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Document

Exhibit 99.1

Encore Capital Group Announces Third Quarter 2020 Financial Results

•GAAP net income up 41% to $55 million, or $1.72 per share

•Non-GAAP adjusted net income up 42% to $74 million, or $2.31 per share

•Global collections grew 8% to a record $540 million

•Estimated Remaining Collections (ERC) grew 15% to a record $8.5 billion

SAN DIEGO, November 2, 2020-- Encore Capital Group, Inc. (NASDAQ: ECPG), an international specialty finance company, today reported consolidated financial results for the third quarter ended September 30, 2020.

“The third quarter was an outstanding period for Encore as we achieved record global collections and ERC,” said Ashish Masih, President and Chief Executive Officer. “Many of our consumers are reaching out to us to assist them with their financial recovery. We deal with consumers in financial hardship every day and have been able to extend relief when appropriate and also help increasing numbers of consumers resolve their debts, which contributed to our record collections in the quarter. We are also servicing an increasing proportion of our consumers through our lower cost call center and digital collections channel, which continues to operate at a high level of efficiency. As a result, we added another quarter to our strong GAAP earnings growth over the past five years,” said Masih.

“The CFPB’s new industry rules, released last week as expected, provide much needed clarity and create uniformity in the fair treatment of U.S. consumers in debt collection. The new rules are largely consistent with those proposed eighteen months ago and, as a result, we are well prepared to fully implement them with no significant incremental operational changes. Through these new rules, we remain very much aligned with the CFPB’s goal of making consumer financial markets work for consumers, responsible providers, and the economy as a whole,” added Masih.

In September, the company implemented a new global funding structure which effectively combined the balance sheets of its Midland Credit Management (MCM) and Cabot Credit Management (Cabot) businesses to maximize the company’s financial flexibility. The new structure is expected to allow Encore to better leverage its global scale and allocate capital to the markets with the best returns, in addition to enhancing its access to capital markets and reducing funding costs.

“Looking ahead, we believe more consumers than ever will need us to help them with their financial recovery. We are committed to being there when consumers need us, as well as supporting the banks who lend to them while fulfilling our important role in the credit ecosystem. In that regard, our new global funding structure, our strong balance sheet and our liquidity have positioned us well for the substantial increase in charged-off receivables we believe is coming to the U.S. and U.K. markets in 2021 and beyond,” said Masih.

Key Financial Metrics for the Third Quarter of 2020:

•Estimated remaining collections (ERC) were a record $8.5 billion, up 15% compared to the third quarter of 2019.

•Portfolio purchases were $170 million, consisting of $141 million in the U.S. and $29 million in Europe.

•Gross collections were a record $540 million, up 8% compared to $499 million in the third quarter of 2019.

•Total revenues were $404 million, up 13% compared to $356 million in the third quarter of 2019.

Encore Capital Group, Inc.

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•Total operating expenses increased 6% to $261 million, compared to $248 million in the same period of the prior year, and included a $15 million payment to the CFPB to settle a complaint filed in September and $7 million of expenses related to the implementation of the company’s new global funding structure.

•Total interest expense increased 25% to $68 million, compared to $54 million in the same period of the prior year, principally as a result of $18 million in costs and expenses related to the financing transactions that implemented the company’s new global funding structure.

•GAAP net income attributable to Encore was $55 million, or $1.72 per fully diluted share, and was net of the $15 million payment to the CFPB and $25 million of expenses ($19 million after tax), related to the implementation of the company’s new global funding structure. This compares to net income of $39 million, or $1.23 per fully diluted share in the third quarter of 2019.

•Adjusted net income attributable to Encore was $74 million, or $2.31 per fully diluted share (also referred to as economic EPS), and was net of $19 million (after tax) of expenses related to the implementation of the company’s new global funding structure. This compares to adjusted net income of $52 million, or $1.64 per fully diluted share in the third quarter of 2019.

•As of September 30, 2020, after taking into account borrowing base and applicable debt covenants, available capacity under Encore’s new global senior facility was $465 million. In addition, Encore ended the third quarter with $150 million of non-client cash on the balance sheet.

