Q3 2021 Encore Capital Group Inc Earnings Call
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Your conference Encore capital group's Q3, 2021 earnings conference call will begin momentarily.
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P T and thank you for signing by welcome to the Encore copyrighted groups Q3, 20th 21 earnings Conference call.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should your great assistance. During the conference <unk> then zero on your touch tone telephone.
As a reminder, this conference call is being recorded.
I would now like to have the conference over at your host.
<unk> Thomas Vice President of Global Investor Relations Mister Thomas you May now be good.
Thank you operator, good afternoon, and welcome to Encore capital groups third quarter 2021. Her name is Paul joining.
Joining me on the call today are Ashish Muffy, our president and Chief Executive Officer Thomas.
Jonathan Clark Executive Vice President and Chief Financial Officer.
<unk> President of Midland Credit management, and Craig Buick C E O of cabinet credit management <unk>.
<unk> John will make prepared remarks today, and then we will be happy to take your questions.
Unless otherwise noted comparisons made I'm just conference call will be between the third quarter of 2021, and the third quarter of 2020.
In addition, today's discussion will include forward looking statements subject to risks and uncertainties actual results could differ materially from these forward looking statements. Please refer to our S. A SEC filings for a detailed discussion of potential risks and uncertainties.
During this call will use rounding and abbreviations for the sake of brevity. We will also be discussing non-GAAP financial measures reconciliations to the most directly comparable GAAP financial measures are included in our earnings presentation, which was filed on form 8-K earlier today. As a reminder, this conference call will also be made available for replay on the <unk>.
Mr Section of our website, where we will also post are prepared remarks. Following the conclusion of this call.
With that let me turn the call over to Ashish Muffy, President and Chief Executive Officer.
Thanks, Bruce and good afternoon, everyone.
Thank you for joining earnings call.
The third quarter for Encore was another period of strong performance as we continue to execute a strategy and deliver on our financial objectives.
Including our capital allocation priorities.
To better understand the results, let's begin with some important highlights from the quarter.
A financial performance in Q3 was driven primarily by a strong collections into period, particularly within R. M. C M business.
On a global basis, a portfolio purchases $168 million in Q3 near.
Nearly matching the hundred and 70 million dollar purchase to order from Q3, a year ago.
All the issuers continue to sell the market continues to be impacted by lower supply as a result of your charge offs.
As these conditions persist we have remained disciplined enough purchasing approach.
Importantly, we continue to purchase that attractive returns due to the improvements in the effectiveness of our collections operations as.
As well as our focus on cost efficiency over the past several years.
These initiatives have allowed us to mitigate the impact of higher market pricing.
After implementing a global funding structure in 2020, we began 2021 by articulating a financial priorities and balance sheet objectives.
Which included a capital allocation suchy.
We subsequently initiated a 300 million dollar multiyear share repurchase plan to return capital to shareholders.
Since that time, we have been repurchasing encore chairs under a share repurchase authorization and in line with a capital allocation priorities.
During the third quarter beauty purchased encore shares totaling $41 million.
Bringing a total through the first three quarters of 2021 $288 million.
Throughout this year businesses continue to perform extremely well delivering stronger turns in cash flows.
As a result of a balance sheet has continued to strengthen as you further reduced to leverage which is now below our target range.
This has prompted us to accelerate the return of capital to our shareholders, two or 300 million dollar tender offer.
As a reminder, a financial priorities include objectives put a balance sheet as well as a clear capital allocation framework.
All underpinned by a long term focus on delivering stronger turns to the credit cycle.
We have made tremendous progress in developing a strong and financially flexible about a cheat and a leverage of 1.8 at the end of cute three has improved more than half a turn.
Since the beginning of the year.
And is now below our target range of two to three X.
Ah consistent capital allocation framework is critical to success in our business and our priorities are clear.
Our business is fueled by ability to purchase portfolio that attractive returns and we have demonstrated a disciplined in this area by delivering the best strict earns in our industry.
Consistent with a capital allocation priorities V began repurchasing on course chairs in the first quarter of 2021.
And and now accelerating the return of capital by initiating a tender offer.
