nine Months Ended September 30,
 20242023
Operating activities:
Net income
$86,063 $64,270 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization23,467 32,768 
Other non-cash interest expense, net12,379 12,526 
Stock-based compensation expense11,731 11,017 
Deferred income taxes1,718 952 
Changes in recoveries(6,020)30,054 
Other, net7,477 (1,958)
Changes in operating assets and liabilities
Other assets(35,277)(21,820)
Accounts payable, accrued liabilities and other liabilities31,086 (11,598)
Net cash provided by operating activities132,624 116,211 
Investing activities:
Purchases of receivable portfolios, net of put-backs(844,868)(772,101)
Collections applied to investment in receivable portfolios641,982 504,672 
Purchases of property and equipment(20,451)(16,765)
Other, net47,632 13,468 
Net cash used in investing activities(175,705)(270,726)
Financing activities:
Payment of loan and debt refinancing costs(18,164)(8,224)
Proceeds from credit facilities458,844 630,079 
Repayment of credit facilities(1,292,578)(446,724)
Proceeds from senior secured notes1,000,000 — 
Repayment of senior secured notes(29,310)(29,310)
Proceeds from issuance of convertible senior notes— 230,000 
Repayment of exchangeable senior notes
— (212,480)
Proceeds from convertible hedge instruments, net— 12,421 
Other, net11,695 (16,890)
Net cash provided by financing activities130,487 158,872 
Net increase in cash and cash equivalents87,406 4,357 
Effect of exchange rate changes on cash and cash equivalents1,583 (3,558)
Cash and cash equivalents, beginning of period158,364 143,912 
Cash and cash equivalents, end of period$247,353 $144,711 
Supplemental disclosure of cash information:
Cash paid for interest$138,951 $120,113 
Cash paid for taxes, net of refunds61,255 50,605 
Supplemental schedule of non-cash investing activities:
Investment in receivable portfolios transferred to real estate owned$4,617 $9,558 
    

See accompanying notes
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ENCORE CAPITAL GROUP, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1: Ownership, Description of Business, and Summary of Significant Accounting Policies
Encore Capital Group, Inc. (“Encore”), through its subsidiaries (collectively with Encore, the “Company”), is an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. The Company purchases portfolios of defaulted consumer receivables at deep discounts to face value and manages 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. The Company also provides debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.
Through Midland Credit Management, Inc. and its domestic affiliates (collectively, “MCM”), the Company is a market leader in portfolio purchasing and recovery in the United States. Through Cabot Credit Management Limited (“CCM”) and its subsidiaries and European affiliates (collectively, “Cabot”), the Company is one of the largest credit management services providers in Europe and the United Kingdom. These are the Company’s primary operations.
The Company also has investments and operations in Latin America and Asia-Pacific, which the Company refers to as “LAAP.”
Financial Statement Preparation and Presentation
The accompanying interim condensed consolidated financial statements have been prepared by the Company, without audit, in accordance with the instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”) and, therefore, do not include all information and footnotes necessary for a fair presentation of its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).
In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of the Company’s condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.
The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in the Company’s condensed financial statements and the accompanying notes. Actual results could materially differ from those estimates.
Basis of Consolidation
The condensed consolidated financial statements have been prepared in conformity with GAAP and reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. The Company also consolidates variable interest entities (“VIEs”) for which it is the primary beneficiary. The primary beneficiary has both (a) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance, and (b) either the obligation to absorb losses or the right to receive benefits. Refer to “Note 8: Variable Interest Entities” for further details. All intercompany transactions and balances have been eliminated in consolidation.
Translation of Foreign Currencies
The condensed financial statements of certain of the Company’s foreign subsidiaries are measured using their local currency as the functional currency. Assets and liabilities of foreign operations are translated into U.S. dollars using period-end exchange rates, and revenues and expenses are translated into U.S. dollars using average exchange rates in effect during each period. The resulting translation adjustments are recorded as a component of other comprehensive income or loss. Equity accounts are translated at historical rates, except for the change in retained earnings during the year which is the result of the income statement translation process. Intercompany transaction gains or losses at each period end arising from subsequent measurement of balances for which settlement is not planned or anticipated in the foreseeable future are included as translation adjustments and recorded within other comprehensive income or loss. Translation gains or losses are the material components of accumulated other comprehensive income or loss and are reclassified to earnings upon the substantial sale or liquidation of investments in foreign operations.
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Recent Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within the segment measure of profit or loss. This guidance will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024. This ASU may result in additional required disclosures when adopted. The Company is currently evaluating the provisions of this ASU and the impact on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The new standard is effective for annual periods beginning after December 15, 2024. This ASU may result in additional required disclosures when adopted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
Note 2: Earnings Per Share
Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period.
The number of shares used to calculate the diluted earnings per share is computed by using the basic weighted-average number of common shares outstanding plus any dilutive potential common shares outstanding during the period, except when their effect is anti-dilutive. Dilutive potential common shares include outstanding stock based awards, and the dilutive effect of the convertible and exchangeable senior notes, if applicable.
A reconciliation of shares used in calculating earnings per basic and diluted shares follows (in thousands, except per share amounts):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Net income $30,643 $19,339 $86,063 $64,270 
Shares:
Total weighted-average basic shares outstanding23,912 23,712 23,859 23,644 
Dilutive effect of stock-based awards89 165 103 191 
Dilutive effect of convertible and exchangeable senior notes406 505 362 700 
Total weighted-average dilutive shares outstanding24,407 24,382 24,324 24,535 
Basic earnings per share$1.28 $0.82 $3.61 $2.72 
Diluted earnings per share$1.26 $0.79 $3.54 $2.62 
There were no anti-dilutive employee stock options outstanding during the three and nine months ended September 30, 2024 and 2023.
Note 3: Fair Value Measurements
Fair value is defined as the price that would be received upon sale of an asset or the price paid to transfer a liability, in an orderly transaction between market participants at the measurement date (i.e., the “exit price”). The Company uses a fair value hierarchy that prioritizes the inputs used in valuation techniques to measure fair value into three broad levels. The following is a brief description of each level:
•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
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•Level 3: Unobservable inputs, including inputs that reflect the reporting entity’s own assumptions.
The Company’s cash and cash equivalents, certain other assets, accounts payable and accrued liabilities, and other liabilities approximate their fair values due to their short-term nature, which are determined to be a Level 1 measurement.
Financial Instruments Required To Be Carried At Fair Value
Financial assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):
 Fair Value Measurements as of September 30, 2024
 Level 1Level 2Level 3Total
Assets
Interest rate cap contracts$— $286 $— $286 
Cross-currency swap agreements
— 15,090 — 15,090 
Liabilities
Foreign currency exchange contracts— (7,225)— (7,225)
Interest rate swap agreements
— (22,782)— (22,782)
Cross-currency swap agreements— (26,103)— (26,103)
 Fair Value Measurements as of December 31, 2023
 Level 1Level 2Level 3Total
Assets
Interest rate cap contracts$— $16,950 $— $16,950 
Cross-currency swap agreements— 361 — 361 
Liabilities
Interest rate swap agreements— (22,510)— (22,510)
Cross-currency swap agreements— (28,039)— (28,039)
Derivative Contracts:
The Company uses derivative instruments to manage its exposure to fluctuations in interest rates and foreign currency exchange rates. Fair values of these derivative instruments are estimated using industry standard valuation models. These models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign currency exchange rates, and forward and spot prices for currencies. The Company’s derivative agreements are subject to underlying agreements with master netting arrangements, which provide for the right of offset in the event of default or in the event of bankruptcy of either party to the transactions. The Company reports its assets and liabilities subject to these arrangements on a gross basis for certain derivative agreements.
Non-Recurring Fair Value Measurement:
Certain assets are measured at fair value on a nonrecurring basis. These assets include real estate-owned assets classified as held for sale at the lower of their carrying value or fair value less cost to sell. The fair value of the assets held for sale and estimated selling expenses were determined at the time of initial recognition and in each reporting period using Level 3 measurements based on appraised values using market comparables. The fair value estimate of the assets held for sale was approximately $49.7 million and $70.6 million as of September 30, 2024 and December 31, 2023, respectively.
Financial Instruments Not Required To Be Carried At Fair Value
The table below summarizes fair value estimates for the Company's financial instruments that are not required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.



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The carrying amounts in the following table are included in the condensed consolidated statements of financial condition as of September 30, 2024 and December 31, 2023 (in thousands):
 September 30, 2024December 31, 2023
 Carrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
Financial Assets
Investment in receivable portfolios, net$3,719,260 $3,753,299 $3,468,432 $3,515,651 
Financial Liabilities
Global senior secured revolving credit facility7,000 7,000 816,880 816,880 
Encore private placement notes— — 29,310 28,922 
Senior secured notes(1)
2,694,757 2,740,267 1,649,621 1,598,636 
Convertible senior notes due October 2025100,000 128,748 100,000 136,403 
Convertible senior notes due March 2029230,000 231,990 230,000 226,794 
Cabot securitisation senior facility341,041 341,041 324,646 324,646 
U.S. facility
150,000 150,000 175,000 175,000 
Other borrowings68,946 68,946 24,904 24,904 
_______________________
(1)Carrying amount represents historical cost, adjusted for any related debt discount.
Investment in Receivable Portfolios:
The fair value of investment in receivable portfolios is measured using Level 3 inputs by discounting the estimated future cash flows generated by the Company’s proprietary forecasting models. The key inputs include the estimated future gross cash flow, average cost to collect, and discount rate. The determination of such inputs requires significant judgment, including assessing the assumed market participant’s cost structure, its determination of whether to include fixed costs in its valuation, its collection strategies, and determining the appropriate weighted average cost of capital. The Company evaluates the use of these key inputs on an ongoing basis and refines the data as it continues to obtain better information from market participants in the debt recovery and purchasing business.
Borrowings:
The Company’s convertible notes, senior secured notes and private placement notes are carried at historical cost, adjusted for the applicable debt discount. The fair value estimate for the convertible notes incorporates quoted market prices using Level 2 inputs. The fair value of the senior secured notes and private placement notes is estimated using widely accepted valuation techniques, including discounted cash flow analyses using available market information on discount and borrowing rates with similar terms, maturities, and credit ratings. Accordingly, the Company used Level 2 inputs for these debt instrument fair value estimates.
The carrying value of the Company’s senior secured revolving credit facility, securitisation senior facility, U.S. facility, and other borrowings approximates fair value due to the use of current market rates that are repriced frequently, which are determined to be a Level 2 measurement.
Note 4: Derivatives and Hedging Instruments
The Company may periodically enter into derivative financial instruments to manage risks related to interest rates and foreign currency. Certain of the Company’s derivative financial instruments qualify for hedge accounting treatment.
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The following table summarizes the fair value of derivative instruments as recorded in the Company’s condensed consolidated statements of financial condition (in thousands):
 September 30, 2024December 31, 2023
Balance Sheet LocationFair ValueBalance Sheet LocationFair Value
Derivatives designated as hedging instruments:
Interest rate cap contractsOther assets$286 Other assets$14,564 
Interest rate swap agreementsOther liabilities(22,782)Other liabilities(22,510)
Cross-currency swap agreementsOther assets15,090 Other assets361 
Cross-currency swap agreementsOther liabilities(26,103)Other liabilities(28,039)
Derivatives not designated as hedging instruments:
Interest rate cap contracts— — Other assets2,386 
Foreign currency exchange contractsOther liabilities(7,225)— — 
Derivatives Designated as Hedging Instruments
The Company may periodically enter into interest rate swap agreements and interest rate cap contracts to reduce its exposure to fluctuations in interest rates on variable interest rate debt and their impact on earnings and cash flows. Under the swap agreements, the Company receives floating interest rate payments and makes interest payments based on fixed interest rates. Under the cap contracts, the Company receives floating interest rate payments and makes interest payments based on capped interest rates. The Company designates its interest rate swap and interest rate cap instruments as cash flow hedges at inception.
The Company uses cross-currency swap agreements to manage foreign currency exchange risk by converting fixed-rate Euro-denominated borrowings and fixed-rate GBP-denominated borrowings including periodic interest payments and the payment of principal at maturity to fixed-rate USD debt. The cross-currency swap agreements are accounted for as fair value hedges.
The following tables summarize the terms of the derivative instruments designated as hedging instruments as recorded in the Company’s consolidated statements of financial condition:

