Debt buyer Encore Capital Group Inc. reported gross collections from the portfolio purchasing and recovery business for the second quarter ended June 30 totaled $278.4 million, a 16% increase over the $240.6 million in the year-ago period.
Revenue from receivable portfolios was $152.0 million, a 10% increase over the $138.7 million in the year-ago period. Revenue recognized on receivable portfolios, as a percentage of portfolio collections, excluding the
effects of net portfolio allowances, fell to approximately 53.3% from 57.2% in the same period of the prior year. Total operating expenses were $126.2 million, a 23% increase over the $102.8 million in the year-ago period.
"For the quarter, we delivered strong financial results, while making strategic investments designed to build a global platform for continued growth," said Ken Vecchione, Encore's president and CEO. "We saw solid growth
in collections and revenue and continued to reduce our cost to collect.
Investment in receivable portfolios was $423.1 million, which included the acquisition of Asset Acceptance's receivable portfolios, to purchase $68.9 billion in face value of debt, compared to $231 million, to purchase
$6 billion in face value of debt in the same period of the prior year. Net income from continuing operations was $11 million, compared to income from continuing operations of $19 million in the year-ago period.
"During the quarter, we successfully closed our acquisition of Asset Acceptance," Vecchione said. "This allowed us to secure a significant portion of our 2013 portfolio purchasing goal at an attractive return and accelerate
the rollout of our Internal Legal platform. We expect our combined organization to be operating at Encore's lower cost-to-collect within the next three to four quarters. The acquisition of Asset Acceptance increased Encore's
Estimated Remaining Collections ("ERC") by almost $1 billion, to more than $2.7 billion as of June 30."
"The July 1, 2013 acquisition of a controlling interest in Cabot Credit Management, a leader in the UK debt recovery market, represents a major milestone for Encore as the company entered the UK market for the first time," Vecchione said. "Together, these activities accelerate our growth trajectory, making Encore a global leader in the consumer debt purchase and recovery industry."
The acquisition of the controlling interest in Cabot increased Encore's ERC to more than $3.3 billion after deducting the ERC attributable to the minority interest.