Q3 2025 Encore Capital Group Inc Earnings Call

Speaker #2: Good day and thank you for standing by . Welcome to the Encore Capital Group . Third quarter 2025 Earnings Conference Call . At this time , I'll .

Speaker #2: Participants are in a listen only mode . After the speakers presentation , there will be a question and answer session . To ask a question during this session , you will need to press star one one on your telephone .

Speaker #2: You'll then hear an automated message advising that your hand is raised . To withdraw your question , please press star one one again .

Speaker #2: Please be advised that today's conference is being recorded . I would now like to hand the conference over to your first speaker today , Bruce Thomas , VP of Global Investor Relations for encore .

Speaker #2: Please go ahead .

Speaker #3: Thank you . Operator . Good afternoon , and welcome to ENCORE CAPITAL GROUP INC Third quarter 2020 Earnings Call . Joining me on the call today are Ashish Masih .

Speaker #3: Our President and Chief Executive Officer , Tomas Hernanz Executive Vice President and Chief Financial Officer Ryan Bell , president of Midland Credit Management .

Speaker #3: And John Young , president of Cabot Credit Management . Ashish and Thomas will make prepared remarks today , and then we'll be happy to take your questions .

Speaker #3: Unless otherwise noted . Comparisons on this conference call will be made between the third quarter of 2025 and the third quarter of 2024 .

Speaker #3: 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 .

Speaker #3: Actual results could differ materially from our expectations . Please refer to our SEC filings for a detailed discussion of potential risks and uncertainties .

Speaker #3: We undertake no obligation to update any forward looking statement during this call . We will be using 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 investor section of our website .

Speaker #3: 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 .

Speaker #3: With that , let me turn the call over to Ashish Masih . Our President and Chief Executive Officer . Thanks , Bruce .

Speaker #4: And good afternoon , everyone . Thank you for joining us . Oncor delivered another strong performance in the third quarter as an industry leadership and operational execution become increasingly evident in our results portfolio purchases in Q3 of $346 million were up 23% compared to the third quarter last year .

Speaker #4: Collections increased 20% to a record $663 million , average receivable portfolios increased 16% to $4.2 billion . Estimated remaining collections , or ERC , increased 10% to a record $9.5 billion .

Speaker #4: Our record collections performance helped earnings increase sharply , with Q3 earnings per share of $3.17 , up more than 150% compared to the third quarter a year ago .

Speaker #4: Average improved to 2.5 times at the end of Q3 , compared to 2.7 times a year ago and 2.6 times in Q2 2025 .

Speaker #4: Even with continued significant portfolio purchases in the third quarter , Oncor strong operating and financial results are primarily driven by the exceptional performance of our MCM business in the US across all dimensions of purchasing , collections and efficiency .

Speaker #4: I will provide more details on Mcms results later in the presentation . In addition to delivering strong results in Q3 , we repurchased $10 million of Oncor shares in the third quarter , consistent with the framework we've laid out in the past .

Speaker #4: We also repurchased nearly $25 million of our shares so far in Q4 , bringing a total to approximately $60 million year to date .

Speaker #4: Reflecting our confidence in Oncor's future prospects in support of our ongoing commitment to return capital to shareholders, our board also recently authorized an additional $300 million under our share repurchase program.

Speaker #4: Before I continue our recap of the quarter , I believe it's helpful to remind investors of the critical role we play in the consumer credit ecosystem by assisting in the resolution of unpaid debts .

Speaker #4: These unpaid debts are an expected outcome of the lending business model . Our mission is to create pathways to economic freedom for the consumers we serve by helping them resolve their past due debts .

Speaker #4: We achieved this by engaging consumers in honest , empathetic and respectful conversations . Our businesses to purchase portfolios of non-performing loans at attractive returns while minimizing funding costs for each portfolio that we own .

Speaker #4: We strive to exceed our collection expectations . While both maintaining an efficient cost structure and ensuring the highest level of compliance and consumer focus .

Speaker #4: We achieved these objectives through a three pillar strategy of participating in the largest and most valuable markets , developing and sustaining a competitive advantage in these markets , and maintaining a strong balance sheet .

