Q3 2024 Encore Capital Group Inc Earnings Call
Okay.
Speaker Change: Good day and thank you for standing by welcome to the Encore capital group's third quarter 2024 earnings Conference call.
Speaker Change: At this time all participants are in a listen only mode. After.
Speaker Change: After the speaker's presentation, there will be a question and answer session.
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Please be advised that today's conference is being recorded.
Speaker Change: I would now like to hand, the conference over to your first speaker today, Bruce Thomas Vice President of Global Industrial Relations for Encore Bruce. Please go ahead.
Bruce Thomas: Thank you operator, good afternoon, and welcome to Encore capital group's third quarter 2024 earnings call.
Bruce Thomas: Joining me on the call today are Ashish Masih, our president and Chief Executive Officer, Jonathan Clark Executive Vice President and Chief Financial Officer, Brian Bell President of Midland Credit Management, and Tomas Hernandez, Chief Financial Officer of Cabot Credit management as you may recall Tomas will succeed.
Bruce Thomas: Jonathan is encore CFO when John retires at the end of March 2025, Ashish.
Bruce Thomas: Ashish and Jon will make prepared remarks today, and then we will be happy to take your questions.
Bruce Thomas: Unless otherwise noted comparisons on this conference call will be made between the third quarter of 2024 in the third quarter of 2023.
Bruce Thomas: In addition, today's discussion will include forward looking statements that are based on current expectations and assumptions and are subject to risks and uncertainties.
Bruce Thomas: Actual results could differ materially from our expectations. Please refer to our SEC filings for a detailed discussion of potential risks and uncertainties. We undertake no obligation to update any forward looking statement during.
Bruce Thomas: During this call we 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 Investor presentation, which is available on the investors section of our website.
Bruce Thomas: As a reminder, following the conclusion of this call a replay of this conference call along with our prepared remarks will also be available on the investors section of our website.
Bruce Thomas: With that let me turn the call over to Ashish Masih, our president and Chief Executive Officer.
Ashish Masih: Thanks, Bruce and good afternoon, everyone.
Ashish Masih: Thank you for joining us.
Ashish Masih: Again todays call with key highlights from the third quarter.
Ashish Masih: Encore strong third quarter performance was largely driven by MCM in the U S. Our largest business.
Ashish Masih: Record portfolio supply in the U S is being driven by the highest charge off rate in more than 10 years, coupled with growth in lending.
Bruce Thomas: Amidst these favorable market conditions MCM continues to deliver on this robust opportunity with portfolio purchases up 28%.
Bruce Thomas: <unk> to the year ago quarter.
Bruce Thomas: While collections in the quarter were up 22% to the highest level since 2021.
Bruce Thomas: In Europe, the portfolio purchasing market continues to show signs of improvement but remains competitive.
Bruce Thomas: We see examples of improved pricing, we believe European portfolio pricing still does not consistently reflect the higher cost of capital caused by higher interest rates.
Bruce Thomas: We are maintaining a disciplined and continue to be selective.
Bruce Thomas: Which has led to reduced cabot portfolio purchases.
Bruce Thomas: At the same time, we are managing cabot's cost structure accordingly.
Bruce Thomas: Overall, our year to date performance is ahead of expectations, we revised upward a quarter ago.
Bruce Thomas: Driven by continued growth in portfolio purchasing and collections, resulting in higher cash generation.
Bruce Thomas: I believe it is helpful to remind investors of the critical role we play in the consumer credit ecosystem by assisting in the resolution of unpaid debts.
Bruce Thomas: These unpaid debts are unexpected and necessary outcome after lending business model.
Bruce Thomas: Although the levels may vary depending on the stage of the macroeconomic cycle.
Bruce Thomas: Regardless of where we are in the cycle. Our mission is to create pathways to economic freedom for the consumers we serve.
Bruce Thomas: Helping them resolve their past due debts.
Bruce Thomas: We achieved this by engaging consumers and honest.
Bruce Thomas: Metallic and respectful conversations.
Speaker Change: Our business is to purchase portfolios of nonperforming loans at attractive returns, while minimizing funding costs.
Speaker Change: Each portfolio that we own we strive to exceed our collection expectations.
