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.

• 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, with $81.9 million remaining authorized.

• 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 $393 million, with operating income up 54.7% to $129.3 million.

• Net income doubled to $46.8 million, and adjusted EBITDA rose 43% to $140.5 million.

• Operating expenses increased 8% to $263 million, mainly due to higher legal and admin costs.

• Cash efficiency margin improved to 58.3%, up 3.5 percentage points year-over-year.

• Interest expense rose 26.5% to $70.5 million, reflecting higher average debt and rates.

Outlook and guidance

• 2025 global portfolio purchases expected to exceed $1.35 billion, with collections projected to grow 11% to $2.4 billion.

• Interest expense for 2025 anticipated at approximately $285 million; effective tax rate expected in the mid-20% range.

• U.S. market conditions remain highly favorable, supporting further growth in portfolio purchases.

• 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.