Encore Capital Group (ECPG) Q1 2025 earnings summary

Executive summary

• Q1 2025 saw global portfolio purchases rise 24% year-over-year to $368 million, with U.S. purchases hitting a record $316 million and collections up 18% to $605 million, driven by strong U.S. performance.

• Earnings per share more than doubled to $1.93, a 103% increase from Q1 2024, and net income rose 101% to $46.8 million.

• Leverage improved to 2.6x, down from 2.8x a year ago, within the target range of 2.0x–3.0x.

• Share repurchases resumed, totaling $10 million in Q1 and $16 million year-to-date.

• Europe saw a decrease in capital deployment due to competitive pricing and currency headwinds, but collections still increased 7% to $150 million.

Financial highlights

• Total revenue grew 20% year-over-year to $392.8 million, with debt purchasing revenue up 21% to $367 million.

• Operating expenses increased 8% to $263.4 million, demonstrating operating leverage.

• Adjusted EBITDA rose 43% to $140.5 million.

• Cash efficiency margin improved to 58.3%, up 3.5 percentage points from Q1 2024.

• Interest expense and other income increased 30% to $69 million due to higher debt balances and rates.

Outlook and guidance

• Full-year 2025 guidance reiterated: global portfolio purchases expected to exceed $1.35 billion, with collections projected to grow 11% to $2.4 billion.

• Interest expense for 2025 expected to be approximately $285 million; effective tax rate in the mid-20s percent.

• U.S. market conditions remain highly favorable, supporting continued capital allocation and growth.

• Sufficient liquidity and positive cash flows expected to fund operations for at least the next twelve months.

• European market remains competitive, constraining capital deployment; sales activity and pricing expected to fluctuate.