Encore Capital Reports Gains in Income, Revenue and Collections in Q2

Debt buyer Encore Capital Group, Inc. (Nasdaq: ECPG) late Monday announced financial results for the second quarter of 2011 marked by gains in gross collections, revenue and net income.

The San Diego-based ARM company reported net income for the second quarter of $14.8 million or $0.58 per share, compared to net income of $11.7 million or $0.47 per share in the same period of the prior year. Adjusted EBITDA grew 29 percent to $116.5 million.

Total revenue grew 20 percent in Q2 2011 to $115.8 million. Gross collections were $195.1 million, a 24 percent increase over the same period of the prior year.

“In the second quarter, Encore Capital’s disciplined approach to portfolio underwriting and management generated record results in terms of net income, gross collections, and cash flow,” said Brandon Black, Encore’s President and Chief Executive Officer.  “We also continued to invest in areas that will provide the Company with long-term strategic advantages.  During the period, this included moving ahead with key new initiatives, including the formation of an internal legal channel, and the establishment of a near-shore call center to service our growing number of Spanish-speaking consumers.”

In an SEC filing, Encore noted that legal collections accounted for the largest portion of gross collections in the quarter at $98.1 million, up 44 percent from the same period in 2010. Encore’s own collection sites accounted for $84.5 million, an increase of 27 percent from a year ago. External collection agency outsourcing, however, fell 43 percent to $12.4 million.

The company’s headcount as of June 30, 2011 was 2,153, with 1,394 employees in India (up 26 percent from Q2 2010) and 759 in the United States (up 18.6 percent from last year). Collector headcount in India grew 24 percent to 1,019 while collector headcount in the U.S. was flat at 232.

Investment in debt portfolios increased 12.5 percent to $93.7 million spent, primarily for charged-off credit card portfolios with face values aggregating $3 billion.