September 30, 2024
Effective dateMaturity DateHedge DesignationNotional AmountReceive Floating Rate Index
Interest rate cap contracts
2024 CapSeptember 2024September 2026Cash flow hedge$341.0 millionSONIA
Interest rate swap agreements
2023 Euro IR SwapOctober 2023January 2028Cash flow hedge$111.4 million3-month EURIBOR
2024 Euro IR Swaps
June 2024January 2028Cash flow hedge$462.1 million3-month EURIBOR
         2023 SOFR IR Swaps
November 2023October 2026Cash flow hedge$150.0 million1-month SOFR CME Term
Cross-currency swap agreements
2020 Euro SwapsSeptember 2020October 2025Fair value hedge$389.8 million—
2023 GBP SwapsJuly 2023February 2026Fair value hedge$401.2 million—

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December 31, 2023
Effective dateMaturity DateHedge DesignationNotional AmountReceive Floating Rate Index
Interest rate cap contracts
2019 CapJanuary 2020June 2024Cash flow hedge$441.5 million3-month EURIBOR
2021 Cap(1)
November 2021September 2024Cash flow hedge$318.3 millionSONIA
2024 CapSeptember 2024September 2026Cash flow hedge$324.6 millionSONIA
Interest rate swap agreements
2023 Euro IR SwapOctober 2023January 2028Cash flow hedge$110.4 million3-month EURIBOR
2024 Euro IR Swaps
June 2024January 2028Cash flow hedge$458.1 million3-month EURIBOR
         2023 SOFR IR Swaps
November 2023October 2026Cash flow hedge$150.0 million1-month SOFR CME Term
Cross-currency swap agreements
2020 Euro SwapsSeptember 2020October 2025Fair value hedge$386.3 million—
2023 GBP SwapsJuly 2023February 2026Fair value hedge$381.9 million—
_______________________
(1)The total notional amount of the 2021 Cap was $445.6 million, of which $318.3 million was hedge designated and $127.3 million was not hedge designated as of December 31, 2023.
As discussed in “Note 7: Borrowings,” on October 15, 2024, the Company fully redeemed its Senior Secured Notes due October 2025 (the “2025 Notes”). In connection with the early redemption of the 2025 Notes, the Company settled the corresponding 2020 Euro Swaps on the same date for approximately $33.8 million. As a result of the early settlement, the Company reclassed the remaining OCI balance associated with the 2020 Euro Swaps of approximately $0.8 million into interest expense during the fourth quarter of 2024. Other than stated above, the settlement payment of the 2020 Euro Swaps will not result in any income statement recognition during the fourth quarter of 2024.
The Company expects to reclassify approximately $5.7 million of net derivative loss from OCI into earnings relating to its cash flow designated derivatives within the next 12 months. This amount will vary due to fluctuations in benchmark interest rates.
The following tables summarize the effects of derivatives designated as hedging instruments in the Company’s condensed consolidated financial statements (in thousands):
Derivatives Designated as Hedging Instruments
(Loss) Gain Recognized in OCI
Location of Gain (Loss) Reclassified from OCI into Income (Loss)
Gain (Loss) Reclassified from OCI into Income
Three Months Ended September 30,Three Months Ended September 30,
2024202320242023
Interest rate swap agreements$(15,272)$— Interest expense$1,078 $— 
Interest rate cap contracts(2,460)(9,578)Interest expense(382)(424)
Cross-currency swap agreements29,718 (26,811)Interest expense(997)(925)
Other income (expense)
35,602 (32,401)
Derivatives Designated as Hedging InstrumentsGain (Loss) Recognized in OCILocation of Gain (Loss) Reclassified from OCI into Income (Loss)
Gain (Loss) Reclassified from OCI into Income
Nine Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Interest rate swap agreements$2,001 $— Interest expense$2,273 $— 
Interest rate cap contracts(14,288)(13,079)Interest expense(1,758)(1,265)
Cross-currency swap agreements12,419 (26,641)Interest expense(4,534)(3,828)
Other income (expense)
22,722 (25,897)
Derivatives Not Designated as Hedging Instruments
From time to time, the Company enters into currency exchange forward contracts to reduce the effects of currency exchange rate fluctuations. These derivative contracts generally mature within one to six months and are not designated as
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hedge instruments for accounting purposes. The gains or losses on these unhedged derivative contracts are recognized in other income or expense based on the changes in fair value.
The following table summarizes the effects of derivatives not designated as hedging instruments on the Company’s condensed consolidated statements of income for the three and nine months ended September 30, 2024 and 2023 (in thousands):
Derivatives Not Designated as Hedging Instruments
Location of (Loss) Gain Recognized in Income on Derivative
Amount of (Loss) Gain Recognized in Income
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Interest rate cap contract
Other (expense) income
$(7)$(215)$267 $(215)
Foreign currency exchange contract
Other expense
(8,098)— (7,225)— 
Note 5: Investment in Receivable Portfolios, Net
The Company’s purchased portfolios of loans are grossed-up to their face value with an offsetting allowance and noncredit discount allocated to the individual receivables as the unit of account is at the individual loan level. Since each loan is deeply delinquent and deemed uncollectible at the individual loan level, the Company applies its charge-off policy and fully writes-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables immediately after purchasing the portfolio. The Company then records 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 ultimately equals the amount paid for a portfolio purchase and presented as “Investment in receivable portfolios, net” in the Company’s condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) based on the purchase price of the portfolio and the expected future cash flows at the time of purchase.
Receivable portfolio purchases are aggregated into pools based on similar risk characteristics. Examples of risk characteristics include financial asset type, collateral type, size, interest rate, date of origination, term, and geographic location. The Company’s static pools are typically grouped into credit card, purchased consumer bankruptcy, and mortgage portfolios. The Company further groups these static pools by geographic location. Once a pool is established, the portfolios will remain in the designated pool unless the underlying risk characteristics change. The purchase EIR of a pool will not change over the life of the pool even if expected future cash flows change.
Revenue is recognized for each static pool over the economic life of the pool. Debt purchasing revenue includes two components:
(1)     Revenue from receivable portfolios, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR) and also includes all revenue from zero basis portfolio (“ZBA”) collections, and
(2)     Changes in recoveries, which includes
(a)     Recoveries above or 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).
The Company measures expected future recoveries based on historical experience, current conditions, reasonable and supportable forecasts, and other quantitative and qualitative factors. Factors that may change the expected future recoveries may include both internal as well as external factors. Internal factors include operational performance, such as capacity and the productivity of the Company’s collection staff. External factors include new laws or regulations, new interpretations of existing laws or regulations, and macroeconomic conditions. The Company continues to reassess its expected future recoveries in each reporting period.
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Investment in receivable portfolios, net consists of the following as of the dates presented (in thousands):
September 30, 2024December 31, 2023
Amortized cost$— $— 
Negative allowance for expected recoveries3,719,260 3,468,432 
Balance, end of period$3,719,260 $3,468,432 
The following table summarizes the changes in the balance of investment in receivable portfolios, net during the periods presented (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Balance, beginning of period$3,583,322 $3,330,986 $3,468,432 $3,088,261 
Negative allowance for expected recoveries - current period purchases (1)
282,485 230,559 856,891 781,315 
Collections applied to investment in receivable portfolios, net (2)
(222,149)(162,652)(641,982)(504,672)
Changes in recoveries (3)
12,675 (17,067)6,020 (30,054)
Put-backs and recalls
(4,577)(3,179)(12,023)(9,214)
Disposals and transfers to real estate owned(7,055)(3,314)(10,153)(9,558)
Foreign currency translation adjustments74,559 (54,789)52,075 4,466 
Balance, end of period$3,719,260 $3,320,544 $3,719,260 $3,320,544 
_______________________
(1)The table below provides the detail on the establishment of negative allowance for expected recoveries of portfolios purchased during the periods presented:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Purchase price$282,485 $230,559 $856,891 $781,315 
Allowance for credit losses667,584 666,915 1,961,740 2,017,060 
Amortized cost950,069 897,474 2,818,631 2,798,375 
Noncredit discount1,220,316 1,171,383 3,688,070 3,225,837 
Face value2,170,385 2,068,857 6,506,701 6,024,212 
Write-off of amortized cost(950,069)(897,474)(2,818,631)(2,798,375)
Write-off of noncredit discount(1,220,316)(1,171,383)(3,688,070)(3,225,837)
Negative allowance282,485 230,559 856,891 781,315 
Negative allowance for expected recoveries - current period purchases$282,485 $230,559 $856,891 $781,315 
(2)Collections applied to investment in receivable portfolios, net, is calculated as follows during the periods presented:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Cash Collections$550,268 $465,339 $1,607,883 $1,404,217 
Less - amounts classified to revenue from receivable portfolios(328,119)(302,687)(965,901)(899,545)
Collections applied to investment in receivable portfolios, net$222,149 $162,652 $641,982 $504,672 
(3)Changes in recoveries is calculated as follows during the periods presented, where recoveries include cash collections, put-backs and recalls, and other cash-based adjustments:
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Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Recoveries above (below) forecast
$22,962 $(4,274)$51,258 $(20,109)
Changes in expected future recoveries(10,287)(12,793)(45,238)(9,945)
Changes in recoveries$12,675 $(17,067)$6,020 $(30,054)
Recoveries above or below forecast represent over and under-performance in the reporting period, respectively. Collections during the three and nine months ended September 30, 2024, over-performed the forecasted collections by approximately $23.0 million and $51.3 million, respectively. Collections during the three and nine months ended September 30, 2023, under-performed the forecasted collections by approximately $4.3 million and $20.1 million, respectively.
When reassessing the forecasts of expected lifetime recoveries during the three months ended September 30, 2024, management considered, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment. Most of the current period collections over-performance was from recent vintages acquired in 2023 and 2024 and did not trigger any significant forecasting adjustments to the estimated remaining collections. Therefore, no significant changes in future expected recoveries were recognized as a result of the recurring forecasting process. The Company recognized approximately $7.8 million of negative changes in expected future recoveries during the three and nine months ended September 30, 2024 resulting from the sale of certain secured mortgage portfolios in September 2024. As a result of the above, the Company recorded net negative changes in expected future recoveries of approximately $10.3 million, and $45.2 million during the three and nine months ended September 30, 2024, respectively. During the three and nine months ended September 30, 2023, the Company recorded approximately $12.8 million and $9.9 million in net negative changes in expected future recoveries, respectively.
Note 6: Other Assets
Other assets consist of the following (in thousands):
September 30,
2024		December 31,
2023
Operating lease right-of-use assets$61,063 $67,019 
Real estate owned49,727 70,590 
Income tax deposits44,600 8,735 
Prepaid expenses37,269 32,910 
Derivative instruments15,376 17,311 
Deferred tax assets, net15,149 17,277 
Service fee receivables11,014 9,080 
Other61,224 70,334 
Total$295,422 $293,256 
Note 7: Borrowings
The Company is in compliance in all material respects with all covenants under its financing arrangements as of September 30, 2024. The components of the Company’s consolidated borrowings were as follows (in thousands):
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September 30,
2024		December 31,
2023
Global senior secured revolving credit facility$7,000 $816,880 
Encore private placement notes— 29,310 
Senior secured notes2,698,831 1,654,989 
Convertible senior notes
330,000 330,000 
Cabot securitisation senior facility341,041 324,646 
U.S. facility
150,000 175,000 
Other68,946 24,904 
Finance lease liabilities1,511 2,818 
3,597,329 3,358,547 
Less: debt discount and issuance costs, net of amortization(46,755)(40,516)
Total$3,550,574 $3,318,031 
Encore is the parent of the restricted group for the Global Senior Facility and the Senior Secured Notes, both of which are guaranteed by the same group of material Encore subsidiaries and secured by the same collateral, which represents substantially all of the assets of those subsidiaries.
Global Senior Secured Revolving Credit Facility
In September 2020, the Company entered into a multi-currency senior secured revolving credit facility agreement (as amended and restated, the “Global Senior Facility”). As of September 30, 2024, the Global Senior Facility provided for a total committed facility of $1,203.0 million that matures in September 2027 and included the following key provisions:
•Interest at Term SOFR (or EURIBOR for any loan drawn in Euro or a rate based on SONIA for any loan drawn in British Pound), with a Term SOFR (or EURIBOR or SONIA) floor of 0.00%, plus a margin of 2.50%, plus in the case of Term SOFR borrowings, a credit adjustment spread of 0.10%;
•An unused commitment fee of 0.40% per annum, payable quarterly in arrears;
•A restrictive covenant that limits the LTV Ratio (defined in the Global Senior Facility) to 0.75 in the event that the Global Senior Facility is more than 20% utilized;
•A restrictive covenant that limits the SSRCF LTV Ratio (defined in the Global Senior Facility) to 0.275;
•A restrictive covenant that requires the Company to maintain a Fixed Charge Coverage Ratio (as defined in the Global Senior Facility) of at least 2.0;
•Additional restrictions and covenants which limit, among other things, the payment of dividends and the incurrence of additional indebtedness and liens; and
•Standard events of default which, upon occurrence, may permit the lenders to terminate the Global Senior Facility and declare all amounts outstanding to be immediately due and payable.
On October 17, 2024, the Company agreed to amend and restate the Global Senior Facility to, among other things, (1) upsize the facility by $92.0 million from $1,203.0 million to $1,295.0 million, (2) extend the termination date of the facility from September 2027 to September 2028 except for a $22.5 million tranche that will continue to terminate in September 2027, and (3) decrease the interest margin by 0.25% from 2.50% to 2.25%.
The Global Senior Facility is secured by substantially all of the assets of the Company and the guarantors. Pursuant to the terms of an intercreditor agreement entered into with respect to the relative positions of (1) the Global Senior Facility and any super priority hedging liabilities (collectively, “Super Senior Liabilities”) and (2) the Senior Secured Notes, Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.
As of September 30, 2024, the outstanding borrowings under the Global Senior Facility were $7.0 million. The weighted average interest rate of the Global Senior Facility was 6.13% and 7.84% for the three months ended September 30, 2024 and 2023, respectively, and 7.87% and 7.48% for the nine months ended September 30, 2024 and 2023, respectively. Available capacity under the Global Senior Facility, after taking into account applicable debt covenants, was approximately $1,196.0 million as of September 30, 2024.
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Encore Private Placement Notes
In August 2017, Encore entered into $325.0 million in senior secured notes with a group of insurance companies (the “Encore Private Placement Notes”). The Encore Private Placement Notes bore an annual interest rate of 5.625%, and required quarterly principal payments of $9.8 million. The covenants and material terms for the Encore Private Placement Notes were substantially similar to those for the Global Senior Facility. The Encore Private Placement Notes matured in August 2024.
Senior Secured Notes
The following table provides a summary of the Company’s senior secured notes (the “Senior Secured Notes”) ($ in thousands):
September 30,
2024		December 31,
2023		Issue
Currency		Maturity DateInterest Payment DatesInterest Rate
2025 Notes
$389,755 $386,324 EUROct 15, 2025Apr 15, Oct 154.875 %
2026 Notes
401,225 381,937 GBPFeb 15, 2026Feb 15, Aug 155.375 %
2028 Notes
334,354 318,280 GBPJun 1, 2028Jun 1, Dec 14.250 %
2028 Floating Rate Notes
573,497 568,448 EURJan 15, 2028Jan 15, Apr 15, Jul 15, Oct 15
EURIBOR +4.250%(1)
2029 Notes
500,000 — 
USD
Apr 1, 2029
Apr 1, Oct 1
9.250 %
2030 Notes500,000 — USDMay 15, 2030
May 15, Nov 15
8.500 %
$2,698,831 $1,654,989 
_______________________
(1)Interest rate is based on three-month EURIBOR (subject to a 0% floor) plus 4.250% per annum, resets quarterly.
The Senior Secured Notes are secured by the same collateral as the Global Senior Facility. The guarantees provided in respect of the Senior Secured Notes are pari passu with the guarantee given in respect of the Global Senior Facility. Subject to the intercreditor agreement described above under the section “Global Senior Secured Revolving Credit Facility,” Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.
The 2028 Floating Rate Notes had a weighted average interest rate of 7.97% and 7.83% for the three months ended September 30, 2024 and 2023, respectively, and 8.11% and 7.17% for the nine months ended September 30, 2024 and 2023, respectively. As discussed in “Note 4: Derivatives and Hedging Instruments,” the Company uses interest rate derivative contracts to manage its risk related to the interest rate fluctuation in its variable interest rate bearing debt. The weighted average interest rate of the 2028 Floating Rate Notes including the effect of the hedging instruments was 7.47% and 4.38% for the three months ended September 30, 2024 and 2023, respectively, and 5.99% and 4.35% for the nine months ended September 30, 2024 and 2023, respectively.
In March 2024, Encore issued $500.0 million in aggregate principal amount of 9.250% Senior Secured Notes due April 2029 at an issue price of 100.000% (the “2029 Notes”). Interest on the 2029 Notes is payable semi-annually, in arrears, on April 1 and October 1 of each year, commencing on October 1, 2024. The Company used the proceeds from this offering to pay down $493.0 million of the drawings under its Global Senior Facility and to pay certain transaction fees and expenses incurred in connection with the offering of the 2029 Notes.