We plan to launch a $200 million tender offer for encore shares Tomorrow November 4th.
Afford the market opens.
The tender will be conducted as a modified Dutch auction with offer pricing per on course, sure no less than $52 and no greater than $60.
Put it in details will be provided in a press release and the SEC filing at the time of the launch.
To recap on code is delivering strong returns on cash flows reflected in a best in class Roissy among our peers.
Which is a reminder, that we deliver the best returns per dollar of invested capital in our industry.
Despite a strong share performance this year.
Which is up 37% in 2021.
We believe we are still undervalued relative to appears.
Our business has continued to generate significant cash and the leverage is now below our target range.
Consequently, we are accelerating the return of capital to the tender offer.
Predicting the boards and management's confidence in our future.
This offer is incremental to the existing share repurchase authorization.
Which after including the share repurchase had.
$212 million of remaining availability for future share buybacks as of the end of Q3.
When combined with chairs, we have already repurchased Ah Felice subscribed tender would reduce the number of outstanding Oncore common shares by more than 22% since the beginning of the year.
After the completion of the tender.
Assuming we purchase the entire 200 million dollar amount.
We expect to remain maintain a strong financial position to capitalize on future opportunities.
With approximately $700 million in available liquidity.
Leverage still at or near the low end of our target range and full access to capital markets.
As is always the case in credit cycles charge offs will increase at some point and we are well positioned to increase portfolio purchases when they do applying a returns focused approach consistent with our strategy.
We are delivering best in class financial performance as a result of a consistent strategy and execution.
We purchase portfolios of nonperforming loans at attractive cash in cash returns using funding with the lowest cost available to us.
For each portfolio that could be one we strive to exceed our connection's expectations while.
While both maintaining an efficient cost structure.
And ensuring the highest level of compliance and consumer focus.
We achieve these objectives, two or three pillar strategy.
This strategy enables us to consistently deliver outstanding financial performance.
Positions us well to capitalize on future opportunities.
N as instrumental in building long term shareholder value.
The first pillar of our strategy market focus leads us to concentrate our efforts on the markets, where we can achieve the highest risk adjusted returns.
Consistent with this strategy, we sorta portfolios in Colombia, and Peru during the third quarter.
Our largest and most valuable market is the U S.
MCM delivered another quarter of strong performance in Q3 as collections grew 4% to $407 million.
Legal collections group compared to Q3, a year ago as courts have reopened which led to a higher proportion of collections coming through the legal channel.
Do we do not expect this to be a long term shift and collection mix.
MCM deployed hundred $2 million to purchase portfolios during Q3 as the impact of the pandemic has dampened supply in the U S.
Nonetheless, we continue to deploy capital at attractive returns, reflecting a discipline purchasing and superior collections effectiveness.
Finally, the Cfpb's new industry rules will become effective later this year and we are ready.
We are pleased to see the completion of this multiyear process, which will resolve uncertainty and finally level the playing field for participants in our industry.
In addition, the new rules, we Modernised communications with consumers and allow us to engage using methods consumers prefer.
We are fully prepared to implement the noodles by the November 30th effective date.
Turning to the business in the UK and Europe.
All collections performance continues its returned to normal levels. After several quarters of Covid related volatility in 2020.
Collections in the third quarter grew 10% compared to Q3 last year.
Third quarter collections in the legal channel increased 12% compared to Q3 last year, which led to a higher cost to collect.
Deployments in Q3 of $66 million were higher compared to the third quarter of last year.
And cabinets year to date portfolio purchases through the third quarter of 2021 totaled $197 million, which is more than cabinets deployment for all of 2020.
Portfolio pricing was higher in the third quarter across a European footprint, while delinquencies remained low constraining investments as we maintained our returned focus discipline in purchasing.
The second pillar of strategy focuses on enhancing a competitive advantages.
A competitive platform enables us to consistently generate significant cash flow.
Cash generation for the 12 months ending in September increased 15%.
Reflecting the steady improvement in our business the efficiency of our operations.
And the resilience of portfolios.
Are consistent growth in cash generation has contributed to a reduced borrowings.
And the deleveraging of a balance sheet.
