Encore Capital Group’s (ECPG Quick QuoteECPG - Free Report) shares gained 11.2% since it reported first-quarter 2024 results on May 8, 2024. The strong first-quarter earnings benefited from improving portfolio supply in the United States and rising collections. Continued growth in lending, coupled with higher delinquencies and charge-offs, supported the company’s record supply of non-performing loans in the quarter. However, slow growth in the U.K. and European markets partially offset the results.

ECPG reported first-quarter 2024 adjusted earnings per share (EPS) of 95 cents, which beat the Zacks Consensus Estimate by 1.1%. The bottom line also reported an improvement of 1.1% year over year.

ECPG's revenues climbed 5% year over year to $328.4 million. However, the top line missed the consensus mark of $329 million.

Operational Update

Total debt purchasing revenue improved 6% year over year in the quarter under review. Servicing revenues deteriorated 9.8% year over year in the first quarter of 2024 and missed the consensus mark by 7.4%. Collections grew 10% year over year to $511 million and beat the consensus mark by 3.1%.

Total operating expenses of $244.8 million rose nearly 1% year over year due to increased salaries and employee benefits, cost of legal collections and other operating expenses. Cash efficiency margin (cash receipts minus operating expenses minus impairment charges divided by cash receipts) improved 50 basis points (bps) year over year to 52.2% in the first quarter.

Interest expenses increased 19.1% year over year to $55.8 million in the quarter under review. Encore Capital’s net loss of $23.2 million improved 25% year over year.

Midland Credit Management’s portfolio purchases were $237 million, which rose 11.3% year over year in the first quarter of 2024. Cabot’s portfolio purchases declined 6% year over year in the first quarter as the company is being selective in purchasing portfolios in a competitive European market.

Financial Position (as of Mar 31, 2024)

Encore Capital exited the first quarter with total assets of $4.7 billion, higher than $4.6 billion at 2023-end. Cash and cash equivalents amounted to $178 million in the first quarter, higher than $158.4 million at 2023-end.

Borrowings increased from $3.3 billion at 2023-end to $3.4 billion. Total liabilities of $3.73 billion at the first-quarter end were higher than $3.69 billion at 2023-end. Total equity increased from $936.5 million at 2023-end to $953.9 million.

Net cash provided by operating activities increased 42% year over year in the first quarter of 2024.

2024 Guidance

Management expects portfolio purchasing to surpass the 2023 figure of $1.1 billion in 2024. It expects collections to grow by approximately 8% to $2 billion in 2024.

Interest expenses were revised upward to $245-$250 million for 2024 due to bond refinancing. Effective tax rate is expected to be in the mid-20s in 2024.

The company expects collections efficiency margin to improve over the 2023 level.

Zacks Rank

Encore Capital currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Players

Here are some other Finance sector players that have reported first-quarter results so far. The bottom-line results of Euronet Worldwide, Inc. (EEFT Quick QuoteEEFT - Free Report) , Virtu Financial, Inc. (VIRT Quick QuoteVIRT - Free Report) and Cboe Global Markets, Inc. (CBOE Quick QuoteCBOE - Free Report) beat the Zacks Consensus Estimate.

Euronet reported first-quarter adjusted earnings of $1.28 per share, which surpassed the Zacks Consensus Estimate by 28%. The bottom line soared 47%. Total revenues were $857 million, which improved 9% year over year and on a constant-currency basis. The top line beat the consensus mark by 2.3%. EEFT’s net income climbed 32.3% year over year to $26.2 million. Operating income of $64 million advanced 40% year over year, or 45% on a constant-currency basis. Adjusted EBITDA rose 17% year over year, or 19% on a constant-currency basis, to $108.8 million.

The EFT Processing segment recorded revenues of $217.2 million, which grew 13% year over year, or 12% on a constant-currency basis. Adjusted EBITDA soared 51% year over year, or 54% on a constant-currency basis, to $44.7 million. Total transactions of the unit climbed 36% to 2,502 million. The epay segment’s revenues advanced 8% year over year and on a constant-currency basis to $257.1 million. The Money Transfer segment generated revenues of $384.6 million, which advanced 7% year over year and on a constant-currency basis.

Virtu Financial reported first-quarter 2024 adjusted earnings per share of 76 cents, which outpaced the Zacks Consensus Estimate by 28.8%. The bottom line advanced 2.7% year over year. Total revenues improved 3.6% to $642.8 million. Adjusted net trading income slid 1.7% to $366.9 million. Revenues from commissions, net and technology services amounted to $118.6 million, which slipped 2.3% year over year. Interest and dividends income of $106 million climbed 28.9% year over year.

Adjusted EBITDA of VIRT declined 2.2% to $202.8 million. Adjusted EBITDA margin of 55.3% deteriorated 30 basis points year over year. Adjusted net trading income in the Market Making segment was $273.7 million, down 1.5% year over year. The segment’s revenues rose 4.4% to $521 million. The Execution Services unit recorded an adjusted net trading income of $93.2 million, which fell 2.1% year over year.

Cboe Global reported first-quarter 2024 adjusted earnings of $2.15 per share, which outpaced the Zacks Consensus Estimate by 5.4%. The bottom line increased 13% year over year. Total adjusted revenues of CBOE Global were $502.1 million, which improved 7% year over year. The top line missed the consensus mark by 1.2%. Options revenues climbed 10% to $307.4 million. Revenues of North American Equities totaled $92.6 million, which decreased 1% year over year. Europe and Asia Pacific revenues increased 10% to $54.1 million.