In May 2024, Encore issued $500.0 million in aggregate principal amount of 8.500% Senior Secured Notes due May 2030 at an issue price of 100.000% (the “2030 Notes”). Interest on the 2030 Notes is payable semi-annually, in arrears, on May 15 and November 15 of each year, commencing on November 15, 2024. The Company used the proceeds from this offering to pay down $448.7 million of the drawings under its Global Senior Facility, pay certain transaction fees and expenses incurred in connection with the offering of the 2030 Notes and for general corporate purposes.
On October 15, 2024, the Company fully redeemed its 2025 Notes at par using drawings from its Global Senior Facility and cash on hand. In connection with the early redemption of the 2025 Notes, the Company also settled the corresponding euro cross currency swap contracts that were due to mature in October 2025 for approximately $33.8 million. Refer to “Note 4: Derivatives and Hedging Instruments” for further detail of the early settlement of the cross currency swap contracts. On October 25, 2024, the Company issued a conditional notice of redemption to redeem its 2026 Notes at par on or around November 15, 2024.
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Convertible Notes
The following table provides a summary of the principal balance, maturity date and interest rate for the Company’s convertible senior notes (the “Convertible Notes”) ($ in thousands):
September 30,
2024		December 31,
2023		Maturity DateInterest Payment DatesInterest Rate
2025 Convertible Notes$100,000 $100,000 Oct 1, 2025Apr 1, Oct 13.250 %
2029 Convertible Notes230,000 230,000 Mar 15, 2029Mar 15, Sep 154.000 %
$330,000 $330,000 
In order to reduce the risk related to the potential dilution and/or the potential cash payments the Company may be required to make in the event that the market price of the Company’s common stock becomes greater than the conversion prices of the Convertible Notes, the Company may enter into hedge programs that increase the effective conversion price for the Convertible Notes. In connection with the issuance of the 2029 Convertible Notes, the Company entered into privately negotiated capped call transactions that effectively raised the conversion price of the 2029 Convertible Notes from $65.89 to $82.69. These hedging instruments have been determined to be indexed to the Company’s own stock and meet the criteria for equity classification. The Company recorded the cost of the hedge instruments as a reduction in additional paid-in capital, and does not recognize subsequent changes in fair value of these financial instruments in its condensed consolidated financial statements. The Company did not hedge the 2025 Convertible Notes.
Certain key terms related to the convertible features as of September 30, 2024 are listed below ($ in thousands, except conversion price):
2025 Convertible Notes2029 Convertible Notes
Initial conversion price
$40.00 $65.89 
Closing stock price at date of issuance$32.00 $51.68 
Closing stock price dateSep 4, 2019Feb 28, 2023
Initial conversion rate (shares per $1,000 principal amount)
25.0000 15.1763 
Adjusted conversion rate (shares per $1,000 principal amount)(1)
25.1310 15.1763 
Adjusted conversion price(1)
$39.79 $65.89 
Adjusted effective conversion price(2)
$39.79 $82.69 
Excess of if-converted value compared to principal(3)
$18,794 $— 
Conversion date
Jul 1, 2025Dec 15, 2028
_______________________
(1)Pursuant to the indenture for the Company’s 2025 Convertible Notes, the conversion rate for the 2025 Convertible Notes was adjusted upon the completion of the Company’s tender offer in December 2021.
(2)As discussed above, the Company maintains a hedge program that increases the effective conversion price for the 2029 Convertible Notes to $82.69.
(3)Represents the premium the Company would have to pay assuming the Convertible Notes were converted on September 30, 2024 using a hypothetical share price based on the closing stock price on September 30, 2024.
In the event of conversion, the Convertible Notes are convertible into cash up to the aggregate principal amount of the notes and the excess conversion premium, if any, may be settled in cash or shares of the Company’s common stock at the Company’s election and subject to certain restrictions contained in each of the indentures governing the Convertible Notes.
Interest expense related to the Convertible Notes was $3.1 million and $3.2 million during the three months ended September 30, 2024 and 2023, respectively, and $9.4 million and $9.5 million during the nine months ended September 30, 2024 and 2023, respectively.
Cabot Securitisation Senior Facility
Cabot Securitisation UK Ltd (“Cabot Securitisation”), an indirect subsidiary of Encore, has a senior facility for a committed amount of £255.0 million (as amended, the “Cabot Securitisation Senior Facility”). Funds drawn under the Cabot Securitisation Senior Facility bear interest at a rate per annum equal to SONIA plus a margin of 3.20% plus, for periods after September 18, 2026, a step up margin ranging from 0% to 1.00%. The Cabot Securitisation Senior Facility matures in September 2028.
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As of September 30, 2024, the outstanding borrowings under the Cabot Securitisation Senior Facility were £255.0 million (approximately $341.0 million based on an exchange rate of $1.00 to £0.75, the exchange rate as of September 30, 2024). The obligations of Cabot Securitisation under the Cabot Securitisation Senior Facility are secured by first ranking security interests over all of Cabot Securitisation’s property, assets and rights (including receivables purchased from Cabot Financial UK from time to time), the book value of which was approximately £333.1 million (approximately $445.5 million based on an exchange rate of $1.00 to £0.75, the exchange rate as of September 30, 2024) as of September 30, 2024. The weighted average interest rate of the Cabot Securitisation Senior Facility was 8.22% and 8.13% for the three months ended September 30, 2024 and 2023, respectively, and 8.34% and 7.49% for the nine months ended September 30, 2024 and 2023, respectively. As discussed in “Note 4, Derivatives and Hedging Instruments,” the Company uses interest rate cap contracts to manage its risk related to the interest rate fluctuations in its variable interest rate bearing debt. The weighted average interest rate of the Cabot Securitisation Senior Facility including the effect of the hedging instruments was 5.88% and 5.35% for the three months ended September 30, 2024 and 2023, respectively, and 5.63% and 5.28% for the nine months ended September 30, 2024 and 2023, respectively.
Cabot Securitisation is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 8: Variable Interest Entities” for further details.
U.S. Facility
In October 2023, an indirect subsidiary of Encore (“U.S. Financing Subsidiary”), entered into a facility for a committed amount of $175.0 million (as amended, the “U.S. Facility”). The Company amended its U.S. Facility, effective September 17, 2024, to extend the maturity date from October 2026 to October 2027 and to increase the committed amount from $175.0 million to $300.0 million. Funds drawn under the U.S. Facility bear interest at a rate per annum equal to Term SOFR plus a margin of 3.50%.
As of September 30, 2024, the outstanding borrowings under the U.S. Facility were $150.0 million. The obligations under the U.S. Facility are secured by first ranking security interests over all of U.S. Financing Subsidiary’s assets and rights. As of September 30, 2024, this included receivables acquired from MCM, the book value of which was approximately $330.8 million. The weighted average interest rate of the U.S. Facility was 8.80% and 8.82% for the three and nine months ended September 30, 2024, respectively. As discussed in “Note 4: Derivatives and Hedging Instruments,” the Company uses interest rate derivative contracts to manage its risk related to the interest rate fluctuation in its variable interest rate bearing debt. The weighted average interest rate of the U.S. Facility including the effect of the hedging instruments was 7.86% and 7.94% for the three and nine months ended September 30, 2024, respectively.
The U.S. Facility is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 8: Variable Interest Entities” for further details.
Note 8: Variable Interest Entities
A VIE is defined as a legal entity whose equity owners do not have sufficient equity at risk, or, as a group, the holders of the equity investment at risk lack any of the following three characteristics: decision-making rights, the obligation to absorb expected losses, or the right to receive expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and the obligation to absorb expected losses or the right to receive residual returns from the entity that could potentially be significant to the VIE. The Company consolidates VIEs when it is the primary beneficiary.
As of September 30, 2024, the Company’s VIEs include certain securitized financing vehicles and other immaterial special purpose entities that were created to purchase receivable portfolios in certain geographies. The Company is the primary beneficiary of these VIEs. The Company has the power to direct the activities of the VIEs including the ability to exercise discretion in the servicing of the financial assets and has the right to receive residual returns that could potentially be significant to the VIEs. The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary.
Most assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the VIE.
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Note 9: Accumulated Other Comprehensive Loss
A summary of the Company’s changes in accumulated other comprehensive loss by component is presented below (in thousands):
Three Months Ended September 30, 2024
 DerivativesCurrency Translation Adjustments
Accumulated Other Comprehensive (Loss)/ Income
Balance at beginning of period$(2,122)$(127,836)$(129,958)
Other comprehensive income before reclassification
11,986 42,237 54,223 
Reclassification(35,301)— (35,301)
Tax effect6,014 640 6,654 
Balance at end of period$(19,423)$(84,959)$(104,382)
Three Months Ended September 30, 2023
 DerivativesCurrency Translation Adjustments
Accumulated Other Comprehensive (Loss)/ Income
Balance at beginning of period$31,532 $(102,432)$(70,900)
Other comprehensive loss before reclassification(36,389)(50,121)(86,510)
Reclassification30,079 — 30,079 
Tax effect(1,903)(257)(2,160)
Balance at end of period$23,319 $(152,810)$(129,491)
Nine Months Ended September 30, 2024
 DerivativesCurrency Translation Adjustments
Accumulated Other Comprehensive (Loss)/ Income
Balance at beginning of period$(3,093)$(120,827)$(123,920)
Other comprehensive income before reclassification
132 34,945 35,077 
Reclassification(18,703)— (18,703)
Tax effect2,241 923 3,164 
Balance at end of period$(19,423)$(84,959)$(104,382)
Nine Months Ended September 30, 2023
 DerivativesCurrency Translation Adjustments
Accumulated Other Comprehensive (Loss)/ Income
Balance at beginning of period$36,494 $(135,310)$(98,816)
Other comprehensive loss before reclassification(39,720)(16,581)(56,301)
Reclassification27,319 — 27,319 
Tax effect(774)(919)(1,693)
Balance at end of period$23,319 $(152,810)$(129,491)
Note 10: Income Taxes
The Company’s effective tax rate for the three and nine months ended September 30, 2024 was 24.8% and 24.3%, respectively. For the three and nine months ended September 30, 2023, the Company’s effective tax rate was 35.7% and 29.7%, respectively. For the three and nine months ended September 30, 2024, the difference between the Company’s effective tax rate and the federal statutory rate was primarily due to state income taxes. For the three months ended September 30, 2023 the difference between the Company's effective tax rate and the federal statutory rate was primarily due to the recording of valuation allowances in certain foreign jurisdictions. For the nine months ended September 30, 2023, the difference between the Company's effective tax rate and the federal statutory rate was primarily due to state income taxes, an accrual related to state tax filing positions, and other foreign adjustments.
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Each interim period is considered an integral part of the annual period and tax expense or benefit is measured using an estimated annual effective income tax rate. The estimated annual effective tax rate for the full year is applied to the respective interim period, taking into account year-to-date amounts and projected amounts for the year. Since the Company operates in foreign countries with varying tax rates, the Company’s quarterly effective tax rate is dependent on the level of income or loss from international operations in the reporting period.
The Company’s subsidiary in Costa Rica is operating under a 100% tax holiday through December 31, 2026. The impact of the tax holiday in Costa Rica for the three and nine months ended September 30, 2024 and 2023, was immaterial.
The Company is subject to income taxes in the U.S. and foreign jurisdictions. Significant judgment is required in evaluating uncertain tax positions and determining the provision for income taxes.
In December 2021, the Organization for Economic Cooperation and Development (“OECD”) enacted model rules for a new global minimum tax framework (“Pillar Two”). Under the Pillar Two rules, a company is required to determine a combined effective tax rate for each jurisdiction. If the jurisdictional effective tax rate determined under the Pillar Two rules is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. In December 2022, European Union Member States adopted a directive implementing the Pillar Two rules requiring Member States to enact the directive into their national laws and these began to go into effect from January 1, 2024. The Company has estimated the applicable top-up tax and recorded this in tax expense for the three and nine months ended September 30, 2024. The estimated impact of top-up tax for the quarter was immaterial.
Note 11: Commitments and Contingencies
Litigation and Regulatory
The Company is involved in disputes, legal actions, regulatory investigations, inquiries, and other actions from time to time in the ordinary course of business. The Company, along with others in its industry, is routinely subject to legal actions asserting various claims, including those based on the Fair Debt Collection Practices Act (“FDCPA”), the Fair Credit Reporting Act (“FCRA”), the Telephone Consumer Protection Act (“TCPA”), comparable state statutes, state and federal unfair competition statutes, and common law causes of action. The violations of law investigated or alleged in these actions often include claims that the Company lacks specified licenses to conduct its business, attempts to collect debts on which the statute of limitations has run, has made inaccurate or unsupported assertions of fact in support of its collection actions and/or has acted improperly in connection with its efforts to contact consumers. Such litigation and regulatory actions could involve potential compensatory or punitive damage claims, fines, sanctions, injunctive relief, or changes in business practices. Many continue on for some length of time and involve substantial investigation, litigation, negotiation, and other expense and effort before a result is achieved, and during the process the Company often cannot determine the substance or timing of any eventual outcome.
As of September 30, 2024, there were no material developments in any of the legal proceedings disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 or any new material legal proceedings during the three and nine months ended September 30, 2024.
In certain legal proceedings, the Company may have recourse to insurance or third-party contractual indemnities to cover all or portions of its litigation expenses, judgments, or settlements. The Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. The Company continuously assesses the potential liability related to its pending litigation and regulatory matters and revises its estimates when additional information becomes available. The Company’s legal costs are recorded to expense as incurred. As of September 30, 2024, the Company has no material reserves for legal matters.
Purchase Commitments
In the normal course of business, the Company enters into forward flow purchase agreements. A forward flow purchase agreement is a commitment to purchase receivables over a duration that is typically three to twelve months, but can be longer, generally with a specifically defined volume range, frequency, and pricing. Typically, these forward flow contracts have provisions that allow for early termination or price re-negotiation should the underlying quality of the portfolio deteriorate over time or if any particular month’s delivery is materially different than the original portfolio used to price the forward flow contract. Certain of these forward flow purchase agreements may also have termination clauses, whereby the agreements can be canceled by either party upon providing a certain specified amount of notice.
As of September 30, 2024, the Company had entered into forward flow purchase agreements for the purchase of nonperforming loans with an estimated minimum aggregate purchase price of approximately $466.1 million. The Company
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expects actual purchases under these forward flow purchase agreements to be significantly greater than the estimated minimum aggregate purchase price.
Note 12: Segment and Geographic Information
The Company conducts business through several operating segments. The Company’s Chief Operating Decision Maker relies on internal management reporting processes that provide segment revenue, segment operating income, and segment asset information in order to make financial decisions and allocate resources. The Company determined its operating segments meet the aggregation criteria, and therefore, it has one reportable segment, portfolio purchasing and recovery, based on similarities among the operating units including economic characteristics, the nature of the services, the nature of the production process, customer types for their services, the methods used to provide their services and the nature of the regulatory environment.
The following table presents information about geographic areas in which the Company operates (in thousands):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
Total revenues:
United States$258,300 $201,550 $717,186 $608,533 
Europe
United Kingdom84,000 73,153 233,152 226,361 
Other European countries(1)
24,415 34,916 98,707 110,210 
Total Europe108,415 108,069 331,859 336,571 
Other geographies(1)
356 — 1,697 189 
Total$367,071 $309,619 $1,050,742 $945,293 
________________________
(1)None of these countries comprise greater than 10% of the Company's consolidated revenues.