Speaker #4: We employ a strategy across our two main businesses Midland Credit Management , or MCM in the US and Cabot Credit Management in select European markets .

Speaker #4: I would now like to highlight Oncor third quarter performance in terms of several key metrics , starting with portfolio purchasing , Encore's global portfolio purchases for the third quarter were $346 million , an increase of 23% compared to Q3 2024 .

Speaker #4: This increased level of purchasing will help drive Oncor's continued collections growth for the rest of this year and well into the future.

Speaker #4: I concentration of portfolio purchases in the US , where we allocated 75% of our deployed capital in the third quarter , is a reminder that the flexibility of our global funding structure allows us to direct our capital toward markets with the highest returns .

Speaker #4: Global collections in Q3 were up 20% to a record $663 million . The past few years of higher portfolio purchases at strong returns , particularly in the US , have led to meaningful growth in collections , which we expect to continue a global collections performance year to date through the third quarter , compared to our IRC at the end of 2024 was 108% .

Speaker #4: 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 #4: Similar to the dynamic I mentioned earlier, our portfolio purchases at strong returns over the past few years have also led to meaningful growth in cash generation.

Speaker #4: Our cash generation for the third quarter , on a trailing 12 month basis , was up 23% compared to the same period a year ago , and we expect it to continue to grow .

Speaker #4: Let's now take a look at our two largest markets , beginning with the US . The US Federal Reserve reports that revolving credit in the US remains near record levels .

Speaker #4: At the same time , since bottoming out in late 2021 , the credit card charge off rate in the US increased to its highest level in more than ten years in 2024 and still remains at an elevated level .

Speaker #4: The combination of strong lending and elevated charge off rates continues to drive robust portfolio supply in the US . Let me illustrate this impact by highlighting the annualized amount of net charge offs , which can be estimated by multiplying outstandings by the net charge off rate .

Speaker #4: Using Q2 2025 data . The most recent quarter reported by the Federal Reserve annualized net charge off volume was $55 billion , which is over three times the $17 billion in annualized net charge off volume in Q4 2021 .

Speaker #4: At the bottom of the current cycle . Similarly , US consumer credit delinquencies , which are a leading indicator of future charge offs , also remain near multi-year highs , with both lending and the charge off rate at elevated levels .

Speaker #4: Purchasing conditions in the US market remain highly favorable . We are observing continued strong US market supply and attractive pricing , as well .

Speaker #4: Third quarter delinquency data supports our expectation that the portfolio purchasing environment for our MCM business in the US is expected to remain favorable for the foreseeable future .

Speaker #4: MCM continues to capture significant portions of this US market supply opportunity , deploying $261 million in Q3 at very strong returns . This was a 13% increase in portfolio purchases compared to Q3 a year ago .

Speaker #4: For the full year in 2025 , we expect MCM to well exceed its 2024 purchases of $999 million . In addition to its solid portfolio purchases in Q3 , MCM business continues to excel operationally , although third quarter collections in the US are typically lower than second quarter collections due to seasonality , MCM collections increased in the third quarter to a record $502 million , which was an increase of 25% compared to Q3 last year .

Speaker #4: The collections overperformance in the US was driven by the deployment of new technologies , enhanced digital capabilities , and continued operational innovation , which enabled us to reach more consumers , leading to more payments as well as a larger payer book .

Speaker #4: These initiatives had a greater impact on the early stages of a portfolio's life cycle , leading to overperformance of our recent vintages . We expect that our collections forecast will gradually adjust to reflect the positive impact of these initiatives .

Speaker #4: Outstanding results not only reflect the improvements we've made in our collections operation and the overall effectiveness of our collection platforms , but also the strength of the consumer .

Speaker #4: Despite some of the negative news and macro uncertainty in the US , our consumers payment behavior remains stable . We continue to monitor for any signs of change .

Speaker #4: Turning to our business in Europe , Cabot delivered another quarter of solid performance in Q3 . Cabot's portfolio purchases in the third quarter were $85 million , which was higher than the historical trend due to attractive spot market portfolio purchases .

Speaker #4: We continue to be selective with Cabot's deployment as a UK market remains impacted by subdued consumer lending and low delinquencies . In addition to continued robust competition , Cabot collections in the third quarter were $160 million , up 8% compared to Q3 last year .

