Profits were up 25% on a year-over-year basis at Encore Capital Group, as the company continued to take advantage of an increased supply of portfolios to purchase and favorable collection conditions, thanks to hiring an additional 500 account managers.
Overall, the company’s net income in the first quarter was $23.2 million, up from $18.6 million during the first quarter of 2023. Revenue at the company was $328 million, up from $313 million last year. Encore invested $296 million in portfolio purchases during the first three months of the year, up from $276 million during the first quarter of 2023.
The primary reason that all the numbers at Encore are up on a year-over-year basis has to do with an increase in the supply of portfolios that are being sold. A spike in credit card volume, coupled with an increase in charge-off rates “has led to very attractive pricing and returns,” said Ashish Masih, Encore’s chief executive, during a conference call with analysts on Wednesday.
To compensate for the increased volume of accounts that need to be collected, the company hired an additional 500 account managers last year, Masih said during the call. As those account managers gain experience, Masih said the company has even higher expectations for its collection volume.
“We expect the benefits from expanding our operations headcount will increase over time as these newer account managers gain experience and drive increased efficiencies and scale in our [Midland Credit Management] collections operation,” Masih said.
The company is working to reduce the amount of collection lawsuits it has to file by trying to resolve more accounts in the call center and via its digital collection efforts, Masih said. But, the volume of the company’s legal collections is likely to rise during the next couple of years as a result of its increase in portfolio investments.