Bruce Thomas: While both maintaining an efficient cost structure and ensuring the highest level of compliance and consumer focus.
Bruce Thomas: We achieved these objectives through our three pillar strategy.
Bruce Thomas: This strategy enables us to deliver strong financial performance, while positioning us well to capitalize and portfolio purchasing opportunities.
Bruce Thomas: We believe this was instrumental in building long term shareholder value.
Bruce Thomas: The first pillar of our strategy market focus.
Bruce Thomas: Central to our efforts on the markets, where we can achieve the highest risk adjusted returns.
Bruce Thomas: Let's now take a look at our two largest markets beginning with the U S.
Bruce Thomas: Okay.
Bruce Thomas: The U S. Federal reserve has been reporting that revolving credit in the U S has been steadily rising since early 2021.
Bruce Thomas: At the same time.
Bruce Thomas: Since bottoming out in late 2021, the credit card charge off rate in the U S has also been steadily rising.
Bruce Thomas: It is now at its highest level in more than 10 years.
Bruce Thomas: The combination of higher lending and growth in charge off rate is driving record portfolio supply in the U S.
Bruce Thomas: Similarly U S consumer credit card delinquencies, which are a leading indicator of future charge offs also continued to rise.
Bruce Thomas: With both lending and the charge off rate growing simultaneously.
Speaker Change: Zinc conditions in the U S market remains highly favorable.
Bruce Thomas: We are observing not only continued strong growth in U S market supply quite attractive pricing as well.
Bruce Thomas: This data supports our expectation that 2024 will be another year of record portfolio sales by U S banks and credit card issuers.
Bruce Thomas: With portfolio supply in the U S surging to its highest level in over 10 years Q3 was another strong quarter of portfolio purchasing for our MCM business.
Bruce Thomas: U S deployments of $230 million were up 28% compared to Q3 2023 at strong returns.
Bruce Thomas: Collections in the U S in the third quarter were $402 million.
Bruce Thomas: Up 22% compared to the third quarter of 2023.
Bruce Thomas: Resulting in MCM highest collection quarter since 2021.
Bruce Thomas: This is an especially strong performance considering that.
Bruce Thomas: The typical calendar year Q3 is usually a seasonally lower collections quarter than Q2.
Bruce Thomas: Consumer payment behavior remained stable throughout the quarter.
Bruce Thomas: We continue to purchase significantly more volume than we ever have in the U S.
Bruce Thomas: Given current and expected market conditions as well as our forward flow commitments already in hand, we anticipate 2024 to be another record year of portfolio purchasing for our MCM business in the U S.
Bruce Thomas: In contrast to the U S supply in the U K has been growing much more slowly.
Bruce Thomas: Credit card Outstandings, just recently returned to pre pandemic levels as banks in the U K. Unlike those in the U S have not been meaningfully increasing consumer lending.
Bruce Thomas: In addition.
Bruce Thomas: Charge offs remain at low levels.
Bruce Thomas: Cabot's collections in Q3 were $148 million up 10% compared to the third quarter a year ago.
Bruce Thomas: We continue to be selective with cabot's portfolio purchases, which were $52 million in the third quarter.
Bruce Thomas: ALDA portfolio pricing continues to improve.
Bruce Thomas: We believe it still does not yet consistently reflect higher funding costs.
Bruce Thomas: Accordingly, we expect to continue to deploy at modest levels until the returns and cabot's markets become more attractive.
Bruce Thomas: We are currently choosing to allocate significantly more capital to the U S market, which has higher returns consistent with our well established strategic focus.
Bruce Thomas: During the third quarter, we exited the secured NPL market in Spain by selling related portfolios.
Bruce Thomas: Putting in a pre tax loss of $8 million.
Bruce Thomas: It is important to note that secured NPL was a small niche portion of our Spanish business.
Bruce Thomas: We are our primary focus has been and will continue to be unsecured consumer and SME portfolios.
Bruce Thomas: We also continue to prudently manage the Cabot cost structure, given the reduced level of portfolio purchases in recent quarters.
Bruce Thomas: Okay.
Speaker Change: I would now like to highlight encore third quarter performance in terms of two key metrics starting with portfolio purchasing.
Bruce Thomas: Encores global portfolio purchases increased 23% compared with Q3, a year ago to $282 million.