Note 13: Goodwill and Identifiable Intangible Assets
The Company’s goodwill is tested for impairment at the reporting unit level annually and in interim periods if certain events occur that indicate that the fair value of a reporting unit may be below its carrying value. Determining the number of reporting units and the fair value of a reporting unit requires the Company to make judgments and involves the use of significant estimates and assumptions.
The annual goodwill testing date for the reporting units that are included in the portfolio purchasing and recovery reportable segment is October 1st. There have been no events or circumstances during the three and nine months ended September 30, 2024, that have required the Company to perform an interim assessment of goodwill carried at these reporting units. Management continues to evaluate and monitor all key factors impacting the carrying value of the Company’s recorded goodwill and intangible assets. Adverse changes in the Company’s actual or expected operating results, market capitalization, business climate, economic factors or other negative events that may be outside the control of management could result in a material non-cash impairment charge in the future.
The Company’s goodwill is attributable to the MCM and Cabot reporting units included in its portfolio purchasing and recovery segment. The following tables summarize the activity in the Company’s goodwill balance (in thousands):
MCM
Cabot(1)
Total
Balance as of June 30, 2024$148,936 $453,875 $602,811 
Effect of foreign currency translation— 25,320 25,320 
Balance as of September 30, 2024$148,936 $479,195 $628,131 
______________________
(1)The amount is net of accumulated goodwill impairment loss of $238.2 million as of September 30, 2024 and June 30, 2024, related to the Cabot reporting unit.
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MCM
Cabot
Total
Balance as of June 30, 2023$148,936 $703,260 $852,196 
Effect of foreign currency translation— (26,186)(26,186)
Balance as of September 30, 2023$148,936 $677,074 $826,010 
There was no accumulated goodwill impairment loss as of September 30, 2023 and June 30, 2023.
MCM
Cabot(1)
Total
Balance as of December 31, 2023
$148,936 $457,539 $606,475 
Effect of foreign currency translation— 21,656 21,656 
Balance as of September 30, 2024$148,936 $479,195 $628,131 
______________________
(1)The amount is net of accumulated goodwill impairment loss of $238.2 million as of September 30, 2024 and December 31, 2023, related to the Cabot reporting unit.
MCM
Cabot
Total
Balance as of December 31, 2022
$148,936 $672,278 $821,214 
Effect of foreign currency translation— 4,796 4,796 
Balance as of September 30, 2023$148,936 $677,074 $826,010 
There was no accumulated goodwill impairment loss as of September 30, 2023 and December 31, 2022.
The Company’s acquired intangible assets are summarized as follows (in thousands):
 As of September 30, 2024As of December 31, 2023
 Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount		Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount
Trade name and other$918 $(918)$— $918 $(870)$48 
Total intangible assets$918 $(918)$— $918 $(870)$48 