A strong cash generation also provides us with additional flexibility when we consider our capital allocation priorities, including consistent share repurchases and the tender offer being around thing today.
A competitive advantages also allow us to deliver differentiated returns.
In addition to cash generation another important measure of our businesses auto iced tea.
Is it takes into account.
Both the performance of our collections operations as well as our ability to appropriately price risk when investing our capital.
We believe it's important to demonstrate that our underlying business delivers strong long term returns and that we can maintain stronger tones through the credit cycle.
Our auto icy performance in the third quarter and a performance overtime, a solid indicators of how we execute in comparison to appears.
In simple terms, we deliver the highest return for invested dollar in our industry.
The third pillar of our strategy makes a strengthening of a balance sheet a constant priority by.
By the end of the third quarter, our balance sheet had further strengthened as we reduced our debt to equity ratio to two times.
In addition.
Reduced our leverage ratio to 1.8 times, which is below are targeted range of two to three times and.
And as near the lowest in the industry.
A strong operating performance and focused capital deployment have driven higher levels of cash flow and.
And have also contributed to a lower level of debt, which in turn has contributed to leverage reduction.
Importantly, assuming the purchase the entire $300 million of encore stock and the tender.
A pro forma leverage ratio for Q3 would still be at the low end of our target range at approximately two times.
I would now like to hand, the call over to John for a more detailed look at our financial results.
Thank you <unk>.
And the third quarter strong collections drove higher revenue net income and returns.
The resulting strong cash generation combined with lower purchase volume that to a further reduction on our leverage ratio and lower ERC.
For purposes of comparison, there were not I'm operating items that impacted GAAP net income in gap EPS in the third quarter this year as well as last year.
In Q3, 2021, we incur to $16 million loss after tax or 51 per share associated with the sale of our investment in Colombia, and Peru, largely related to the change in foreign currency during our investment period.
I would like to highlight that a year ago. In Q3, 2020, we recorded $19 million of expenses after tax or 59 cents per share related to establishing our new global funding structure.
In addition, GAAP net income a year ago included $15 million or 47 per share.
CFPB settlement fees.
Collections for $567 million in the third quarter of 5% compared to Q3 last year.
MCM collections grew 4% in the third quarter to $407 million.
Within that total MCM legal channel collections grew 22% compared to Q3 last year when the pandemic impact in the legal channel was significant.
Cabot's collections through our debt purchasing business in Europe, and the third quarter or $155 million up 10% compared to Q3 last year.
Encores year to date global collections for portfolios owned at the end of 2020.
Through the first three quarters of 2021 was 118% of ERC at the end of 2020.
Revenues in the third quarter, where $413 million compared to $404 million in Q3 last year.
Our estimated remaining collections at the end of Q3 was $7.9 billion down 7% compared to the end of Q3 last year a time when our ERC was very near its peak level.
The decline is primarily results are very strong collections performance during the past year as well as lower portfolio purchasing during the same period.
Our global funding structure provides many benefits to encore, including lower funding costs, an extended maturities as such in August we amended an extended our global senior facility, reducing the LIBOR and your ribald floors, two zero and extending the maturity from 2024 to 2002.
Five.
Available capacity under a global R. C F was $864 million at the end of the third quarter.
And we concluded Q3 with $130 million of non client cash on the balance sheet.
With our strong balance sheet, our financial flexibility and access to a variety of capital sources, we are well prepared to fund the tender offer continue share buybacks and fund the opportunities that lie ahead.
With that could turn it back over to Ashish.
Thank you John.
As I stated earlier, we are delivering best in class performance, which is now also enabling a strategy to return capital to shareholders.
I want to reiterate that we are able to do this from a position of strength that.
That is driven by staying true to our strategy.
And through the exceptional talented encore.
I am thankful for their continued contributions during an unprecedented period to deliver time and again for our consumers.
It's something that makes me very proud of our organization and excited about the opportunities in front of us.
With a mission vision and values at the core of our business have.
Have you been able to successfully navigate and embrace uncertainty.
Execute on a strategy.
And support our colleagues and consumers at a time when they need it most.
Specifically, our values underscored the importance of caring for each other.
Finding a better way and embracing our differences.