Speaker #4: We continue to be focused on operational excellence and cost management , including leveraging relevant best practices from our MCM business . This is particularly relevant in the UK .

Speaker #4: The banks are increasingly selling fresh portfolios in forward flows . Our operational focus and initiatives have enabled Cabot to deliver stable collections performance .

Speaker #4: I'd now like to hand the call over to Thomas for a more detailed look at our financial results .

Speaker #5: Thank .

Speaker #4: You Ashish .

Speaker #5: Moving to the financial results slide in the third quarter , we delivered a strong growth in collections and portfolio revenue of 20 and 13% , respectively .

Speaker #5: Strong collections performance was supported by the high levels of US portfolio purchases in recent quarters . Our focus on operational execution , operational improvements and stable consumer behavior collections yield was 62.7% in Q3 , an improvement of 2.5 percentage points compared to last year .

Speaker #5: Portfolio revenue increased by 13% to $370 million , supported by 16% growth in average receivable portfolios and a portfolio yield of 35% . As a reminder , changes in recoveries is the sum of two numbers .

Speaker #5: First , recoveries above or below forecast is the amount we collected above or below our IRC expectation for the quarter , and is also known as cash or cash .

Speaker #5: Owners . Second , changes in expected future recoveries is the net present value of changes in the IRC forecast . Beyond the current quarter .

Speaker #5: Changes in recoveries were $63.6 million for the quarter . Of that total , the vast majority $61.5 million , were recoveries above forecast changes in expected future recoveries were $2.2 million , both of our businesses , MCM in the US and Cabot in Europe were once again net positive contributors to changes in recoveries .

Speaker #5: Put differently , we collected $61.5 million more than we forecasted in our IRC , which is incremental cash flow . The collections overperformance in the US was driven by the deployment of new technologies , enhanced digital capabilities , and continued operational innovation , which enable us to reach more consumers , leading to more payments as well as a larger paper book .

Speaker #5: This initiatives had a greater impact on the early stages of a portfolio's lifecycle , leading to overperformance for our recent vintages , we expect that our collection forecast will gradually adjust to reflect the positive impact of these initiatives that purchasing revenue increased by 27% to $434 million , and the resulting debt purchasing yield was 41% .

Speaker #5: Approximately 6% was the impact of changes in recoveries , servicing , and other revenues were $27 million , bringing total revenues to $460 million , reflecting growth of 25% .

Speaker #5: Operating expenses increased only 10% to $287 million , compared to 20% growth in collections , reflecting significant operating leverage in the business . Cash efficiency margin for the quarter improved by 3.6 percentage points to 58 point four , compared to 54.8 in Q3 last year .

Speaker #5: We expect cash efficiency margin of approximately 58% for 2025 . Interest expense and other income increased by 12% to $73 million , reflecting higher debt balances .

Speaker #5: We now expect interest expense of approximately $285 million in 2025 . Our tax provision of $25 million implies a corporate tax rate of approximately 25% , which is in line with our previous guidance .

Speaker #5: Finally , net income increased by 144% to $75 million , resulting in earnings per share for the quarter of $3.17 , compared to $1.26 in Q3 last year .

Speaker #5: We believe our balance sheet provides us with very competitive funding costs . When compared to our peers , our funding structure also provides us with financial flexibility and diversified funding sources to compete effectively in this growing supply environment .

Speaker #5: Leverage grows at 2.5 , a 0.2 improvement versus last year and lower than a quarter ago during Q3 . We increased the size of our US facility by $150 million to $450 million .

Speaker #5: We extended this maturity to 2028 , leaving us with no material maturities until 2028 . In October , we issued $500 million of senior secured high yield notes due 2031 at an attractive coupon of 6.625 .

Speaker #5: Also in October , we settled the $100 million of 2025 convertible notes entirely in cash . The combination of these three transactions improve our liquidity by up to $550 million , giving us a strong liquidity to continue to grow our US business .

Speaker #5: During the remainder of this year . And beyond . With that , I would like to turn it back over to Ashish .