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Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 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 commitments 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 (“CCM”) 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”), a leading UK contingency debt collection and BPO services company.
LAAP (Latin America and Asia-Pacific)
We have purchased non-performing loans in Mexico. Additionally, we have invested in 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 the rest of Europe.
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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 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 receivable portfolios subject to Chapter 13 and Chapter 7 bankruptcy proceedings.
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 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 paying and non-paying consumer loan accounts. We purchase paying and non-paying receivable portfolios using a proprietary pricing model that utilizes account-level statistical and behavioral data. This model generally allows us to value portfolios accurately and quantify portfolio performance in order to maximize future collections. As a result, we have 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 reaching record levels and the highest U.S. charge-off rate in ten years, supply remains elevated at a record level. 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 third 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 growth in lending and rising delinquency rates will drive continued growth in 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-off rates, as creditors have embedded debt sales as an integral part of their business models. The percentage of volume that is sold in multi-year forward flow arrangements has been consistent.
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The debt markets in France and Spain continue to be two of the largest in Europe with significant debt. Financial institutions continue to look to dispose of non-performing loans in these markets.
While we have seen a resumption of sales activity across all of our European markets, underlying default rates are generally low by historic levels, and sales levels are expected to fluctuate from quarter to quarter. In general, portfolio pricing remains competitive across our European footprint.
Purchases by Geographic Location
The following table summarizes purchases of receivable portfolios by geographic location during the periods presented (in thousands):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2024202320242023
MCM (United States)$230,182 $179,250 $703,517 $606,076 
Cabot (Europe)52,303 51,309 153,374 175,239 
Total purchases of receivable portfolios$282,485 $230,559 $856,891 $781,315 
In the United States, capital deployment increased during the three and nine months ended September 30, 2024, 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 improved.
In Europe, capital deployment remained relatively consistent during the three months ended September 30, 2024, as compared to the corresponding period in the prior year. Capital deployment decreased during the nine months ended September 30, 2024, primarily driven by continued competitive pricing environment in Europe. The decrease was partially offset by the favorable impact from foreign currency translation driven by the weakening of the U.S. dollar against the British Pound.
Collections from Purchased Receivables by Channel and Geographic Location
We utilize three channels for the collection of our purchased receivables: 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
September 30,		Nine Months Ended
September 30,
 2024202320242023
MCM (United States):
Call center and digital collections$251,763 $198,558 $733,928 $584,677 
Legal collections145,622 129,771 418,774 407,754 
Collection agencies4,317 1,657 15,107 2,041 
Subtotal401,702 329,986 1,167,809 994,472 
Cabot (Europe):
Call center and digital collections61,902 53,069 178,847 164,222 
Legal collections50,002 46,749 151,192 139,670 
Collection agencies35,894 34,688 107,680 102,740 
Subtotal147,798 134,506 437,719 406,632 
Other geographies:768 847 2,355 3,113 
Total collections from purchased receivables$550,268 $465,339 $1,607,883 $1,404,217 
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Gross collections from purchased receivables increased by $84.9 million, or 18.3%, to $550.3 million during the three months ended September 30, 2024, as compared to $465.3 million during the three months ended September 30, 2023. Gross collections from purchased receivables increased by $203.7 million, or 14.5%, to $1,607.9 million during the nine months ended September 30, 2024, as compared to $1,404.2 million during the nine months ended September 30, 2023. The increases in collections in the United States were primarily a result of consistent increases in capital deployments in the United States in recent quarters. The increases in collections from purchased receivables in Europe were primarily due to the acquisition of portfolios with higher returns in recent periods. Additionally, collections in Europe were favorably impacted by foreign currency translation by approximately $3.2 million and $7.8 million during the three and nine months ended September 30, 2024, respectively, primarily as a result of the weakening of the U.S. dollar against the British Pound.
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 September 30,
 20242023
Revenues
Revenue from receivable portfolios$328,119 89.4 %$302,687 97.8 %
Changes in recoveries12,675 3.4 %(17,067)(5.5)%
Total debt purchasing revenue340,794 92.8 %285,620 92.3 %
Servicing revenue22,772 6.2 %19,893 6.4 %
Other revenues3,505 1.0 %4,106 1.3 %
Total revenues367,071 100.0 %309,619 100.0 %
Operating expenses
Salaries and employee benefits107,502 29.3 %95,067 30.7 %
Cost of legal collections67,339 18.3 %56,274 18.2 %
General and administrative expenses38,808 10.6 %35,559 11.5 %
Other operating expenses31,804 8.7 %27,959 9.0 %
Collection agency commissions7,370 2.0 %8,046 2.6 %
Depreciation and amortization8,158 2.2 %11,196 3.6 %
Total operating expenses260,981 71.1 %234,101 75.6 %
Income from operations106,090 28.9 %75,518 24.4 %
Other expense
Interest expense(66,906)(18.2)%(50,558)(16.3)%
Other income
1,578 0.4 %5,103 1.6 %
Total other expense(65,328)(17.8)%(45,455)(14.7)%
Income before income taxes40,762 11.1 %30,063 9.7 %
Provision for income taxes(10,119)(2.8)%(10,724)(3.5)%
Net income $30,643 8.3 %$19,339 6.2 %
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 Nine Months Ended September 30,
 20242023
Revenues
Revenue from receivable portfolios$965,901 91.9 %$899,545 95.2 %
Changes in recoveries6,020 0.6 %(30,054)(3.2)%
Total debt purchasing revenue971,921 92.5 %869,491 92.0 %
Servicing revenue64,258 6.1 %63,486 6.7 %
Other revenues14,563 1.4 %12,316 1.3 %
Total revenues1,050,742 100.0 %945,293 100.0 %
Operating expenses
Salaries and employee benefits318,294 30.3 %294,772 31.2 %
Cost of legal collections190,309 18.1 %167,525 17.7 %
General and administrative expenses111,828 10.7 %108,053 11.4 %
Other operating expenses93,016 8.9 %81,864 8.7 %
Collection agency commissions22,308 2.1 %26,583 2.8 %
Depreciation and amortization23,467 2.2 %32,768 3.5 %
Total operating expenses759,222 72.3 %711,565 75.3 %
Income from operations291,520 27.7 %233,728 24.7 %
Other expense
Interest expense(184,047)(17.5)%(147,376)(15.6)%
Other income
6,291 0.6 %5,080 0.5 %
Total other expense(177,756)(16.9)%(142,296)(15.1)%
Income before income taxes113,764 10.8 %91,432 9.6 %
Provision for income taxes(27,701)(2.6)%(27,162)(2.8)%
Net income $86,063 8.2 %$64,270 6.8 %
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 “Investment in 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)     Revenue from receivable portfolios, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR), and also includes all revenue from zero basis portfolio (“ZBA”) collections, and
(2)     Changes in recoveries, which includes
(a)     Recoveries above or 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).
30

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. We did not establish a negative allowance for these pools as we elected the Transition Resource Group for Credit Losses’ practical expedient to retain the integrity of these legacy pools. Similar to how we treated ZBA collections prior to the adoption of CECL, all subsequent collections to the ZBA pools are recognized as ZBA revenue, which is included in revenue from receivable portfolios in our condensed consolidated statements of income.
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 as well as direct acquisition of real estate assets in Europe and LAAP.
The following table summarizes revenues for the periods presented (in thousands, except percentages):
Three Months Ended September 30,
20242023$ Change
% Change
Revenue recognized from portfolio basis$322,491 $296,015 $26,476 8.9 %
ZBA revenue5,628 6,672 (1,044)(15.6)%
Revenue from receivable portfolios328,119 302,687 25,432 8.4 %
Recoveries above (below) forecast
22,962 (4,274)27,236 
Changes in expected future recoveries(10,287)(12,793)2,506 
Changes in recoveries12,675 (17,067)29,742 (174.3)%
Debt purchasing revenue340,794 285,620 55,174 19.3 %
Servicing revenue22,772 19,893 2,879 14.5 %
Other revenues3,505 4,106 (601)(14.6)%
Total revenues$367,071 $309,619 $57,452 18.6 %
Nine Months Ended September 30,
20242023$ Change
% Change
Revenue recognized from portfolio basis$947,907 $877,914 $69,993 8.0 %
ZBA revenue17,994 21,631 (3,637)(16.8)%
Revenue from receivable portfolios965,901 899,545 66,356 7.4 %
Recoveries above (below) forecast
51,258 (20,109)71,367 
Changes in expected future recoveries(45,238)(9,945)(35,293)
Changes in recoveries6,020 (30,054)36,074 (120.0)%
Debt purchasing revenue971,921 869,491 102,430 11.8 %
Servicing revenue64,258 63,486 772 1.2 %
Other revenues14,563 12,316 2,247 18.2 %
Total revenues$1,050,742 $945,293 $105,449 11.2 %
31

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 revenues were favorably impacted by foreign currency translation by approximately $2.5 million and $6.2 million during the three and nine months ended September 30, 2024, respectively, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 2.7% and 2.6% for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, respectively.
The increases in revenue recognized from portfolio basis during the three and nine months ended September 30, 2024, as compared to the three and nine months ended September 30, 2023, were primarily due to a higher portfolio basis (i.e. a higher investment in receivable balance) in the U.S. driven by a consistent higher volume of purchases in the past several quarters.
As discussed above, ZBA revenue represents collections from our legacy ZBA pools. 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.
Recoveries above or below forecast represent over and under-performance in the reporting period, respectively. Collections during the three and nine months ended September 30, 2024, over-performed the forecasted collections by approximately $23.0 million and $51.3 million, respectively. Collections during the three and nine months ended September 30, 2023, under-performed the forecasted collections by approximately $4.3 million and $20.1 million, respectively.
When reassessing the forecasts of expected lifetime recoveries during the three months ended September 30, 2024, management considered, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment. Most of the current period collections over-performance was from recent vintages acquired in 2023 and 2024 and did not trigger any significant forecasting adjustments to the estimated remaining collections. Therefore, no significant changes in future expected recoveries were recognized as a result of our recurring forecasting process. We recognized approximately $7.8 million of negative changes in expected future recoveries during the three and nine months ended September 30, 2024 resulting from the sale of certain portfolios associated with the exit of our secured non-performing mortgage loan business in Spain in September 2024. As a result of the above, we recorded net negative changes in expected future recoveries of approximately $10.3 million, and $45.2 million during the three and nine months ended September 30, 2024, respectively. During the three and nine months ended September 30, 2023, we recorded approximately $12.8 million and $9.9 million in net negative changes in expected future recoveries, respectively.
32