Bruce Thomas: Driven primarily by continued strong U S deployments in our largest business MCM.
Bruce Thomas: This increased level of portfolio purchasing will help drive one course collections growth over the next few years.
Bruce Thomas: The fact that the vast majority of our global deployment in the third quarter was in the U S. As a reminder of the flexibility that our global funding structure provides to us this structure enables us to allocate capital to the opportunities in the markets with the highest returns.
Bruce Thomas: Global collections in the third quarter were $550 million and up 18% compared to Q3 a year ago.
Bruce Thomas: The past several quarters of higher portfolio purchases.
Bruce Thomas: Clearly in the U S has led to meaningful growth in collections a trend we expect to continue.
Speaker Change: I would now like to hand, the call over to John for a more detailed look at our financial results.
John: Thank you Ashish.
John: The third quarter was another period of strong purchasing for our U S business at attractive returns.
Speaker Change: Collections were higher than our forecast for the quarter and we made minor adjustments to our ERC forecast, which together resulted in a positive impact to earnings.
Speaker Change: I would also like to reiterate that the sale of portfolio is related to our exit from the secured NPL market in Spain reduced our third quarter earnings by $8 million or 2017 and earnings per share.
Speaker Change: In addition, I'd like to highlight a few items.
Speaker Change: Q3 collections of $550 million were up 18% compared to the third quarter last year.
Speaker Change: ERC at the end of the quarter was $8 $65 billion.
Speaker Change: Up 10% compared to a year ago.
Speaker Change: Operating expenses remained well controlled and were up 11% compared to Q3 last year as we continue to realize operating leverage and the scale benefits of collections growth in our business.
Speaker Change: As a result, our cash efficiency margin increased from 51% a year ago to 53, 6% in the current quarter.
Speaker Change: GAAP net income of $31 million and GAAP EPS of $1 26 in the third quarter were up 58% and 59% respectively compared with the third quarter of 2023.
Speaker Change: We believe that our ability to generate significant cash provides us with an important competitive advantage, which is also a key component of our three pillar strategy.
Speaker Change: Similar to the dynamic Ashish mentioned earlier higher portfolio purchases at strong returns over the past several years have also led to meaningful growth in cash generation a trend we expect to continue.
Speaker Change: Our cash generation in the third quarter was up 22% compared to Q3 of 2023.
Speaker Change: As a third pillar of our strategy balance sheet strength is a constant priority our.
Speaker Change: Our unified global funding structure provides us with financial flexibility diversified sources of financing and extended maturities.
Speaker Change: It also underpins one of the best balance sheets in our industry with comparatively attractive leverage.
Speaker Change: Importantly, even as we remain on a record pace for portfolio purchases in the U S. This year, our leverage declined again during the third quarter, given our strong cash generation just as we expected it would.
Speaker Change: This cash generation is driven by our increased volume of purchases over the last several quarters.
Speaker Change: The higher returns associated with those purchases and continued strong collections.
Speaker Change: Our leverage ratio of two seven times at the end of the third quarter remains well within our target range and is down from two nine times at the end of 2023.
Speaker Change: We believe our balance sheet provides us very competitive funding costs when compared to our peers.
Speaker Change: Our funding structure also provides us financial flexibility and diversified funding sources to compete effectively in this growing supply environment.
Speaker Change: In the third quarter, we again made good use of our diversified funding structure to proactively manage our debt maturities in September we amended and extended our U S facility to among other things increase its capacity to $300 million from $175 million and extend its maturity by one year to October.
Speaker Change: 2027.
Speaker Change: You May recall, we issued a total of $1 billion of senior secured notes in the first half of 2024 comprised of up to $500 million offerings.
Speaker Change: These two bonds expanded our options for future financing, establishing our access to the broad and deep U S high yield market.
Speaker Change: While we initially used the proceeds from these bonds to pay down our revolving credit facility. We subsequently used the same facility to redeem our 2025 Euro notes at par in October and we plan to redeem our 2026 Sterling notes at par in mid November.
Speaker Change: As a result, we now effectively have no material maturities until 2027.
Speaker Change: In addition, we amended and extended our revolving credit facility in October we increase its capacity by $92 million to one point to 95 billion.