•Debt to equity ratio improved to 2.9x and the ratio of Net Debt to Adjusted EBITDA plus collections applied to principal balance (the industry standard for leverage) improved to 2.4x.

Conference Call and Webcast

Encore will host a conference call and slide presentation today, November 2, 2020, at 2:00 p.m. Pacific / 5:00 p.m. Eastern time, to present and discuss third quarter results.

Members of the public are invited to access the live webcast via the Internet by logging in on the Investor Relations page of Encore's website atwww.encorecapital.com. To access the live, listen-only telephone conference portion, please dial (855) 541-0982 or (704) 288-0606.

For those who cannot listen to the live broadcast, a telephonic replay will be available for seven days by dialing (800) 585-8367 or (404) 537-3406 and entering the conference ID number 6032536. A replay of the webcast will also be available shortly after the call on the Company's website.

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Non-GAAP Financial Measures

This news release includes certain financial measures that exclude the impact of certain items and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company has included adjusted income attributable to Encore and adjusted income attributable to Encore per share (also referred to as economic EPS when adjusted for certain shares associated with our convertible notes that will not be issued but are reflected in the fully diluted share count for accounting purposes) because management uses this measure to assess operating performance, in order to highlight trends in the Company’s business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. The Company has included information concerning adjusted operating expenses in order to facilitate a comparison of approximate costs to cash collections for the portfolio purchasing and recovery business in the periods presented. Adjusted income attributable to Encore, adjusted income attributable to Encore per share/economic EPS, and adjusted operating expenses have not been prepared in accordance with GAAP. These non-GAAP financial measures should not be considered as alternatives to, or more meaningful than, net income, net income per share, and total operating expenses as indicators of the Company’s operating performance. Further, these non-GAAP financial measures, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. The Company has attached to this news release a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures. The Company has included references to constant currency growth rates to facilitate comparisons of underlying financial results excluding the impact of changes to foreign currency exchange rates. Constant Currency figures are calculated by employing foreign currency exchange rates from the year ago period to recalculate current period results. All constant currency values are calculated based on the average exchange rates during the respective periods, except for ERC, which is calculated using the changes in the period-ending exchange rates.

About Encore Capital Group, Inc.

Encore Capital Group is an international specialty finance company that provides debt recovery solutions and other related services across a broad range of financial assets. Through its subsidiaries around the globe, Encore purchases or services portfolios of receivables from major banks, credit unions and utility providers.

Headquartered in San Diego, Encore is a publicly traded NASDAQ Global Select company (ticker symbol: ECPG) and a component stock of the Russell 2000, the S&P Small Cap 600 and the Wilshire 4500. More information about Encore can be found atwww.encorecapital.com. More information about the Company’s Midland Credit Management subsidiary can be found atwww.midlandcreditonline.com. More information about the Company's Cabot Credit Management subsidiary can be found atwww.cabotcm.com. Information found on the Company’s, MCM’s, or Cabot’s websites is not incorporated by reference.

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Forward Looking Statements

The statements in this press release that are not historical facts, including, most importantly, those statements preceded by, or that include, the words “will,” “may,” “believe,” “projects,” “expects,” “anticipates” or the negation thereof, or similar expressions, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). These statements may include, but are not limited to, statements regarding our future operating results, performance, business plans or prospects. For all “forward-looking statements,” the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act. Such forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company and its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors are discussed in the reports filed by the Company with the Securities and Exchange Commission, including the most recent reports on Forms 10-K and 10-Q, as they may be amended from time to time. The Company disclaims any intent or obligation to update these forward-looking statements.

Contact:

Bruce Thomas

Vice President, Investor Relations

Encore Capital Group, Inc.

(858) 309-6442

bruce.thomas@encorecapital.com

FINANCIAL TABLES FOLLOW

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ENCORE CAPITAL GROUP, INC.