Speaker #4: Thanks , Thomas . Now I would like to remind everyone of our key financial objectives and priorities . Maintaining a strong and flexible balance sheet , including a strong WB debt rating , as well as operating within our target leverage range of 2 to 3 times , remain critical objectives with regard to our capital allocation priorities .

Speaker #4: Buying portfolios , particularly in today's attractive US market , offers the best opportunity to create long term shareholder value by deploying capital at attractive returns .

Speaker #4: This is indeed what we are doing . As highlighted by a recent purchasing history . Next , on our capital allocation priority list , a share repurchases .

Speaker #4: As I mentioned earlier , as of today , we repurchased approximately $60 million of Oncore shares year to date , consistent with the framework we've laid out in the past .

Speaker #4: And as a reflection of our confidence in Encore's future and in support of our ongoing commitment to return capital to shareholders , our board also recently authorized an additional $300 million under our share repurchase program .

Speaker #4: As a result of our strong performance so far this year and a positive outlook for remainder of 2025 , we are providing the following guidance on key metrics .

Speaker #4: As we originally guided , we anticipate global portfolio purchasing in 2025 to exceed $1.35 billion of purchases . We made in 2024 . As MCM is poised to surpass the record level of purchasing of a year ago .

Speaker #4: In addition , we are again raising a guidance on global collections . We are now expect collections to grow by approximately 18% to $2.55 billion .

Speaker #4: This is an increase of $50 million from a growth expectation from a quarter ago . We expect interest expense of approximately $2.95 million for the year , and we continue to expect our effective tax rate for the year to be in the mid 20s on a percentage basis .

Speaker #4: Now, we'd be happy to answer any questions that you may have. Operator, please open up the lines for questions.

Speaker #2: Thank you . At this time , we will conduct the question and answer session . As a reminder to ask a question , you need to press star one on your telephone and wait for your name to be announced .

Speaker #2: To withdraw your question , please press star one . One again , please stand by while we compile the Q&A roster . Our first question comes from John Rowin from Janney Montgomery Scott .

Speaker #2: Your line is open .

Speaker #6: Good afternoon guys .

Speaker #7: Hi , John .

Speaker #8: Just on the portfolio purchases . Obviously , guidance is above 1.35 , but you've were at 1.1 already for the year . Now , with the third quarter included , you know , obviously if 1.35 was , you know , the baseline , I know you're saying above that it would indicate a relatively slow fourth quarter .

Speaker #8: I'm just wondering if you could give us any insight into purchasing for the fourth quarter . Do you have forward flows intact ? I'm just trying to get an understanding of , you know , what the fourth quarter looks like because we have kind of a baseline number , but it could be anything above that number .

Speaker #8: And , you know , just trying to understand what it might look like in the fourth quarter .

Speaker #4: Yeah . John , this is Ashish . So in terms of the broader market , we are predominantly deploying in the US and that market is very solid and robust and continues to be very favorable in terms of volumes .

Speaker #4: There's been no change in any impact on the forward flows or anything like that . So we are just reiterating our guidance . We are focused on returns and we do expect to exceed that guidance that we have of 1.35 .

Speaker #4: And MCM is poised to well exceed its 2024 deployment , which was $1 billion , 999 million , to be precise . So all things are good .

Speaker #4: I mean , there are some spot opportunities that come here and there , particularly more in Europe , but also in us at times .

Speaker #4: So quarter to quarter can be volatile at times . But overall purchasing trends , particularly in US , look very solid and we are on track to continue deploying and which is going to power our collections growth in the fourth quarter .

Speaker #4: And next year as well .

Speaker #8: Okay . And then , you know , your your peer seems to be a little bit more conservative on the purchasing front . Is there anything that you can attribute that to or , you know , juxtapose , you know , your , you know , very strong purchasing quarter relative to some of your other peers .

Speaker #4: So I cannot comment on exactly what's happening at our peers . But as I said , a largest market focus is us , where we deployed 75% of our capital in Q3 .

Speaker #4: And at times I would say some other players deploy less . That's an opportunity . It increases the returns and increases their opportunity as well .

Speaker #4: So we feel good with what we're buying , good with how the market is in terms of issuers , what they expect to sell .

Speaker #4: And so we continue to execute on that front .