In our business.
Empathetic approach is what inspires us to help consumers and need every day and.
And I can't think of better principals to live by as we continue our success in the near and long term.
Now we'd be happy to answer any questions that you may have.
Operator, please open up the lines for questions.
Okay.
Again, ladies and gentlemen, if you had a question at this time. Please press. This time and then the number one key when you touch tones how the following.
Once again, you will need surprised sorry, then the number one key on your attached Tony telephone.
Your first question comes from the line all that Martin Keyes that from Cubist Caroline is open.
Thank you good afternoon.
Mark though for the.
100 million dollar tender.
But funding say roughly half of that will be incremental barring half will be cash on hand is that the right way to think about it.
Yeah, I wouldn't focus on the exact mix, but we.
We do have is reported out of $130 million of cash on hand.
And we're generating cash every day and that was of course at the end of the quarter. So.
We probably generate even more cash instead so.
Roughly yeah, I guess so.
Reasonable reasonable approximation I suppose.
Yeah I was thinking of you I think you had 864 million and availability and then you're talking released about there being 700 million after the offer.
I was thinking about that you're talking about yeah, they're correct.
Yeah, the way I think about it mark is.
There is $864 million left and availability.
And then there is $130 million in cash.
So you add those together you up to 90 94.
If you assume the tenders fully executed that's less 300, so that gets you to 694, so I called at 700, yeah.
Gotcha, exactly and the incremental borrowing costs the interest rate on the that.
Credit facility.
For the 160, roughly what is the what's it called from there.
Well the interest rate today is.
A little over four 4%.
So it's unchanged from.
Roughly the same that we've had in the past.
Yeah, Yeah, and then the European market you you are talking about the.
Increased price you are being discipline, there how 'bout the supply or the size of the portfolios coming to market.
Are those also constrained or is it more of a competitive issue rather than a supply issue.
So this is ashish Mark let me take it and then I'll, let Craig I chime in as well it was on the phone.
So in Europe, all the banks are selling who sell them.
Although the sales are more lumpy compared to U S. I mean, there are some call workflows, but at times banks accumulate in the behavior is a bit different in Europe horses, UK Europe. There's some of the legacy supply that comes to market, but in general given delinquencies in charge off so low.
Volumes of lower so that's creating a higher competition and somewhat increase to a higher pressure on pricing.
Now that said.
If you read the reports and bank reports and other reports.
Purchasing a spend is starting to rise again and credit card balances that can you say UK banks that of course I've seen are starting to turn the corner and rise again, so at some point in the future banks.
Expect charges pasta rice, but right now theater kind of fairly low level. So any other color Craig I would like to add.
[noise], Yeah, I think she said amount glad I think about it is that we have this issue. She mentioned that a relatively low supply for a period of time, we've got a number one from the <unk>.
As in the sector.
But that relatively low supply, we all sing I'll put pressure on pricing.
Point.
Sheesh mentioned supplies down consumer lending in the UK, giving yourself cyclists on unsecured consumer lending.
In the UK Hussein credit card balances dropped it out about 15% from it take pretty cut and it's starting to pick back up again now lending you're starting to increase so that's a positive sign for the sector. Shaquille. Thank you Toby delinquencies remained quite like delinquencies has been pretty much consistent played crosses through the cross to today and then a question as long as the same way.
Will they go I don't think they'll go down. The question is when will they go off and if you say by how much but in the meantime, we all saying that high pricing coming through and we remain disciplined and change of that capital deployment to protect that sort of return on invested capital initiation Lucy.
And then the thank.
Thank you for that.
The sale of the business in Colombia, and Peru, I take Ah we.
Could add back the loss associated with that you you didn't look like you adjusted it out for your earnings finger so the.
51% AD back we'd get you over $3 and earning if we chose to do that that's the right way to think about that.
[noise] Oh, that's correct, we did not adjust we only report one earnings number to GAAP earnings EPS now Mark So that would be correct. Yeah. John also highlighted to be just fully transparent that two adjustments from a year ago quarter as well and there were two significant adjustments.
In that quarter as well so.
Cause that the transaction to help the collections number.
No.