Consolidated Statements of Financial Condition

(In Thousands, Except Par Value Amounts)

(Unaudited)

September 30,

2020December 31,

2019

Assets

Cash and cash equivalents$169,983$192,335

Investment in receivable portfolios, net3,265,9923,283,984

Deferred court costs, net—100,172

Property and equipment, net120,125120,051

Other assets309,296329,223

Goodwill866,657884,185

Total assets$4,732,053$4,909,950

Liabilities and Equity

Liabilities:

Accounts payable and accrued liabilities$221,837$223,911

Borrowings3,252,1013,513,197

Other liabilities130,859147,436

Total liabilities3,604,7973,884,544

Commitments and Contingencies

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, 31,345 and 31,097 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively313311

Additional paid-in capital227,113222,590

Accumulated earnings1,018,348888,058

Accumulated other comprehensive loss(121,098)(88,766)

Total Encore Capital Group, Inc. stockholders’ equity1,124,6761,022,193

Noncontrolling interest2,5803,213

Total equity1,127,2561,025,406

Total liabilities and equity$4,732,053$4,909,950

The following table presents certain assets and liabilities of consolidated variable interest entities (“VIEs”) included in the consolidated statements of financial condition above. Most assets in the table below include those assets that can only be used to settle obligations of consolidated VIEs. The liabilities exclude amounts where creditors or beneficial interest holders have recourse to the general credit of the Company.

September 30,

2020December 31,

2019

Assets

Cash and cash equivalents$238$34

Investment in receivable portfolios, net528,481539,596

Other assets4,7734,759

Liabilities

Borrowings452,299464,092

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ENCORE CAPITAL GROUP, INC.

Consolidated Statements of Operations

(In Thousands, Except Per Share Amounts)

(Unaudited)

Three Months Ended

September 30,Nine Months Ended

September 30,

2020201920202019

Revenues

Revenue from receivable portfolios$342,489$316,217$1,035,141$939,870

Changes in expected current and future recoveries30,451—(2,203)—

Servicing revenue29,78731,06082,41797,399

Other revenues9491443,435673

Total revenues403,676347,4211,118,7901,037,942

Allowance reversals on receivable portfolios, net8,51511,945

Total revenues, adjusted by net allowances355,9361,049,887

Operating expenses

Salaries and employee benefits95,97996,638279,944284,699

Cost of legal collections60,38348,971164,018149,446

General and administrative expenses53,45938,168113,954110,335

Other operating expenses28,08825,75383,52784,913

Collection agency commissions12,70317,34336,56246,905

Depreciation and amortization10,60910,00031,43629,736

Goodwill impairment—10,718—10,718

Total operating expenses261,221247,591709,441716,752

Income from operations142,455108,345409,349333,135

Other expense

Interest expense(67,962)(54,365)(172,951)(173,245)

Other income (expense)361(11,546)(1,211)(15,766)

Total other expense(67,601)(65,911)(174,162)(189,011)

Income before income taxes74,85442,434235,187144,124

Provision for income taxes(19,747)(3,021)(59,875)(18,447)

Net income55,10739,413175,312125,677

Net income attributable to noncontrolling interest(457)(544)(784)(893)

Net income attributable to Encore Capital Group, Inc. stockholders$54,650$38,869$174,528$124,784

Earnings per share attributable to Encore Capital Group, Inc.:

Basic$1.74$1.24$5.56$3.99

Diluted$1.72$1.23$5.51$3.97

Weighted average shares outstanding:

Basic31,48431,33831,40231,242

Diluted31,82631,65731,67231,459

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ENCORE CAPITAL GROUP, INC.

Consolidated Statements of Cash Flows

(Unaudited, In Thousands)

Nine Months Ended September 30,

20202019

Operating activities:

Net income$175,312$125,677

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization31,43629,736

Expense related to financing19,7913,496

Other non-cash interest expense, net22,72524,049

Stock-based compensation expense13,1899,412

Deferred income taxes(15,070)5,012

Goodwill impairment—10,718

Changes in expected current and future recoveries2,203—

Allowance reversals on receivable portfolios, net—(11,945)

Other, net24,46920,218

Changes in operating assets and liabilities

Deferred court costs and other assets14,26745,415

Prepaid income tax and income taxes payable(11,226)(21,240)

Accounts payable, accrued liabilities and other liabilities(27,114)(43,602)

Net cash provided by operating activities249,982196,946

Investing activities:

Purchases of receivable portfolios, net of put-backs(517,959)(757,101)