Speaker Change: Reduce the interest margin by 25 basis points and extended its maturity by one year to September 2028.
Speaker Change: With that I'd like to turn it back over to Ashish.
Ashish Masih: Thanks, John.
Ashish Masih: Now I would like to address a change to our capital allocation priorities.
Ashish Masih: We strongly believe that the prospects for our business exceed those of our competitors by a wide margin.
Ashish Masih: Our strong position in the valuable U S market or.
Ashish Masih: Our investing discipline.
Ashish Masih: Operational performance and financial flexibility.
Ashish Masih: All factors that provide us a consistent advantage over our competition.
Ashish Masih: And so when we look at today's market buying portfolios, particularly in the U S offers the best opportunity to create long term shareholder value by deploying capital at attractive returns.
Ashish Masih: Which is exactly what we are doing as highlighted by our recent purchasing history.
Ashish Masih: Now.
Ashish Masih: As we look at the market and ongoing industry challenges.
Ashish Masih: We're not seeing opportunities for value, creating strategic M&A.
Ashish Masih: As a consequence, we are.
Ashish Masih: Far more likely to repurchase our own stock than acquiring another firm.
Ashish Masih: Although this has been implicit in our capital allocation and demonstrated by our track record over the past several years.
Ashish Masih: We now want to be more explicit by clearly prioritizing the return of capital over strategic M&A.
Ashish Masih: Having said that maintaining a strong and flexible balance sheet, including a strong double b debt trading.
Ashish Masih: As well as operating within our target leverage range of two to three times remain critical objectives.
Ashish Masih: As you work through the current cycle and continued purchasing portfolios at current or even growing levels.
Ashish Masih: We ended the fate and our leverage will continue to decline.
Ashish Masih: When leverage nears the midpoint of our target range, we expect to resume stock repurchases subject to balance sheet considerations.
Ashish Masih: End market conditions.
Ashish Masih: Furthermore, as leverage approaches the low end of our target range.
Ashish Masih: You can also expect to see an increase in the pace of share repurchases.
Ashish Masih: I'd now like to recap, how we are differentiated from others in our industry.
Ashish Masih: Specialty during a time in a number of our competitors are dealing with their own challenges.
Ashish Masih: First.
Ashish Masih: We are the largest player in the attractive U S debt purchasing market.
Ashish Masih: Second we believe our ability to collect on the portfolios, we buy and a corresponding purchase price multiples.
Ashish Masih: Lead to collecting more order vintages lifetime.
Ashish Masih: Which in turn generates more cash.
Ashish Masih: Our earnings and ultimately higher returns.
Ashish Masih: And third our well diversified global balance sheet allows us to allocate capital to opportunities with the highest returns.
Ashish Masih: This flexibility is vital as demonstrated by our current allocation at <unk>.
Ashish Masih: Majority of our capital to our MCM business in the U S.
Ashish Masih: Our balance sheet also provides us the flexibility to fund our business and a myriad of ways.
Ashish Masih: This provides a significant advantage in times when traditional markets become less certain and more expensive.
Ashish Masih: In closing I'd like to quickly summarize our third quarter performance.
Ashish Masih: Portfolio of supply in the U S market continues to grow.
Ashish Masih: To record levels.
Ashish Masih: Which is where we are currently focusing the majority of our capital deployment.
Ashish Masih: Against this highly favorable backdrop, we deployed $230 million in the U S in Q3 and strong returns.
Ashish Masih: In the UK and Europe, we are maintaining a disciplined and continue to be very selective in our purchases until returns become more attractive.
Ashish Masih: We're also right sizing the business to reflect cabot's current purchasing levels.
Ashish Masih: Our overall performance through Q3 is ahead of the expectations. We last raised in August.
Ashish Masih: Driven by strong portfolio purchasing and collections.
Ashish Masih: As a result, we are raising our guidance again.
Ashish Masih: We now anticipate our global portfolio purchasing this year to be approximately 125 billion.
Ashish Masih: An increase of $175 million when compared to 2023.
Ashish Masih: This implies a Q4 purchasing to be approximately $400 million.
Ashish Masih: And it's driven by continued strong purchasing at MCM as well as a large stock purchases at Cabot.