The following tables summarize collections from purchased receivables, revenue from receivable portfolios, end of period receivable balance and other related supplemental data, by year of purchase (in thousands, except percentages):
 Three Months Ended September 30, 2024As of September 30, 2024
 CollectionsRevenue from Receivable PortfoliosChanges in RecoveriesInvestment in Receivable PortfoliosMonthly EIR
United States:
ZBA$5,628 $5,628 $— $— — %
20112,670 2,130 465 752 88.6 %
20122,494 2,518 (323)1,763 42.0 %
20136,307 5,515 386 4,266 40.5 %
20144,233 2,696 616 12,910 6.7 %
20154,037 1,877 1,492 15,819 3.9 %
20166,976 3,384 2,669 27,226 4.2 %
20179,748 5,662 2,234 33,308 5.5 %
201815,488 8,060 1,627 63,173 4.0 %
201927,024 14,526 (1,113)117,894 3.8 %
202030,170 16,384 (1,069)137,464 3.7 %
202130,867 16,397 963 130,575 3.9 %
202261,009 28,531 2,177 289,780 3.1 %
2023117,460 66,842 7,805 656,348 3.3 %
2024
77,591 54,500 5,721 674,257 3.4 %
Subtotal401,702 234,650 23,650 2,165,535 3.6 %
Europe:
ZBA— — — — — %
201313,674 11,591 (918)121,015 3.2 %
201412,751 10,074 330 113,901 3.0 %
20158,651 6,226 (645)84,119 2.4 %
2016(1)
7,157 5,552 (5,960)64,238 2.7 %
20179,937 6,284 185 111,792 1.9 %
20189,916 6,653 (4,698)139,021 1.6 %
201911,765 6,901 (555)121,893 1.9 %
20207,927 4,982 (2,669)72,052 2.2 %
202112,796 8,804 (710)155,417 1.9 %
202216,046 8,471 1,912 181,895 1.6 %
202322,478 9,849 (216)220,592 1.5 %
2024
14,700 8,082 2,473 148,590 2.2 %
Subtotal147,798 93,469 (11,471)1,534,525 2.1 %
Other geographies:(2)
All vintages768 — 496 19,200 — %
Subtotal768 — 496 19,200 — %
Total$550,268 $328,119 $12,675 $3,719,260 3.0 %
_______________________
(1)Portfolio balance includes non-accrual pool groups. The EIR presented is only for pool groups that accrete portfolio revenue.
(2)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.
33

 Three Months Ended September 30, 2023As of September 30, 2023
 CollectionsRevenue from Receivable PortfoliosChanges in RecoveriesInvestment in Receivable PortfoliosMonthly EIR
United States:
ZBA$6,671 $6,671 $— $— — %
20113,362 3,025 397 1,209 88.6 %
20124,031 3,468 580 2,839 42.0 %
20138,671 7,875 517 6,347 40.5 %
20145,206 3,360 712 16,086 6.7 %
20154,650 2,533 511 20,581 3.9 %
20168,236 4,688 599 35,986 4.1 %
201713,575 8,310 677 46,989 5.5 %
201820,980 12,041 (970)93,742 4.0 %
201938,084 21,762 (4,069)176,282 3.8 %
202045,294 24,793 (2,777)207,618 3.7 %
202145,490 25,825 (7,422)199,488 3.9 %
202266,028 43,223 (4,367)450,261 3.1 %
2023
59,708 42,693 6,894 593,886 3.1 %
Subtotal329,986 210,267 (8,718)1,851,314 3.7 %
Europe:
ZBA1 1 — — — %
201313,916 13,071 (4,720)125,830 3.2 %
201413,657 11,195 (2,415)116,705 3.0 %
20159,442 6,850 (1,249)87,125 2.5 %
2016(1)
7,937 6,109 40 69,477 2.8 %
201711,350 7,340 (880)122,295 1.9 %
201812,015 7,915 (1,701)159,945 1.6 %
201913,757 7,910 743 133,199 1.9 %
20209,160 5,969 661 85,211 2.2 %
202113,860 10,250 (1,252)173,952 1.9 %
202217,410 9,990 (14)201,110 1.6 %
2023
12,001 5,820 2,409 164,707 1.4 %
Subtotal134,506 92,420 (8,378)1,439,556 2.0 %
Other geographies:(2)
All vintages847 — 29 29,674 — %
Subtotal847 — 29 29,674 — %
Total$465,339 $302,687 $(17,067)$3,320,544 3.0 %
______________________
(1)Portfolio balance includes non-accrual pool groups. The EIR presented is only for pool groups that accrete portfolio revenue.
(2)Annual pool groups for other geographies have been aggregated for disclosure purposes.
34

 Nine Months Ended September 30, 2024As of September 30, 2024
 CollectionsRevenue from Receivable PortfoliosChanges in RecoveriesInvestment in Receivable PortfoliosMonthly EIR
United States:
ZBA$17,992 $17,992 $— $— — %
20117,847 7,015 581 752 88.6 %
20128,243 8,283 (756)1,763 42.0 %
201320,561 18,132 1,096 4,266 40.5 %
201412,793 8,778 653 12,910 6.7 %
201512,254 6,106 2,928 15,819 3.9 %
201621,643 11,200 4,168 27,226 4.2 %
201730,891 18,861 2,554 33,308 5.5 %
201850,210 26,744 2,904 63,173 4.0 %
201987,945 48,474 (3,375)117,894 3.8 %
2020100,826 54,709 (3,478)137,464 3.7 %
2021104,611 54,361 5,270 130,575 3.9 %
2022199,446 96,269 (5,021)289,780 3.1 %
2023362,724 215,070 14,708 656,348 3.3 %
2024
129,823 96,633 6,327 674,257 3.4 %
Subtotal1,167,809 688,627 28,559 2,165,535 3.6 %
Europe:
ZBA2 2 — — — %
201340,793 35,227 (4,664)121,015 3.2 %
201438,392 30,848 (2,634)113,901 3.0 %
201525,718 18,980 (1,839)84,119 2.4 %
2016(1)
22,994 17,146 (6,000)64,238 2.7 %
201730,747 19,327 (1,321)111,792 1.9 %
201832,407 20,670 (11,196)139,021 1.6 %
201936,012 21,225 (1,186)121,893 1.9 %
202024,257 15,624 (2,769)72,052 2.2 %
202140,075 26,843 (1,355)155,417 1.9 %
202249,632 26,240 1,209 181,895 1.6 %
202368,229 30,695 3,203 220,592 1.5 %
2024
28,461 14,447 4,166 148,590 2.2 %
Subtotal437,719 277,274 (24,386)1,534,525 2.1 %
Other geographies:(2)
All vintages2,355 — 1,847 19,200 — %
Subtotal2,355 — 1,847 19,200 — %
Total$1,607,883 $965,901 $6,020 $3,719,260 3.0 %
_______________________
(1)Portfolio balance includes non-accrual pool groups. The EIR presented is only for pool groups that accrete portfolio revenue.
(2)All portfolios are on non-accrual basis. Annual pool groups for other geographies have been aggregated for disclosure purposes.

35

 Nine Months Ended September 30, 2023As of September 30, 2023
 CollectionsRevenue from Receivable PortfoliosChanges in RecoveriesInvestment in Receivable PortfoliosMonthly EIR
United States:
ZBA$21,614 $21,614 $— $— — %
201110,569 9,392 1,060 1,209 88.6 %
201212,700 10,730 1,720 2,839 42.0 %
201327,380 25,257 1,068 6,347 40.5 %
201416,257 10,755 2,243 16,086 6.7 %
201515,364 8,326 1,263 20,581 3.9 %
201627,926 15,457 1,922 35,986 4.1 %
201746,684 27,579 3,724 46,989 5.5 %
201872,025 40,120 (3,028)93,742 4.0 %
2019131,426 71,881 (709)176,282 3.8 %
2020156,099 82,302 368 207,618 3.7 %
2021149,638 86,576 (17,139)199,488 3.9 %
2022204,751 138,525 (23,655)450,261 3.1 %
2023102,039 74,515 16,667 593,886 3.1 %
Subtotal994,472 623,029 (14,496)1,851,314 3.7 %
Europe:
ZBA17 17 — — — %
201344,291 39,642 (8,091)125,830 3.2 %
201441,970 34,087 (4,107)116,705 3.0 %
201527,507 20,849 (2,306)87,125 2.5 %
2016(1)
27,315 19,146 86 69,477 2.8 %
201737,562 22,710 (1,589)122,295 1.9 %
201836,684 24,452 (6,556)159,945 1.6 %
201941,831 24,271 1,233 133,199 1.9 %
202029,104 18,258 3,530 85,211 2.2 %
202144,789 31,147 (26)173,952 1.9 %
202252,840 31,090 (3,562)201,110 1.6 %
202322,722 10,847 5,801 164,707 1.4 %
Subtotal406,632 276,516 (15,587)1,439,556 2.0 %
Other geographies:(2)
All vintages3,113 — 29 29,674 — %
Subtotal3,113 — 29 29,674 — %
Total$1,404,217 $899,545 $(30,054)$3,320,544 3.0 %
____________________
(1)Portfolio balance includes non-accrual pool groups. The EIR presented is only for pool groups that accrete portfolio revenue.
(2)Annual pool groups for other geographies have been aggregated for disclosure purposes.
Servicing revenues increased by approximately $2.9 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. The increase was primarily attributable to increased demand from BPO clients. Service revenues remained relatively consistent during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.
Other revenues remained relatively consistent during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. Other revenues increased during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily driven by increase of gains recognized on the sale of real estate assets.
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Operating Expenses
The following tables summarize operating expenses for the periods presented (in thousands, except percentages):
Three Months Ended September 30,
20242023$ Change% Change
Salaries and employee benefits$107,502 $95,067 $12,435 13.1 %
Cost of legal collections67,339 56,274 11,065 19.7 %
General and administrative expenses38,808 35,559 3,249 9.1 %
Other operating expenses31,804 27,959 3,845 13.8 %
Collection agency commissions7,370 8,046 (676)(8.4)%
Depreciation and amortization8,158 11,196 (3,038)(27.1)%
Total operating expenses$260,981 $234,101 $26,880 11.5 %
Nine Months Ended September 30,
20242023$ Change% Change
Salaries and employee benefits$318,294 $294,772 $23,522 8.0 %
Cost of legal collections190,309 167,525 22,784 13.6 %
General and administrative expenses111,828 108,053 3,775 3.5 %
Other operating expenses93,016 81,864 11,152 13.6 %
Collection agency commissions22,308 26,583 (4,275)(16.1)%
Depreciation and amortization23,467 32,768 (9,301)(28.4)%
Total operating expenses$759,222 $711,565 $47,657 6.7 %
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 results were unfavorably impacted by foreign currency translation by approximately $1.8 million and $4.7 million during the three and nine months ended September 30, 2024, respectively, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 2.7% and 2.6% for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, 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 September 30, 2024, as compared to the three months ended September 30, 2023, was primarily due to the following reasons:
•An increase in salaries and bonus of approximately $8.9 million primarily due to an increase in overall headcount; and
•An increase in employee benefits and payroll taxes of approximately $2.8 million.
The increase in salaries and employee benefits during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily due to the following reasons:
•An increase in salaries and bonus of approximately $16.6 million primarily due to an increase in overall headcount; and
•An increase in employee benefits and payroll taxes of approximately $6.2 million.