Once we sell the portfolios whatever collections that were coming from that portfolio.
Would not be there going forward.
Okay, but.
Not material help the collection.
Okay now mature enough.
No. It wasn't the question the sale.
Sale does not have collections now.
Yeah Okay.
And then just U S competition, you mentioned how your.
Doing well with.
Your <unk>.
Collection, the effectiveness and your cost efficiency and that's helping you to mitigating the impact of the higher market pricing.
What what's the dynamic within the U S. How would you describe it in terms of competition.
Yeah and U S.
As I've said before all banks, who have been sellers traditionally are selling into the market. It just the delinquencies in charge offs at a low point right now and I would say in some cases, you find flat pricing and occasionally in some cases, you find somewhat higher pricing that's able to mitigate.
But as we are hearing the earnings reports and what we hear directly from the banks as well.
Spending is rising pushes volumes are up and kind of credit card balance is just starting to pick up.
So they all expect charge off to write sometime in 2022.
But at this point, we are at a fairly low point and perhaps if I had to give an opinion at the lowest point in terms of charged off volumes Ryan any other color on the market.
No I think you've covered it well actually you see I I would need to directly address the question I think competition is stable, we're not saying a bunch of new or any entrance into the into the market, but to your point of view sure correct supply photographs.
It it's down but we do expect it to increase next year and we're hearing very similar comments from the bank both publicly and then in our conversations with them.
And then finally.
Finally, the you use the number down 22% on until just the sheer account, we got eight contemplating the chairs that you've already repurchased and the.
Tender offer it was fully subscribed is that the 22% number.
Yeah, so to put the 22 in context, Mark we have purchased about 2 million shares in the first three quarters of this year.
And if it's $60 a share the full tender offer subscribe that would be another 5 million share. So that's about 7 million shares.
And if you compare that are a factor that into the shares outstanding at the end of last year, which is about $31.3 million or something around that that gets you to 22% now if you buy it at a lower price and more shares that number would be slightly higher.
Understood in any of these guys did you execute on the.
Remaining 212 million on the authorization what would be can you give us a sense of your commitment on that I think you could still outstanding.
Would you be in the market.
Later in the fourth quarter or you'll wait and see.
So the way I would characterize kind of the two programs. One program was the when the board authorized earlier in the year to 300 billion. You bought 88 out of that so $212 million will be remaining in that program. A tender offer is incremental and complimentary to that now even though they are separate we.
View purchasing.
Purchasing from both repurchases from both as part of a comprehensive Donald capital strategy.
So you need to think of it together and post tender.
Ah repurchases will depend again as you have said many times on our performance or balance sheets Trent and our liquidity. So that's how we would do but for that we would have the 212 million available as of end of Q3.
Understood. Thank you.
Absolutely.
Yeah.
Your next question comes from the line of Bob Napoleon.
William player and company Caroline is okay.
Hi, This is spence around for Bob can you hear me.
Yes, Yes center, we can.
Thank you for taking my question.
As I'm looking at the difference between cash collections and income on receivables. It seems like the payment applied the principles more around historical levels this quarter can.
Can you provide any color on the the drivers about looking forward should we expect that to remain in the historical range or should that remain volatile.
Yes, Sir it's.
It's always hard to predict right. It all depends on there that can be general trends, but it all depends on what portfolios are being collected they each have addition, effective interest rate is you know.
And.
And then for every dollar you collect if you happen to be in one which drawing from pools that have a higher effective interest rate then you're kind of get a different ratio. Then you draw from one that gets a lower.
We care about collecting cash.
And investing it high returns and there will be movement and volatility in this.
Overtime, but I.
As long as you're investing.
At strong Irr's and you continue to collect strongly the risks takes care of itself.
Okay. Thank you and would you mind, providing an update on how you're using digital tools.
How digital is trying to it as a percent of collections and any updates how you're investing in those capabilities.
Yes fence or this is ashish. So we are typically not provided a percent coming just from digital what we do disclose is what comes from.
Call Center in digital combined it's kind of an omnichannel approach because a consumer of it start on online go to the mobile and then speak to an account manager or just any combination so.