Collections applied to investment in receivable portfolios, net540,101588,259

Purchases of property and equipment(22,658)(30,712)

Other, net8,0911,596

Net cash provided by (used in) investing activities7,575(197,958)

Financing activities:

Payment of loan and debt refinancing costs(48,676)(8,777)

Proceeds from credit facilities1,695,914481,105

Repayment of credit facilities(2,051,764)(440,992)

Proceeds from senior secured notes410,820460,512

Repayment of senior secured notes(152,430)(460,455)

Proceeds from issuance of convertible and exchangeable senior notes—100,000

Repayment of convertible senior notes(89,355)(84,600)

Other, net(32,400)(15,480)

Net cash (used in) provided by financing activities(267,891)31,313

Net (decrease) increase in cash and cash equivalents(10,334)30,301

Effect of exchange rate changes on cash and cash equivalents(12,018)(1,042)

Cash and cash equivalents, beginning of period192,335157,418

Cash and cash equivalents, end of period$169,983$186,677

Supplemental disclosure of cash information:

Cash paid for interest$148,059$131,873

Cash paid for taxes, net of refunds87,15431,419

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ENCORE CAPITAL GROUP, INC.

Supplemental Financial Information

Reconciliation of Adjusted Income Attributable to Encore to GAAP Net Income Attributable to Encore and Adjusted Operating Expenses Related to Portfolio Purchasing and Recovery Business to GAAP Total Operating Expenses

(In Thousands, Except Per Share amounts) (Unaudited)

Three Months Ended September 30,

20202019

$Per Diluted Share$Per Diluted Share

GAAP net income attributable to Encore, as reported$54,650$1.72$38,869$1.23

Adjustments:

CFPB settlement fees(1)15,0090.47——

Convertible notes and exchangeable notes non-cash interest and issuance cost amortization3,1800.103,5310.11

Acquisition, integration and restructuring related expenses(2)(23)0.003,8190.12

Amortization of certain acquired intangible assets(3)1,7730.061,6440.05

Loss on Baycorp Transaction(4)——12,4890.39

Goodwill impairment(4)——10,7180.34

Net gain on fair value adjustments to contingent consideration(5)——(101)0.00

Income tax effect of above non-GAAP adjustments and certain discrete tax items(6)(1,052)(0.04)(19,069)(0.60)

Adjusted net income attributable to Encore$73,537$2.31$51,900$1.64

_______________________

(1)Amount represents a charge resulting from the Stipulated Judgment with the CFPB. We adjust for this amount because we believe it is not indicative of ongoing operations; therefore, adjusting for it enhances comparability to prior periods, anticipated future periods, and our competitors’ results.

(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)We have acquired intangible assets, such as trade names and customer relationships, as a result of our acquisition of debt solution service providers. These intangible assets are valued at the time of the acquisition and amortized over their estimated lives. We believe that amortization of acquisition-related intangible assets, especially the amortization of an acquired company’s trade names and customer relationships, is the result of pre-acquisition activities. In addition, the amortization of these acquired intangibles is a non-cash static expense that is not affected by operations during any reporting period. As a result, the amortization of certain acquired intangible assets is excluded from our adjusted income attributable to Encore and adjusted earnings per share.

(4)The Baycorp Transaction resulted in a goodwill impairment charge of $10.7 million and a loss on sale of $12.5 million during the three months ended September 30, 2019. We believe the goodwill impairment charge and the loss on sale are not indicative of ongoing operations, therefore adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.

(5)Amount represents the net gain recognized as a result of fair value adjustments to contingent considerations that were established for our acquisitions of debt solution service providers in Europe. We have adjusted for this amount because we do not believe this is indicative of ongoing operations.

(6)Amount represents the total income tax effect of the adjustments, which is generally calculated based on the applicable marginal tax rate of the jurisdiction in which the portion of the adjustment occurred. Additionally, we adjust for certain discrete tax items that are not indicative of our ongoing operations.