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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 September 30,
20242023$ Change% Change
Court costs$44,282 $34,720 $9,562 27.5 %
Legal collection fees23,057 21,554 1,503 7.0 %
Total cost of legal collections$67,339 $56,274 $11,065 19.7 %
Nine Months Ended September 30,
20242023$ Change% Change
Court costs$124,250 $97,746 $26,504 27.1 %
Legal collection fees66,059 69,779 (3,720)(5.3)%
Total cost of legal collections$190,309 $167,525 $22,784 13.6 %
The increases of cost of legal collections during the three and nine months ended September 30, 2024, as compared to the three and nine months ended September 30, 2023, were primarily due to increased legal placements in this channel in the U.S. The increase in cost of legal collections during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was partially offset by decreased contingent fees paid to our external network of attorneys as we grow our legal collection activities through our internal legal channel.
General and Administrative Expenses
The increase in general and administrative expense during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, was primarily due to the following reasons:
•Approximately $2.9 million of increased general and administrative expense include costs associated with our information technology.
The increase in general and administrative expense during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, was primarily due to the following reasons:
•An increase in information technology expenses of approximately $6.0 million; and
•The increase was partially offset by a decrease in consulting fees of approximately $1.5 million and a decrease in facilities fees of approximately $1.4 million.
Other Operating Expenses
The increase in other operating expenses during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily due to an increase in postage and printing expenses and an increase in collections bank charges and trace agencies fees of approximately $3.1 million and $0.9 million, respectively. The increase in other operating expenses during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily due to an increase in postage and printing expenses and an increase in collections bank charges and trace agencies fees of approximately $8.0 million and $2.4 million, respectively.
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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 by approximately $0.7 million and $4.3 million during the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023, respectively. The decreases were primarily due to fewer accounts placed with external agencies and favorable commission rates received from such agencies in Europe.
Depreciation and Amortization
The decrease in depreciation and amortization expenses during the three and nine months ended September 30, 2024, as compared to three and nine months ended September 30, 2023, was primarily due to smaller depreciable and amortizable asset balances during the three and nine months ended September 30, 2024, as compared to three and nine months ended September 30, 2023. Depreciation expenses and amortization expenses decreased by approximately $1.8 million and $1.2 million during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, and by approximately $5.8 million and $3.5 million during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, respectively.
Interest Expense
The following tables summarize our interest expense for the periods presented (in thousands, except percentages):
 Three Months Ended September 30,
 20242023$ Change% Change
Stated interest on debt obligations$62,467 $46,692 $15,775 33.8 %
Amortization of debt issuance costs3,991 3,503 488 13.9 %
Amortization of debt discount
448 363 85 23.4 %
Total interest expense$66,906 $50,558 $16,348 32.3 %
 Nine Months Ended September 30,
 20242023$ Change% Change
Stated interest on debt obligations$171,668 $134,850 $36,818 27.3 %
Amortization of debt issuance costs11,071 11,453 (382)(3.3)%
Amortization of debt discount
1,308 1,073 235 21.9 %
Total interest expense$184,047 $147,376 $36,671 24.9 %
The increase in interest expense during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily due to the following reasons:
•The effect resulting from increased average debt balance of approximately $6.0 million; and
•The effect resulting from rising interest rates of approximately $9.1 million; and
•An unfavorable impact of foreign currency translation of approximately $0.6 million driven by the weakening of the U.S. dollar against the British Pound.
The increase in interest expense during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily due to the following reasons:
•The effect resulting from increased average debt balance of approximately $17.7 million;
•The effect resulting from rising interest rates of approximately $17.9 million; and
•An unfavorable impact of foreign currency translation of approximately $1.2 million driven by the weakening of the U.S. dollar against the British Pound.
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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 $1.6 million and $6.3 million during the three and nine months ended September 30, 2024, respectively. Other income, net, was $5.1 million and $5.1 million during the three and nine months ended September 30, 2023, respectively. Interest income included in other income, net of other expense, was approximately $1.9 million and $5.0 million for the three and nine months ended September 30, 2024, respectively, and $1.3 million and $3.4 million for the three and nine months ended September 30, 2023, respectively.
Provision for Income Taxes
Provision for income taxes and effective tax rate are as follows for the periods presented ($ in thousands):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Provision for income taxes$10,119 $10,724 $27,701 $27,162 
Effective tax rate24.8 %35.7 %24.3 %29.7 %
For the three and nine months ended September 30, 2024, the differences between our effective tax rate and the federal statutory rate were primarily due to state income taxes. For the three months ended September 30, 2023 the difference between our effective tax rate and the federal statutory rate was primarily due to the recording of valuation allowances in certain foreign jurisdictions. For the nine months ended September 30, 2023, the difference between our effective tax rate and the federal statutory rate was primarily due to state income taxes, an accrual related to state tax filing positions, and 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):
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 Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
GAAP net income, as reported$30,643 $19,339 $86,063 $64,270 
Adjustments:
Interest expense66,906 50,558 184,047 147,376 
Interest income(1,909)(1,315)(5,037)(3,382)
Provision for income taxes10,119 10,724 27,701 27,162 
Depreciation and amortization8,158 11,196 23,467 32,768 
Stock-based compensation expense3,737 3,092 11,731 11,017 
Net loss (gain) on derivative instruments(1)
7 (3,512)(267)(3,512)
Acquisition, integration and restructuring related expenses(2)
162 594 4,364 6,574 
Adjusted EBITDA$117,823 $90,676 $332,069 $282,273 
Collections applied to principal balance(3)
$223,292 $188,872 $666,766 $562,511 
_______________________
(1)Amount represents gain or loss recognized on derivative instruments that are not designated as hedging instruments or gain or loss recognized on derivative instruments upon dedesignation of hedge relationships. We adjust for this amount because we believe the gain or loss on derivative contracts is not indicative of ongoing operations.
(2)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.
(3)Collections applied to principal balance is calculated in the table below:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
Collections applied to investment in receivable portfolios, net$222,149 $162,652 $641,982 $504,672 
Changes in recoveries(12,675)17,067 (6,020)30,054 
Other proceeds applied to basis
13,818 9,153 30,804 27,785 
Collections applied to principal balance$223,292 $188,872 $666,766 $562,511 
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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. 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 Purchased Receivables to Purchase Price Multiple
The following table summarizes our receivable purchases, related gross collections, and cumulative collections money multiples (in thousands, except multiples):
Year of
Purchase
Purchase
Price(1)
Cumulative Collections through September 30, 2024
<20152015201620172018201920202021202220232024
Total(2)
CCMM(3)
United States:
<2015$3,762,057 $7,258,767 $1,076,324 $739,743 $519,613 $372,705 $290,351 $216,962 $186,927 $140,814 $112,180 $67,436 $10,981,822 2.9 
2015499,034 — 105,610 231,102 186,391 125,673 85,042 64,133 42,774 25,655 19,518 12,254 898,152 1.8 
2016552,970 — — 110,875 283,035 234,690 159,279 116,452 87,717 51,650 35,130 21,643 1,100,471 2.0 
2017527,444 — — — 111,902 315,853 255,048 193,328 144,243 85,348 57,985 30,891 1,194,598 2.3 
2018629,214 — — — — 175,042 351,696 308,302 228,919 144,566 89,548 50,210 1,348,283 2.1 
2019675,139 — — — — — 174,693 416,315 400,250 256,444 164,106 87,945 1,499,753 2.2 
2020537,732 — — — — — — 213,450 430,514 311,573 194,522 100,826 1,250,885 2.3 
2021403,735 — — — — — — — 120,354 240,605 188,895 104,611 654,465 1.6 
2022549,745 — — — — — — — — 98,277 268,516 199,446 566,239 1.0 
2023807,874 — — — — — — — — — 184,182 362,724 546,906 0.7 
2024701,121 — — — — — — — — — — 129,823 129,823 0.2 
Subtotal9,646,065 7,258,767 1,181,934 1,081,720 1,100,941 1,223,963 1,316,109 1,528,942 1,641,698 1,354,932 1,314,582 1,167,809 20,171,397 2.1 
Europe:
<20151,242,208 519,115 410,256 322,275 284,799 261,696 218,565 177,458 178,076 134,094 112,284 79,185 2,697,803 2.2 
2015419,941 — 65,870 127,084 103,823 88,065 72,277 55,261 57,817 42,660 36,249 25,720 674,826 1.6 
2016258,218 — — 44,641 97,587 83,107 63,198 51,609 51,017 40,214 35,278 22,994 489,645 1.9 
2017461,571 — — — 68,111 152,926 118,794 87,549 86,107 61,762 48,763 30,747 654,759 1.4 
2018432,258 — — — — 49,383 118,266 78,846 80,629 61,691 49,675 32,407 470,897 1.1 
2019273,354 — — — — — 44,118 80,502 88,448 63,607 54,544 36,012 367,231 1.3 
2020116,227 — — — — — — 22,721 59,803 45,757 37,363 24,257 189,901 1.6 
2021255,788 — — — — — — — 43,082 66,529 58,515 40,075 208,201 0.8 
2022244,508 — — — — — — — — 36,957 70,385 49,632 156,974 0.6 
2023259,255 — — — — — — — — — 40,975 68,229 109,204 0.4 
2024153,374 — — — — — — — — — — 28,461 28,461 0.2 
Subtotal4,116,702 519,115 476,126 494,000 554,320 635,177 635,218 553,946 644,979 553,271 544,031 437,719 6,047,902 1.5 
Other geographies(4):
All vintages340,283 40,293 42,665 109,884 112,383 108,480 75,601 28,960 20,682 3,334 3,954 2,355 548,591 1.6 
Subtotal340,283 40,293 42,665 109,884 112,383 108,480 75,601 28,960 20,682 3,334 3,954 2,355 548,591 1.6 
Total$14,103,050 $7,818,175 $1,700,725 $1,685,604 $1,767,644 $1,967,620 $2,026,928 $2,111,848 $2,307,359 $1,911,537 $1,862,567 $1,607,883 $26,767,890 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 September 30, 2024, excluding collections on behalf of others.
(3)Cumulative Collections Money Multiple (“CCMM”) through September 30, 2024 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 Purchased Receivables to Purchase Price Multiple
The following table summarizes our purchases, resulting historical gross collections, estimated remaining gross collections from purchased receivables, and purchase price multiple (in thousands, except multiples):
Purchase Price(1)
Historical
Collections(2)
Estimated
Remaining
Collections		Total Estimated
Gross Collections
Purchase Price Multiple(3)
United States:
<2015(4)
$3,762,057 $10,981,822 $189,210 $11,171,032 3.0 
2015499,034 898,152 33,940 932,092 1.9 
2016552,970 1,100,471 60,014 1,160,485 2.1 
2017527,444 1,194,598 90,823 1,285,421 2.4 
2018629,214 1,348,283 144,961 1,493,244 2.4 
2019675,139 1,499,753 259,584 1,759,337 2.6 
2020537,732 1,250,885 301,194 1,552,079 2.9 
2021403,735 654,465 295,993 950,458 2.4 
2022549,745 566,239 565,286 1,131,525 2.1 
2023807,874 546,906 1,355,471 1,902,377 2.4 
2024701,121 129,823 1,506,417 1,636,240 2.3 
Subtotal9,646,065 20,171,397 4,802,893 24,974,290 2.6 
Europe:
<2015(4)
1,242,208 2,697,803 898,510 3,596,313 2.9 
2015(4)
419,941 674,826 249,529 924,355 2.2 
2016258,218 489,645 193,724 683,369 2.6 
2017461,571 654,759 257,876 912,635 2.0 
2018432,258 470,897 294,891 765,788 1.8 
2019273,354 367,231 275,856 643,087 2.4 
2020116,227 189,901 169,723 359,624 3.1 
2021255,788 208,201 337,982 546,183 2.1 
2022244,508 156,974 346,132 503,106 2.1 
2023259,255 109,204 392,651 501,855 1.9 
2024153,374 28,461 317,749 346,210 2.3 
Subtotal4,116,702 6,047,902 3,734,623 9,782,525 2.4 
Other geographies(5):
All vintages340,283 548,591 33,075 581,666 1.7 
Subtotal340,283 548,591 33,075 581,666 1.7 
Total$14,103,050 $26,767,890 $8,570,591 $35,338,481 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 September 30, 2024, excluding collections on behalf of others.
(3)Purchase Price Multiple represents total estimated gross collections divided by the purchase price.
(4)Includes portfolios acquired in connection with certain business combinations.
(5)Annual pool groups for other geographies have been aggregated for disclosure purposes.