So that's omnichannel is most important that said, we continue to invest a lot and focus a lot and innovation in the digital space.
Whether it's through the.
Web, which is often on the phone our other other ways to do it now the other thing is as a CFPB rules come into effect at the end of this month.
One of the positives there is.
The rules make it easier to communicate with consumers using modern technologies, such as text and kind of E mail, it becomes easier and so forth to overtime.
I do expect we will continue to invest a lock and pushing that in a much.
Much much stronger way to drive collection through those channels and as consumers prefer it that way frankly, right every other financial sector consumers. They used to operating digitally and we are no difference. So that rule change is going to be provide a good impetus to really helping consumers and the <unk>.
<unk>.
And in that sense players with larger scale like encore will be able to invest much more than some of the smaller players in our sector as well as collection agencies.
Who worked for banks and they'll have.
To invest and it just makes it easier for us and enhances our competitive advantage as we keep moving forward.
Thank you for taking the questions.
Sure.
Your next question is from the line that keep it short of G. M. P Securities Caroline is open.
Thank you I'm fine all the questions have been answered thank you.
Alright.
Alright next question comes from the line of Mike Condo of Northland capital markets.
Okay.
Hey, guys. Thanks, Yeah she's.
First question isn't.
Is it too early to call the bottom.
Purchase volume.
Are you getting close to that.
So.
Thanks for your question Mike M I.
I believe it is the bottom if you'd eat again. This is will depend on how consumer behavior goes if it's been anything but predictable and the economic cycle of the credit cycle has been very unusual as you know.
Consumers got some help but also the expenses were lower than to pay it off the deaths, both pre and post charge off now.
I think the situation is normalizing.
Pretty quickly and banks are reporting higher spend volume.
Most banks are reporting if not all that we looked at just in the last two weeks.
Credit card balances are starting to rise and in UK as well for the sector credit card balances without rising so even if charge off rates remain the same.
Dollar volume of charge offs would go up and then as you know as banks lend.
Glenn deeper into the credit spectrum, and and a critic losses in charge off rate also increases over time, so maybe a slow ramp up but I do feel it does feel like we are at the bottom in terms so.
The charge of volumes and supply volume.
Got it.
Lee.
[noise] I'm looking I'm glad you're doing the tender.
I'm looking for a little insight into how you came to the conclusion do they tender.
Was it more driven that your leverage got to a 0.1 0.8 times.
Or you know the strong performance this year or with the buyback just really slow going and you Wanna do accelerated I guess, a little bit of color. How you decided on the tender to layer that is.
Absolutely a great question and you touched on a lot of points. So let me just take a step back or a broader perspective.
And I give you are thinking on this so.
So the first thing is this whole starts with a very basic which is the foundation of our strategy of returning capital, which is our performance I saw strong performance being in the right markets delivering the highest returns into industry.
And a strong balance sheet. So that's number one.
Number two if you'd go back to earlier part of the year at the beginning of the year, we outlined our balance sheet priorities also outlined a capital allocation priorities very clearly.
And at that time or leverage was at 2.4, which is in the middle of the range and we initiated purchase repurchases.
After that the board authorized 300 billion multi your program.
When we bought $88 million out of that now as the year progressed. The third point I would make is we've continued to perform strongly cash flow strong in a balanced <unk> balance sheet continue to strengthen our leverage now at the end of Q3 is 1.8, which is below our range right and the other point I would highlight is V.
Are undervalued, we believe we are undervalued relative to appears.
And especially if you consider the highest the heightened returned the highest in the industry.
That's a factor as well so we are accelerating how to tone of capital uhm and through the $300 billion tender.
The important thing to note.
Is this is incremental we still have $212 million remaining in the original program.
So that's kind of the context, and finally I would say as you'd think of us going forward kind of Europe fundamentally different company now I'm much stronger than when you compare to ask you a few years ago.
And we will maintain a strong financial position. So even after if this 300 million is fully subscribed, let's say assume that.
We will have access to $700 million liquidity as John mentioned earlier.
Leverage would be at the low end of our range and we will have access to capital markets and as happens with credit cycles charge offs expect to increase and we're going to be very well positioned to still.
