Encore Capital Group Inc.
) reported third-quarter 2013 operating net income of 99 cents
per share, which surpassed the Zacks Consensus Estimate of 93
cents by 6.5%. The results also improved significantly by 20.7%
from the prior-year quarter number of 82 cents per share.
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The bottom-line growth during the quarter was primarily driven by
substantial improvement in the top line as well as contribution
from the recent acquisition of a controlling interest in Cabot
Encore Capital reported net income of 82 cents per share in the
third quarter, on par with year-ago earnings. The net income
figure included the impact of convertible notes non-cash interest
and issuance cost amortization of 4 cents per share, acquisition
related legal and advisory fees of 18 cents per share and
favorable effect of tax credits applicable to prior periods worth
5 cents per share,
Total revenues of Encore Capital increased 62.2% year over year
to nearly $235.5 million. The top line also exceeded the Zacks
Consensus Estimate of $206 million by 14.3%. Growth in sales was
fueled by significantly higher revenues from receivable portfolio
as well as improvement in other revenues during the quarter.
Gross collections of $379.7 million from the portfolio purchasing
and recovery business escalated 54% year over year for Encore
Adjusted operating expenses of $154.7 million shot up 55.2% year
over year to $154.7 million. Rise in expenses resulted from
higher salaries and employee benefits, cost of legal collections,
other operating expenses, collection agency commissions and
higher general and administrative expenses.
Encore Capital's third-quarter adjusted earnings before interest,
taxes, depreciation and amortization (EBITDA) grew 55% year over
year to $234.4 million.
During the quarter, Encore Capital completed the acquisition of a
controlling interest in Cabot Credit Management that provided the
former with opportunities to deploy capital in a new market, in
order to derive significant earnings. The acquisition drove
Remaining Collections $1.5 billion higher to $4 billion as of Sep
As of Sep 30, total assets of Encore Capital stood at $2.59
billion compared to $1.17 billion at 2012-end.
At the end of third quarter, Encore Capital's cash and cash
equivalents surged significantly to $110.2 million from $17.5
million as of Dec 31, 2012.
Including $559 million of acquisition of Cabot Credit
Management's portfolio, investment in receivable portfolio
totaled $617.9 million during the quarter.
Total debt amounted to $1.8 billion rising from $706 million at
Total shareholders' equity of Encore Capital increased to $548
million, up 35% from the 2012-end level.
Performances by Others
Regional Management Corp.
) reported net income of 61 cents for the third quarter of 2013,
a penny above the Zacks Consensus Estimate of 60 cents. Results
also improved 3.4% year over year.
Discover Financial Services
) reported third-quarter 2013 earnings per share (EPS) of $1.20,
in line with the Zacks Consensus Estimate. However, EPS declined
3.2% from the year-ago quarter's earnings of $1.24.
Capital One Financial Corp.
) reported third-quarter 2013 earnings per share of $1.86, which
beat the Zacks Consensus Estimate of $1.77. However, earnings
were 7.5% below $2.01 earned in the prior-year quarter.
Encore Capital presently carries a Zacks Rank #4 (Sell).