Credit investments play a core feature in investors’ portfolios for a number of reasons. These…
Profits for all of 2020 were up at Encore Capital Group even though it made less money in the fourth quarter than it did in the same period a year earlier, according to the company’s quarterly financials that were released yesterday. Even though the company spent 34% less on portfolio purchases in 2020 than it did a year earlier, the company still collected $2.1 billion, a 4% increase from what it collected in 2019. The company also plans to use its excess liquidity to ramp up its portfolio purchases and explore “strategic and disciplined” merger and acquisition activity, Encore Chief Executive Ashish Masih said in a conference call with analysts yesterday.
For the fourth quarter, Encore and its subsidiaries, which includes Midland Credit Management in the United States and Cabot Credit Management in the United Kingdom, earned $37 million, down from $43 million during the last three months of 2019. For all of 2020, Encore earned $212 million in net income, up from $168 million a year earlier.
Spending less money on purchasing portfolios was driven by a limited supply in the company’s “key markets,” Masih said during the call with analysts. The company did benefit from a reduction in expenses in 2020, which Masih tied to the COVID-19 pandemic.
Mentioning M&A perked the ears of analysts participating on yesterday’s call with Masih and other leaders from the company. Many of the questions centered on how the company plans to move forward in that area.
Listing M&A priorities, Masih said that portfolio purchasing will be at the top of the list, followed by looking at purchasing other companies. “We will be very disciplined and strategic about it,” Masih said, who added later that the company has always been disciplined about M&A opportunities and will continue to do so moving forward.
Calling 2020 an “unprecedented” year, Masih said Encore was able to benefit from earlier investments made in technology and compliance to “quickly provide safe working conditions for our colleagues, and maintain full operational capability.”