Speaker #8: Okay. All right. Thank you.

Speaker #2: Thank you . Our next question is from Mark Hughes with Truist . Your line is open .

Speaker #9: Yeah . Thank you very much . The collections multiple for the US core paper and the UK core paper . Can you share those .

Speaker #9: The queue is not out . So I'm just curious how they .

Speaker #7: Yeah . Mark . Yeah .

Speaker #4: So this is Ashish . So the collections multiple in 2025 . And that again is a cumulative multiple in our queue . It's 2.3 for us .

Speaker #4: And 2.3 for Cabot as well . It's been very stable throughout the year with a little bit variations here and there . But it's been stable .

Speaker #9: Yeah very good . How do you find the pricing return dynamic ? Sounds like supply is good . I think in recent quarters you've said the pricing was relatively stable .

Speaker #9: Those collections multiples would be consistent with that . Any shading on on that as you see it now .

Speaker #4: , as I said , supply is good . And you also indicated so . And pricing is stable again as well . And just to remind everyone returns are a reflection of pricing as well as what you can collect .

Speaker #4: So if we expect to collect more through the life of the portfolio , which is what we believe we do , you get a higher multiple .

Speaker #4: So we are getting very good returns under these stable pricing conditions .

Speaker #9: Thomas , could you provide guidance for the cash efficiency margin ratio ?

Speaker #5: Yes , we indicate that we expect for the full year , 58% .

Speaker #9: 58% . Okay . Thank you . You talk about the new technologies , digital enhancements . Seems like it's a really having a pretty meaningful impact on the business .

Speaker #9: Both top and bottom line . Anything to expand on that . The in particularly if you're still in the midst of doing that and it's are those partially implemented fully implemented .

Speaker #9: It just seems like it's had a material kind of step up in in the operations . So if you could talk a little bit more about it , that'd be great .

Speaker #4: Yes . Mark . So we have been on these things for quite a while , kind of implementing technologies and customer contact strategies .

Speaker #4: Digital that enable omnichannel collection . So all of this is being over time . But we are now seeing very clear improvement in our collections .

Speaker #4: And as these are focused more on call center and digital , they are impacting more impacting the recent vintages . Let's say the 2024 vintage .

Speaker #4: So on the front part of the curve , because it's call center oriented . So it's driving some of the over that you see .

Speaker #4: We feel really good about it . We're in the midst of implementing over time . I'm sure we will get the impact of this .

Speaker #4: And other parts of the world , but also in MCM in the later parts of the portfolio's life cycle . But overall , I would say this is leading to some of the over that we talked about .

Speaker #4: And Thomas and I talked about the changes in recoveries . What it's leading to , and overall , we feel really good about how the collections have gone this year in terms of kind of the three quarters .

Speaker #4: This year , this has really allowed us to deliver very solid earnings . And if you do the math for the three quarters of this year , we get to about $7.50 .

Speaker #4: And this is driven largely by MCM collections performance . And so we feel really good about our business . And expect similarly strong performance to continue in Q4 and beyond .

Speaker #9: Yeah , your your own liabilities , your debt at this point , how much is fixed versus floating ?

Speaker #5: Yeah , approximately 75% is fixed and hedged and approximately 25% is floating . But that changed a little bit from awkward to the next .

Speaker #5: And we did a few refinancings . But yeah , that's that's the right ballpark .

Speaker #9: I'm sorry . What were those ? Did you say 35 is fixed ?

Speaker #5: No , 75 is fixed and hedge and 25 is floating , give or take .

Speaker #9: Okay . Thank you very much .

Speaker #2: Thank you for your questions . Our next question comes from pardon Mike Grondahl , with Northland Capital Markets . Your line is open .

Speaker #10: Hey this is Logan on for Mike . Thanks for taking our question . First collections were up 20% year over year despite what seemed like a tougher macro in three Q can you guys provide some additional color on what you're seeing with the consumer , and what drove another strong quarter of collections ?

Speaker #10: Thanks .

Speaker #4: Yeah . Logan , there is definitely kind of noise out in the press around the consumer stress . And whatnot . There are multiple signals there .