Capitalize on that an increase of portfolio purchases. So that's kind of our thinking on the business a balance sheet and just a whole capital returns strategies to hope I hope that's helpful to your question.
Yeah, good to hear and and thanks for the insight.
Absolutely.
Alright.
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Your next question comes from the line Robert Todd Farmer, Raymond James Caroline is open.
Hi, guys and congrats on a quota most of mine have been been answered, but I got a couple of all only U S. First I mean as you said she was seeing wising balances et cetera, I mean, we're gonna see.
Charge of spies.
Eventually at.
At the same time, we're also seeing now in September I think you know consumer savings dropped to pre COVID-19 levels. So.
You know I'll I'll you seeing anything that's maybe not thank God, maybe in your data and your collections.
Is the amount of excess cash.
Consumers declining a little bit, which would make sense with the savings I'm goodness that can we is there anything to me didn't Tuesday about potential incremental.
Stretched consumer switch would be another good indicators.
Supply at some point.
Great question Robert Thanks, So that's in U S I think.
We are still seeing solid collections, we're collecting well.
And again channels change and so forth depending on the kind of a cycle we are in.
What we're seeing strong collections, I think you're making the right points on savings rates and all the other thing we have noticed as we looked at the last and most recent delinquency reports from some of the largest banks I think among many of them reported the 30 plus the early stage delinquency either leveling off in a few cases actually right.
<unk>.
So that to me is also a good leading indicator potentially if that continues for another quarter.
Supply, that's bottomed out and will increase in the coming quarters in the next year.
Got it got it I appreciate that and then one more again on you up I mean, we're talking about European supply can be more more lumpy and it's typically a little software and third quarter anyway cause everybody goes on vacation.
Ooh.
Are you seeing any any any more emerging sizes.
[laughter].
<unk> up supply with a lot of those banks no no having historically, so old and just let it sit on the balance sheet any indications that.
And if that's going to come to market in the in you know set foot from whether the the supply. This this is more outside the UK, obviously set put some some maybe just the building of of balance is this is more of a that expected to come over the next 812 months versus what we've seen in Scotland.
And you can't times, you've seen some banks accumulate their portfolios and dentelle.
Europe, there's still some of the order portfolios that continue to come to market Craig any color on the Europe side Uhm from this kind of a pent up.
Supply Uhm Roberts talking about.
Yeah, Hi.
Okay. It's a different it's a different kettle of fish because they tend to in the UK most banks soda to tend to claim this thing through relatively quickly just the nature of the financial ecosystem in the U K is that it tends to cycle through relatively quick you don't have that you.
You talked about and.
In Europe I think we are starting to see this on some of those European banks are starting to address some of that historic N. P. O levels were saying this for a little bit.
Probably the supply and Europeans coming through a little stronger than the UK curious I've still got some of that that globe to welcome. The concept of the calendar provisioning that's coming in that is forcing the banks to look into this further pressure from the regulators is saying them start to invest a little bit more of that supply side that pent up.
And paled backlog is probably supplemented some of the supply during this load delinquency period.
Well, we are starting to see that shift and some of the markets were and we are starting to say that banks address that a little more proactively than what they probably did call up three or four years ago.
Okay I appreciate that thank you.
Ladies and gentlemen, if you had a question at this time the spread Sars and tambourine keen on your attached talentless Eileen.
Hi, I'm showing afraid their questions at this time I would now like to turn the conference back to Mister right now.
You mean.
Thank you.
As we close the call today and I'd, just like to reiterate a couple of key points.
A strategy of focusing on the right markets executing well to deliver strong returns on a portfolio purchases and maintaining a strong balance sheet are key drivers of our success.
This strong track record of success.
Enabled us to begin returning capital to shareholders earlier in the year.
And is now helping us accelerated via the 300 million dollar tender offer.
Looking ahead, we intend to maintain a strong financial position that will enable us to increase portfolio purchases when supply starts rising again as it does in every credit cycle.
This will drive on course continued success.
Thanks for taking the time to join US and we look forward to providing a fourth quarter and full year 2021 results in February.
He does concludes today's conference call. Thank you for your participation and have a wonderful T. You mean now disconnect.
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