Ashish Masih: In addition, we now expect a year over year collections growth to be approximately 15%.
Ashish Masih: Two over 212 5 billion.
Ashish Masih: An increase of over $250 million when compared to 2023.
Ashish Masih: Now we'd be happy to answer any questions that you may have.
Ashish Masih: Later, please open up the lines for questions.
Speaker Change: Thank you at this time, we will conduct a question and answer session.
Ashish Masih: A reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Speaker Change: These standby, while we compile the Q&A roster.
Speaker Change: First question comes from Mark Hughes with <unk> Securities. Please go ahead.
Mark Hughes: Yes. Thank you good afternoon.
Speaker Change: Hi, Mark.
Ashish Masih: Ashish you.
Ashish Masih: You started out for your call and you've got some great slide on.
Ashish Masih: Supply increasing meaningfully in the U S and you're investing a lot of money.
Ashish Masih: And then at the end you.
Ashish Masih: Refer to capital allocation strategies.
Ashish Masih: A little.
Ashish Masih: At odds.
Speaker Change: How should we think about that is this kind of an indication that you.
Ashish Masih: You think.
Ashish Masih: Charge offs may be topping or.
Ashish Masih: Rate of increase may be slowing and therefore youre preparing for the next stage how should we think about it.
Ashish Masih: Mark.
Ashish Masih: Tom.
Ashish Masih: No indication of any change in the U S market globally the opportunities we have.
Ashish Masih: And my remark, let me recap the most.
Ashish Masih: Important thing and the first thing that fed was.
Ashish Masih: We believe we have an advantage in terms of our competitors whether it's our.
Ashish Masih: Collections operation and investment discipline, and so forth. So the most important things in our highest priority continues to be buying portfolios at strong returns. So no change there and particularly in the U S which is there.
Ashish Masih: Moving to buy portfolios.
Ashish Masih: A healthy clip.
Ashish Masih: As demonstrated by our track record so no change on that front in terms of belief in the market, which continues to be very favorable 24 is going to be a record. After 23 was a record and we see continued growth in lending and growth in charge offs at even if it's.
Ashish Masih: Somewhat plateauing at a higher level and a normalized level. So supply continues to be very strong.
Ashish Masih: So our capital allocation priority change is along the next level that we indicate on that page, there's two parts to the change.
Ashish Masih: As we think about opportunities looking ahead to the first one is.
Speaker Change: As you have been observing the market and industry challenges, particularly some of our peers.
Ashish Masih: As we often asked we actually do not see opportunities for value, creating kind of strategic M&A at this point.
Ashish Masih: And.
Ashish Masih: <unk> com, we are far more likely to repurchase our own stock and acquired another upfront. So thats been implicit pretty much in our capital allocation priority and even more important demonstrated in our track record over the years. So at this time, we thought it would be helpful to our investors to be more explicit about this.
Ashish Masih: As opposed to being implied and Thats why we chose to highlight that with.
Ashish Masih: Second.
Ashish Masih: Separate element of our capital allocation.
Ashish Masih: Did want to add.
Ashish Masih: Color to it in our thinking and provide some of our thinking to the investors.
Ashish Masih: And that that's about our balance sheet and as we've stated many times strong balance sheet and maintaining a strong balance sheet and flexibility is critical and that includes strong double the decorating operating within our target leverage range of two to three none of that changes, but as you've observed and.
Ashish Masih: Wanted to comment and provider.
Ron: Ron It is.
Ashish Masih: Even if we continue purchasing at strong levels or growing levels, our leverage will certainly decline.
Ashish Masih: And therefore, what we are saying is as it approaches the midpoint there.
Speaker Change: More likely they are likely to resume stock purchases repurchases at that time.
Ashish Masih: Of course always subject to balance sheet considerations and market conditions and finally as it approaches the lowest lower end of the range that Patriot accelerate again. So there are two separate elements and hopefully that provides color.
Ashish Masih: What we're trying to do here.
Ashish Masih: It's nothing to do about opportunity in the U S market.
Ashish Masih: King.
Ashish Masih: I appreciate that detail could you share the collections multiple touch for the U S core paper.
Ashish Masih: Cabot paper I think the Q, maybe is not out yet, but wood collections multiple where we see on the 2000.