Speaker #4: Unemployment rate and all continues to be low . Overall . We are used to dealing with consumers who face some financial distress , and we're very flexible in how we work with them .

Speaker #4: We have seen no impact in terms of consumer behavior , whether it's on conversion of accounts to payers , strength of the payment plans or the resilience of payment plans or things of that nature .

Speaker #4: So we see a very stable consumer behavior in the US market , which is what I think you're referring to .

Speaker #10: Got it . Yeah . That's great to hear . Then one more from us . You guys have continued to delever while generating significant cash , looking out to mid 2026 .

Speaker #10: If leverage goes from 2.5 to 2.3 x , how much cash could that free up for buybacks ?

Speaker #4: So you're right in observing we are delivering and actually while we continue to purchase at very strong levels . So that's a reflection of the power of our collections operation .

Speaker #4: And the multiples and all of the cash we're generating . So in terms of buybacks I would say we've been very clear in our capital allocation , we're doing what we said in our priorities and all future buybacks are going to be subject to kind of balance sheet liquidity and a whole range of things .

Speaker #4: But we are doing exactly what we said about a year ago, with leverage at the midpoint. We resumed share repurchases, and we've continued to do that every quarter.

Speaker #4: And very importantly , our recent increase in share repurchases reflect our confidence in the future prospects of encore . So and that's what I can give you , rather than give a specific number .

Speaker #4: But we have increased that pace recently , as would notice .

Speaker #10: Got it . Thanks , guys . Congrats on another great quarter .

Speaker #7: Thank you .

Speaker #2: Thank you . One moment . Our next question is from David Scharf with Citizens Capital Markets . Your line is open .

Speaker #11: Hi . This is David . Thanks for taking our question . And congrats on another strong quarter . I wanted to dig in a little bit on the dynamics in European markets and kind of see if we can get a little bit more color on the outlook and also potential digging in on the competitive side and seeing if there's a potential ramp in the future , kind of any other color that you can provide .

Speaker #11: In that sense .

Speaker #4: In the European markets , things are kind of pretty similar to what they've been . So there's kind of a couple of dynamics there .

Speaker #4: Supply is not really growing much . It's growing slowly as lending has been quite slow to grow . And charge off rates and delinquency rates have been quite low .

Speaker #4: Still , despite some of the consumer distress . So overall supply is not growing as much . Pricing goes back and forth at times .

Speaker #4: A year or two ago we saw some improvement . Sometimes it can go back , but we are staying disciplined . We have a global balance sheet and we don't have to deploy when we don't see the returns .

Speaker #4: So we've taken actions in our business managing cost structure , exiting some of the non-strategic markets a year ago . So we're staying very disciplined .

Speaker #4: The business is very focused on operational excellence and just delivering stable collections performance . And this year they've exceeded the forecast expectations for all the three quarters .

Speaker #4: So it's on a more solid footing . We feel good where it is at . And as opportunities come and occasionally they do come because there's more of a spot sales in the European market , we will be sure to capitalize on them in Q3 actually was a bit higher than a normal run rate for Cabot .

Speaker #4: For us , as you would see in the filings .

Speaker #11: Got it . Understood . And then just one follow up question . So just in terms of the buybacks , obviously there's a big ramp at quarter to date with 25 million deployed .

Speaker #11: And the 300 million incremental authorization . There's a 25 million kind of a good way to think of a run rate for just trying to get a sense of how aggressive these buybacks could be .

Speaker #4: All I can say is kind of following our capital allocation . We bought 60 million to date . So on the regular Q1 , Q2 , Q3 , and we gave the incremental purchases we've done in Q4 of 25 million .

Speaker #4: So that's 60 million . So again , it's all subject to balance sheet liquidity . We also , as I indicated , the increase , the purchasing in recently .

Speaker #4: And to reflect a confidence and the future of encore kind of what we expect out in the future . So that's what I can give you now .

Speaker #4: There's not a number . There's multiple factors that go in as I just indicated , but hopefully you see us . Our signal from the 60 million of purchases year to date .

Speaker #11: Yeah . That definitely makes a lot of sense . Thank you .

Speaker #2: Thank you . Our next question is from Robert Dodd with Raymond James . Your line is open .