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Nine Months Ended September 30,

20202019

$Per Diluted Share$Per Diluted Share

GAAP net income attributable to Encore, as reported$174,528$5.51$124,784$3.97

Adjustments:

CFPB settlement fees(1)15,0090.47——

Convertible notes and exchangeable notes non-cash interest and issuance cost amortization11,2050.3511,5710.37

Acquisition, integration and restructuring related expenses(2)4,9400.166,3450.20

Amortization of certain acquired intangible assets(3)5,2070.165,3580.17

Loss on Baycorp Transaction(4)——12,4890.40

Goodwill impairment(4)——10,7180.34

Net gain on fair value adjustments to contingent consideration(5)——(2,300)(0.07)

Income tax effect of above non-GAAP adjustments and certain discrete tax items(6)(6,399)(0.19)(21,840)(0.69)

Change in tax accounting method(7)——(9,070)(0.29)

Adjusted net income attributable to Encore$204,490$6.46$138,055$4.40

________________________

(1)Amount represents a charge resulting from the Stipulated Judgment with the CFPB. We have adjusted for this amount because we believe it is not indicative of ongoing operations; therefore, adjusting for it enhances comparability to prior periods, anticipated future periods, and our competitors’ results.

(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)We have acquired intangible assets, such as trade names and customer relationships, as a result of our acquisition of debt solution service providers. These intangible assets are valued at the time of the acquisition and amortized over their estimated lives. We believe that amortization of acquisition-related intangible assets, especially the amortization of an acquired company’s trade names and customer relationships, is the result of pre-acquisition activities. In addition, the amortization of these acquired intangibles is a non-cash static expense that is not affected by operations during any reporting period. As a result, the amortization of certain acquired intangible assets is excluded from our adjusted income attributable to Encore and adjusted income per share.

(4)The Baycorp Transaction resulted in a goodwill impairment charge of $10.7 million and a loss on sale of $12.5 million during the three months ended September 30, 2019. We believe the goodwill impairment charge and the loss on sale are not indicative of ongoing operations, therefore adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.

(5)Amount represents the net gain recognized as a result of fair value adjustments to contingent considerations that were established for our acquisitions of debt solution service providers in Europe. We have adjusted for this amount because we do not believe this is indicative of ongoing operations.

(6)Amount represents the total income tax effect of the adjustments, which is generally calculated based on the applicable marginal tax rate of the jurisdiction in which the portion of the adjustment occurred. Additionally, we adjust for certain discrete tax items that are not indicative of our ongoing operations.

(7)Amount represents the benefit from the tax accounting method change related to revenue reporting. We adjust for certain discrete tax items that are not indicative of our ongoing operations.

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Three Months Ended

September 30,Nine Months Ended

September 30,

2020201920202019

GAAP total operating expenses, as reported$261,221$247,591$709,441$716,752

Adjustments:

Operating expenses related to non-portfolio purchasing and recovery business(1)(54,001)(42,503)(137,876)(130,817)

CFPB settlement fees(2)(15,009)—(15,009)—

Stock-based compensation expense(3,884)(4,005)(13,189)(9,412)

Acquisition, integration and restructuring related expenses(3)23(3,819)(132)(6,345)

Goodwill impairment(4)—(10,718)—(10,718)

Net gain on fair value adjustments to contingent consideration(5)—101—2,300

Adjusted operating expenses related to portfolio purchasing and recovery business$188,350$186,647$543,235$561,760

________________________

(1)Operating expenses related to non-portfolio purchasing and recovery business include operating expenses from other operating segments that primarily engage in fee-based business, as well as corporate overhead not related to our portfolio purchasing and recovery business.

(2)Amount represents a charge resulting from the Stipulated Judgment with the CFPB. We have adjusted for this amount because we believe it is not indicative of ongoing operations; therefore, adjusting for it enhances comparability to prior periods, anticipated future periods, and our competitors’ results.

(3)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.

(4)The Baycorp Transaction resulted in a goodwill impairment charge of $10.7 million that is included in operating expenses during the three and nine months ended September 30, 2019. We believe the goodwill impairment charge is not indicative of ongoing operations, therefore, adjusting for the expense enhances comparability to prior periods, anticipated future periods, and our competitors’ results.

(5)Amount represents the gain recognized as a result of fair value adjustments to contingent considerations that were established for our acquisitions of debt solution service providers in Europe. We have adjusted for this amount because we do not believe this is indicative of ongoing operations.