Speaker Change: 24 vintages.
Speaker Change: Yes, the 'twenty 'twenty four vintage for US you will see up to three months.
Ashish Masih: And for our cabinet business, you will see a $2 three multiple as well.
Ashish Masih: Vintage.
Speaker Change: In the Q okay.
Speaker Change: And then the.
Ashish Masih: You mentioned the large spot purchase for Cabot.
Speaker Change: Fourth quarter did I hear that properly.
Ashish Masih: Your.
Ashish Masih: Large competitor also had some strong European purchasing.
Ashish Masih: Is there is that.
Speaker Change: If there is something going on is that part of a broader trend or both of you happened to hit on.
Ashish Masih: Large opportunity.
Ashish Masih: Same time in Europe.
Ashish Masih: Yes, so I can't comment about kind of are.
Speaker Change: So you heard it correctly mark that in Q4.
Ashish Masih: We are expecting around $400 million in purchases now that based on two things continued strong MCM purchasing in the us.
Ashish Masih: Well, it's kind of normal cabinet purchasing but there is one larger spot purchase that.
Ashish Masih: We've got an opportunity as you know in UK and Europe.
Ashish Masih: Purchasing can be quite lumpy quarter to quarter, and that's because as more prevalent and there is a high prevalence of.
Ashish Masih: Bought deals in Europe and UK.
Ashish Masih: And sometimes the window. So that's what happened in terms of market.
Ashish Masih: Total environment to your other second part of the question.
Ashish Masih: Over time, it's a steadily improving but it is not there yet in terms of fully reflecting the cost of capital so still competitive and it has been improving over the last year or two or maybe 18 months.
Ashish Masih: So it's purely a good trend and therefore, we were able to get this one spot opportunity and we wanted to provide that in advance and you have given the full year purchasing a number to you.
Speaker Change: And then just one more with the <unk>.
Speaker Change: Strong cash flow strong collection a lot of purchasing.
Speaker Change: Should be thinking about.
Speaker Change: Cost picture of the cash efficiency is there prospects for leverage there or are you going to continue to.
Speaker Change: Workdays portfolios aggressively and so it should be relatively stable.
Speaker Change: No I think you hit on an important point I mean, our collections are growing faster than expenses. So.
Speaker Change: We are continuing to improve our operations drive technology investments and whatnot.
Speaker Change: Overall, youre seeing scale effect in operating leverage so our collections efficiency margin.
Speaker Change: Improved from 51% to 50.
Speaker Change: <unk>.
Speaker Change: Three 6% in the third quarter.
Speaker Change: And I would expect that trend to continue in a steady way.
Speaker Change: Typical Gil.
Speaker Change: In fact that <unk> seen.
Ashish Masih: Thank you very much.
Ashish Masih: Thank you.
Speaker Change: Our next question comes from Mike Grondahl with Northland. Please go ahead.
Mike Grondahl: Hey, guys did you disclose collections kind of as a percent of expectations.
Mike Grondahl: For both the U S and cabinet do you have those numbers.
Speaker Change: Yes, Mike so in our slide presentation, we do disclose that in our footnotes. So just to clarify versus expectation as of December 31 2023.
Ashish Masih: For encore that percent of 103%.
Ashish Masih: For MCM in the U S of 105% in Cabot is 97%.
Ashish Masih: Okay great.
Ashish Masih: And.
Ashish Masih: Do you think is fair.
Ashish Masih: Sure.
Ashish Masih: Your repurchase kind of reallocation or increasing the emphasis on that.
Speaker Change: Is it is it fair to think about that is it kind of adds discipline to the process.
Speaker Change: Especially at this stage I mean, if you can by $282 million.
Speaker Change: Paper it doesn't seem like it's a wild stretch.
Ashish Masih: Goodbye 10 or $20 million of stock in the quarter.
Ashish Masih: That $280 million sort of pro forma would just be a little bit lower.
Speaker Change: Is that a fair way of things.
Speaker Change: Looking about the increased priority of a buyback.
Speaker Change: I would anchor back to what we said in our remarks, Mike which is.
Speaker Change: So the first priority is buying portfolios at strong returns and continue to do now.
Speaker Change: Now what's happening is even if you buy at strong levels that we are at high levels and growing even.