Speaker #12: Hi , guys . And congrats on the the operational performance of us . I mean , on that . The collections over performance .

Speaker #12: Can you give us any more . I mean , obviously you're implementing these things and they could eventually be reflected in the case .

Speaker #12: But if I look at the 63 million , I think of 64 million changes , recoveries . I mean , almost all of that was cash over collection , over performance in the quarter , not changes in curve .

Speaker #12: So if you expected it to be sustainable , I would have thought the curve would have curves would have moved up . Obviously there's a lot of curves and a lot of different vintages .

Speaker #12: So I'm just reading one one number , but at the same time , if it was a one off , I would have expected there to be a negative adjustment .

Speaker #12: Didn't see that either . So can you give us more color on like how sustainable even this kind of cash over performance that seems to have really kicked in or accelerated this quarter ?

Speaker #12: You've been overperforming all year . How sustainable is this kind of this new level of collections performance ?

Speaker #4: Yeah , Robert , thanks for your question . And observations . Very accurate indeed . So this is heavily driven by our . MCM business collecting exceptionally well .

Speaker #4: And as you indicated , some of these initiatives impact the early stage of the portfolio life cycle . So it's impacting some of the recent vintages 2024 and even to some extent 2025 to and to some extent 23 .

Speaker #4: So as you noted , this is 97% of the 63.6 million is cash . Overs , right ? So over time , as data gets incorporated into forecasts , the positive impact of these initiatives will get reflected in the forecast that we put out there .

Speaker #4: But it takes time because as you get actual data and we are seeing this performance improvement in the early part of the curve kind of how it plays out in the later part of the curve .

Speaker #4: We have to see . So we have a process and we have to . Basically look at the actual results . And then the forecast move over time .

Speaker #4: What I would tell you is we feel really good about this collections performance , whether it's showing up in the overperformance or in the kind of the main forecasts as portfolio revenue .

Speaker #4: And as I said earlier on , the first three quarters , we earned $7.50 that I feel is a good representation . And we feel that it's something that we'd be looking forward to in Q4 and beyond , because I'm feeling really good about how the business is performing , particularly driven by MCM collection performance .

Speaker #4: .

Speaker #12: Got it . Thank you . Thanks . Thanks for the extra . The extra then looking to you . We've talked about the buyback .

Speaker #12: You talked about obviously you want to purchase receivables and the delinquency trends make it look like the market's going to remain pretty pretty healthy for for a while .

Speaker #12: I mean where there's always a third leg that we ask about right about you know acquisition opportunities and strategic M&A and things like that .

Speaker #12: At what point do you think that become maybe shifts from being the third leg to maybe moving up the ladder a little bit ?

Speaker #12: That's mixing my metaphors . But , you know , is it just it's just not interesting right now . And or as you deliver further and obviously you use that for buybacks .

Speaker #12: But there's , you know , does that become interesting at any point in this environment . .

Speaker #4: Now , Robert . That's that's a good point . So it is clearly in our capital allocation hierarchy , it's kind of something that we look at regularly .

Speaker #4: So what I would say the bar is high . We look at every opportunity or at least hear about all the opportunities we may not spend looking at all of them .

Speaker #4: That's out there . And each of our markets , in terms of growth potential or consolidation potential , we've done some of those really well .

Speaker #4: When we bought the two US businesses back in 2013 and 14 , those have performed fantastically well . For example . So we would continue to look at those .

Speaker #4: The bar will be high . Is high as is evident from our track record . But again , we stay nimble and we'll be on the lookout if there's something interesting that creates sustained shareholder value for encore shareholders , we'd be looking at it .

Speaker #4: But again , the bar remains high , so we would not be rushing into anything . We are very comfortable given the size of the markets in US particularly , and the portfolio buying opportunities of the returns to send capital that way , because it it's a very reliable way to generate collections and cash and value over time .

Speaker #4: But we'll be looking at other opportunities if they come by .

Speaker #12: Got it . Thank you .

Speaker #2: Thank you . This does conclude our question and answer session . I would now like to turn it back to Mr. Massey for final remarks .

Speaker #4: Thanks for joining the call today . And taking the time to do so . And we look forward to providing a fourth quarter and full year 2025 results in February .