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Estimated Remaining Gross Collections by Year of Purchase
The following table summarizes our estimated remaining gross collections from purchased receivable portfolios and estimated future cash flows from real estate-owned assets (in thousands):
 
Estimated Remaining Gross Collections by Year of Purchase(1)
 
2024(3)
20252026202720282029203020312032
>2032
Total(2)
United States:
<2015(4)
$18,489 $59,018 $39,197 $26,518 $17,955 $11,824 $7,582 $4,597 $2,623 $1,407 $189,210 
20153,507 10,708 6,434 4,107 2,895 2,043 1,444 1,024 727 1,051 33,940 
20166,103 19,224 11,435 7,097 4,990 3,515 2,481 1,754 1,244 2,171 60,014 
20178,559 26,844 17,950 11,461 7,886 5,560 3,930 2,786 1,980 3,867 90,823 
201813,068 41,446 28,887 19,501 12,869 8,860 6,255 4,429 3,146 6,500 144,961 
201924,196 75,439 51,099 34,584 23,530 15,622 10,805 7,611 5,375 11,323 259,584 
202026,986 85,909 60,147 40,788 27,821 18,927 12,644 8,799 6,206 12,967 301,194 
202126,660 83,845 59,401 39,528 26,912 18,603 12,845 8,783 6,114 13,302 295,993 
202255,559 167,755 106,768 73,089 49,315 34,393 24,376 17,385 12,171 24,475 565,286 
2023104,315 396,823 275,893 179,070 124,500 85,528 59,727 41,584 29,094 58,937 1,355,471 
202487,695 386,576 347,532 212,158 141,983 100,801 70,854 50,154 35,033 73,631 1,506,417 
Subtotal375,137 1,353,587 1,004,743 647,901 440,656 305,676 212,943 148,906 103,713 209,631 4,802,893 
Europe:
<2015(4)
26,965 101,550 92,592 84,376 78,181 72,088 66,214 60,034 55,022 261,488 898,510 
2015(4)
8,214 30,587 28,176 25,277 22,428 20,423 18,221 16,342 14,712 65,149 249,529 
20167,706 26,381 23,691 21,162 18,585 16,282 13,992 12,202 10,245 43,478 193,724 
201710,312 36,461 31,724 28,720 23,974 20,894 18,109 15,771 13,517 58,394 257,876 
201810,593 40,138 35,556 31,710 27,503 24,720 21,357 18,679 16,530 68,105 294,891 
201911,971 42,359 35,228 29,306 25,129 21,876 18,678 16,004 14,030 61,275 275,856 
20207,834 28,720 25,353 19,952 15,162 12,036 10,431 8,633 7,427 34,175 169,723 
202114,260 53,339 46,782 40,849 34,843 28,244 22,389 18,963 16,207 62,106 337,982 
202216,361 59,563 49,722 42,719 34,935 28,460 22,986 18,366 15,412 57,608 346,132 
202320,728 71,601 59,344 49,034 40,504 32,381 25,629 20,771 16,925 55,734 392,651 
202415,296 60,219 51,621 40,540 32,179 25,360 19,841 15,676 12,766 44,251 317,749 
Subtotal150,240 550,918 479,789 413,645 353,423 302,764 257,847 221,441 192,793 811,763 3,734,623 
Other geographies(5):
All vintages1,325 5,156 4,285 3,720 3,239 2,923 2,617 2,304 1,948 5,558 33,075 
Subtotal1,325 5,156 4,285 3,720 3,239 2,923 2,617 2,304 1,948 5,558 33,075 
Portfolio ERC526,702 1,909,661 1,488,817 1,065,266 797,318 611,363 473,407 372,651 298,454 1,026,952 8,570,591 
REO ERC(6)
8,326 30,016 27,954 9,189 2,749 61 — — — — 78,295 
Total ERC$535,028 $1,939,677 $1,516,771 $1,074,455 $800,067 $611,424 $473,407 $372,651 $298,454 $1,026,952 $8,648,886 
________________________
(1)As of September 30, 2024, ERC for Zero Basis Portfolios include approximately $44.1 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 approximately $33.1 million from cost recovery portfolios, primarily in other geographies.
(2)Represents the expected remaining gross cash collections over a 180-month period. As of September 30, 2024, ERC for 84-month and 120-month periods were:
84-Month ERC120-Month ERC
   United States$4,457,135 $4,704,272 
   Europe2,676,722 3,205,304 
   Other geographies25,038 30,090 
Portfolio ERC7,158,895 7,939,666 
REO ERC78,295 78,295 
Total ERC$7,237,190 $8,017,961 
(3)Amount for 2024 consists of three months data from October 1, 2024 to December 31, 2024.
(4)Includes portfolios acquired in connection with certain business combinations.
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(5)Annual pool groups for other geographies have been aggregated for disclosure purposes.
(6)Real estate-owned (“REO”) assets ERC includes approximately $77.7 million and $0.6 million of estimated future cash flows for Europe and Other Geographies, respectively.
Estimated Future Collections Applied to Investment in Receivable Portfolios
As of September 30, 2024, we had $3.7 billion in investment in receivable portfolios. The estimated future collections applied to the investment in receivable portfolios net balance is as follows (in thousands):
Years Ending December 31,
United States
Europe
Other Geographies		Total
2024(1)
$142,237 $56,880 $1,057 $200,174 
2025589,111 209,149 4,123 802,383 
2026484,016 185,080 3,413 672,509 
2027296,941 160,074 2,958 459,973 
2028197,928 135,428 2,564 335,920 
2029136,649 115,134 2,284 254,067 
203095,317 96,302 2,032 193,651 
203167,383 81,727 769 149,879 
203247,454 72,121 — 119,575 
203333,596 66,046 — 99,642 
203423,923 61,387 — 85,310 
203517,770 60,086 — 77,856 
203613,796 59,317 — 73,113 
203710,564 60,299 — 70,863 
20386,615 65,219 — 71,834 
20392,235 50,276 — 52,511 
Total$2,165,535 $1,534,525 $19,200 $3,719,260 
________________________
(1)Amount for 2024 consists of three months data from October 1, 2024 to December 31, 2024.
Liquidity and Capital Resources
Liquidity
The following table summarizes our cash flow activities for the periods presented (in thousands):
 Nine Months Ended September 30,
 20242023
(Unaudited)
Net cash provided by operating activities$132,624 $116,211 
Net cash used in investing activities(175,705)(270,726)
Net cash provided by financing activities130,487 158,872 
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.
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Net cash provided by operating activities was $132.6 million and $116.2 million during the nine months ended September 30, 2024 and 2023, 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, 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 $6.0 million during the nine months ended September 30, 2024 and an increase in operating cash flows by $30.1 million during the nine months ended September 30, 2023. Refer to “Note 5: Investment in Receivable Portfolios, Net” in the notes to our consolidated financial statements for discussion relating to changes in recoveries.
Investing Cash Flows
Net cash used in investing activities was $175.7 million and $270.7 million during the nine months ended September 30, 2024 and 2023, 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 $844.9 million and $772.1 million during the nine months ended September 30, 2024 and 2023, respectively. Collection proceeds applied to the investment in receivable portfolios, were $642.0 million and $504.7 million during the nine months ended September 30, 2024 and 2023, 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 $130.5 million and $158.9 million during the nine months ended September 30, 2024 and 2023, 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 $458.8 million and $630.1 million during the nine months ended September 30, 2024 and 2023, respectively. Repayments of amounts outstanding under our credit facilities were $1,292.6 million and $446.7 million during the nine months ended September 30, 2024 and 2023, respectively. During the nine months ended September 30, 2024, we issued $1.0 billion in senior secured notes (of which $500.0 million matures in 2029 and $500.0 million matures in 2030). We used a portion of the proceeds from the senior secured notes issuance to repay drawings under our Global Senior Facility. During the nine months ended September 30, 2023, we issued $230.0 million 4.00% convertible senior notes that mature in 2029, and used $212.5 million in cash to repurchase and settle our exchangeable senior notes due 2023.
Capital Resources
Our primary sources of capital are cash collections from our investment in 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.
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 $1,196.0 million as of September 30, 2024. In October 2024, the Company redeemed the 2025 Notes at par, which was funded in part by a utilization of the Global Senior Facility of approximately $314.3 million. The Global Senior Facility was subsequently upsized by $92.0 million from $1,203.0 million to $1,295.0 million in October 2024.
In March 2024, we issued $500.0 million in aggregate principal amount of 9.250% Senior Secured Notes due 2029 at an issue price of 100.000% through a private placement offering. Additionally, in May 2024, we issued $500.0 million in aggregate principal amount of 8.500% Senior Secured Notes due 2030 at an issue price of 100.000% through a separate private placement offering.
Our Board of Directors has approved a $300.0 million 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 nine months ended September 30, 2024 and 2023, the Company did not make any repurchases under the share repurchase program. Our practice is to retire the
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shares repurchased. As of September 30, 2024, authorization for $91.9 million of share repurchases remained under the share repurchase program.
Our cash and cash equivalents as of September 30, 2024, consisted of $40.9 million held by U.S.-based entities and $206.5 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 $23.4 million as of September 30, 2024.
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, 2023, for a complete discussion of our critical accounting estimates. Other than the ongoing reassessment of expected future recoveries of our investment in receivable portfolios during each reporting period under our CECL accounting policy as discussed in “Note 5: Investment in 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, 2023.
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Item 3 – Quantitative and Qualitative Disclosures About Market Risk
Foreign Currency Exchange Rates. As of September 30, 2024, there had not been a material change in any of the foreign currency risk information disclosed in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Interest Rates. As of September 30, 2024, there had not been a material change in the interest rate risk information disclosed in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Item 4 – Controls and Procedures
Attached as exhibits to this Form 10-Q are the certifications required by Rule 13a-14 of the Securities Exchange Act of 1934, as amended. This section includes information concerning the controls and controls evaluation referred to in the certifications.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”) and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and accordingly, management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on their most recent evaluation, as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act are effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION

Item 1 – Legal Proceedings
Information with respect to this item may be found in “Note 11: Commitments and Contingencies,” to the condensed consolidated financial statements.

Item 1A – Risk Factors
There is no material change in the information reported under “Part I-Item 1A-Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
None.

Item 5 - Other Information
On August 28, 2024, Laura Olle, a member of the Company's board of directors, adopted a trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) to sell up to 1,340 shares of Encore Capital Group, Inc. common stock between November 27, 2024, and February 27, 2025, subject to certain conditions.



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Item 6 – Exhibits
NumberDescription
3.1.1
3.1.2
3.1.3
3.2
10.1
31.1
31.2
32.1
101.INSInline XBRL Instance Document - The instance document does not appear in the interactive data file because XBRL tags are embedded within the inline XBRL document. (filed herewith)
101.SCHInline XBRL Taxonomy Extension Schema Document (filed herewith)
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith)
101.LABInline XBRL Taxonomy Extension Label Linkbase Document (filed herewith)
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101
In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, copies of certain instruments defining the rights of holders of long-term debt of the company are not filed herewith. Pursuant to this regulation, we hereby agree to furnish a copy of any such instrument to the SEC upon request.

51
Table of Contents
SIGNATURES

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 thereunto duly authorized.
 
ENCORE CAPITAL GROUP, INC.
By: /s/ Jonathan C. Clark
 Jonathan C. Clark
 Executive Vice President,
 Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)


Date: November 6, 2024

52
Document

Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
I, Ashish Masih, certify that:
 
1.I have reviewed this Quarterly Report on Form 10-Q of Encore Capital Group, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 

 
By: 
/S/ ASHISH MASIH
 Ashish Masih
President and Chief Executive Officer
Date: November 6, 2024

Document

Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
I, Jonathan C. Clark, certify that:
 
1.I have reviewed this Quarterly Report on Form 10-Q of Encore Capital Group, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
By: 
/S/ JONATHAN C. CLARK
 Jonathan C. Clark
Executive Vice President, Chief Financial Officer and Treasurer
Date: November 6, 2024

Document

Exhibit 32.1
ENCORE CAPITAL GROUP, INC.
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Encore Capital Group, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
 
(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company.
/s/ ASHISH MASIH
Ashish Masih
President and Chief Executive Officer
November 6, 2024
 
/s/ JONATHAN C. CLARK
Jonathan C. Clark
Executive Vice President,
Chief Financial Officer and Treasurer
November 6, 2024
This certification accompanies the above described Report and is being furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed as part of the Report.