Speaker Change: Our multiples and strong collection will continue to delever.
Speaker Change: Can do both at the same time.
Speaker Change: And therefore, we wanted to clarify kind of if that continues.
Speaker Change: And we are not seeing strategic M&A as an opportunity.
Speaker Change: Once you come to the midpoint of that leverage range.
Speaker Change: We can resume stock repurchases now balance sheet strength and all of those concentrations are paramount. So thats something we will always be focusing on.
Speaker Change: <unk> got something you want to think about it at the midpoint of the range.
Speaker Change: For that.
Speaker Change: Buying portfolio.
Speaker Change: Is the number one priority given the opportunity to continue to see and again, we expect to continue to delever, while buying at very strong levels or even growing revenues.
Speaker Change: Got it.
Speaker Change: Do you have an active buyback in place and how much is left on it.
Speaker Change: Yes, there is active buyback authorization about $92 million remaining on that.
Speaker Change: Okay, and then hey, Jonathan.
Jonathan Clark: A little bit ago, the fed cut rates 50 bips.
Speaker Change: If I recall right about 25% of your debt float.
Speaker Change: Any rule of thumb, you can give us sort of how to think about.
Speaker Change: With the fed going down 50, or 25 bps.
Speaker Change: And how that will translate for you guys.
Speaker Change: Yes, great.
Speaker Change: Great question and just to level set you on what's fixed and floating today.
Speaker Change: If you look at our.
Speaker Change: What's fixed or hedged who were actually about as of September 30, we were 99% fixed so I can tell you guys have.
Speaker Change: September 30.
Speaker Change: With little to no impact.
Speaker Change: But as you could as we think about it as we need.
Speaker Change: Use our Rcs.
Speaker Change: To continue retiring.
Speaker Change: Bonds of the new financial year.
Speaker Change: We'll be back up to a 28.
Speaker Change: 25%.
Speaker Change: Range of floating.
Speaker Change: Net.
Speaker Change: Is that by year end.
Speaker Change: That would be by year end, yes, okay.
Speaker Change: Okay $20.
Speaker Change: Yeah.
Speaker Change: We've already done one.
Speaker Change: And we will do the second.
Speaker Change: Doug.
Speaker Change: Got it okay.
Speaker Change: Thanks, guys.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Robert Dodd with Raymond James. Please go ahead.
Robert Dodd: Hi, guys. Thank you for the clarity.
Speaker Change: Personal capital allocation priorities.
Speaker Change: Just a question I have is on legal.
Speaker Change: I mean legal expenses up pretty.
Speaker Change: <unk> in the quarter year over year sequentially, not surprisingly given all the purchasing.
Speaker Change: Should I should we expect that to continue I mean, obviously you had very strong purchases.
Speaker Change: Purchase growth in 'twenty, two 'twenty three 'twenty four.
Speaker Change: And.
Speaker Change: Clearly I would assume would start flowing in to the legal process now. So I mean is this new level a.
Speaker Change: All level set but the beginning of it may be slow, but a continued ma'am.
Speaker Change: As the last couple of years purchases flowed through that kind of process.
Speaker Change: Yes, Robert so as you're buying increasing levels.
Speaker Change: They start going through the legal process now with.
Speaker Change: We continue to be very consumer focused and try to resolve.
Speaker Change: Many accounts prior to the legal process, but as the volume of fortunate thing is driving you kind of expect the legal expenses too.
Speaker Change: Steadily right now overall had repeat the point that we expect to continue to see.
Speaker Change: Improved operating leverage which has been collecting collection efficiency and margin in terms of the overall cost structure.
Speaker Change: Got it thank you.
Speaker Change: Thanks.
Speaker Change: Thank you.
Speaker Change: A reminder to ask a question you will need to press star one on your telephone one moment for our next question.
Speaker Change: Okay.
Speaker Change: I'm showing no further questions at this time I'd now like to turn it back to Mr. Murphy for closing remarks.
Speaker Change: Thanks for taking the time to join US today, and we look forward to providing our fourth quarter and full year results in February.
Speaker Change: Okay.
Speaker Change: Thank you for your participation in today's conference. This concludes the program you may now disconnect.
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Speaker Change: Jim.
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