ECPG 10-K & 10-Q changes, risk factors and insider trading

Economic conditions globally and locally directly affect unemployment and credit availability. Adverse conditions (including natural disasters and extreme weather events), economic changes (including significant inflationinflation, changes in trade policy and tariffs), political volatility and financial disruptions (including unemployment) could place financial pressure on the consumer, which may reduce our ability to collect on our consumer receivable portfolios and may adversely affect the value of our consumer receivable portfolios. Further, increased financial pressures on the financially distressed consumer may result in additional regulatory requirements or restrictions on our operations and increased litigation filed against us. These conditions could increase our costs and harm our business, financial condition, and operating results.

The availability of receivable portfolios atthat favorablemeet pricesour purchasing standards depends on a number of factors, including:

•continued sale of receivable portfolios by originating institutions and portfolio resellers at sufficient volumes and acceptable price levels;

•our ability to develop and maintain favorable relationships with key major credit originators and portfolio resellers;

•our ability to obtain adequate data from credit originators or portfolio resellers to appropriately evaluate the collectability of, estimate the value of, and collect on portfolios; and

We acquire and service charged-off receivables that the obligors have failed to pay and the sellers have deemed uncollectible and have written off. The originating institutions and/or portfolio resellers generally make numerous attempts to recover on these nonperforming receivables, often using a combination of their in-house collection and legal departments, as well as third-party collection agencies. In order to operate profitably over the long term, we must continually purchase and collect on a sufficient volume of charged-off receivables to generate revenue that exceeds our costs. These receivables are difficult to collect, and we may not be successful in collecting amounts sufficient to cover the costs associated with purchasing the receivables and funding our operations. If we are not able to collect on these receivables, collect sufficient amounts to cover our costs or generate satisfactory returns, this may adversely affect our business, financial condition and operating results.

If our technology and telecommunications systemsplatforms were to fail, failbecome to be effective,ineffective, or if we are not able to successfully anticipate, invest in, or adopt technological advances within our industry, it could have an adverse effect on our operations.

In addition, our business relies on computer and telecommunications technologies, and our ability to integrate new technologies into our business is essential to our competitive position and our success. We may not be successful in anticipating, investing in, or adopting technological changeschanges, including emerging automation and artificial intelligence (AI) capabilities, on a timely or cost-effective basis. Computer and telecommunications technologies are evolving rapidly and are characterized by short product life cycles.

We rely on information technology networks and systems to process and store electronic information. We collect and store sensitive data, including personal, confidential or proprietary consumer or employee information, on our information technology networks. Despite the implementation of risk and security measures (see Item 1A-Cybersecurity1C-Cybersecurity), our information technology networks and systems have been, and in the future may again be, subject to breaches, disruptions and shutdowns due to attacks by threat actors or breaches due to malfeasance by contractors, employees and others who have access to our networks and systems.

In addition, the CFPB has engaged in enforcement activity in sectors adjacent to our industry, impacting credit originators, collection firms, payment processors and credit reporting agencies, among others. Additionally, state regulators may increase enforcement activity and supervisory scrutiny within their respective jurisdictions, sometimes applying novel or more expansive interpretations of state law. Enforcement activity in these spaces by the CFPB or others, especially in the absence of clear rules or regulatory expectations, may be disruptive to third parties as they attempt to define appropriate business practices. As a result, certain commercial relationships we maintain may be disrupted or impacted by changes in third-parties’ business practices or perceptions of elevated risk relating to the debt collection industry, which could reduce our revenues, or increase our expenses, and consequently adversely affect our business, financial condition and operating results.

Our failure or the failure of third-party agencies and attorneys, or the credit originators or portfolio resellers selling receivables to us, to comply with existing or new laws, rules, or regulations could limit our ability to recover on receivables, affect the willingness of financial institutions to sell portfolios to us, cause us to pay damages to consumers, necessitate ongoing adjustments to our policies and compliance programs, or result in fines or penalties, which could reduce our revenues, or increase our expenses, and consequently adversely affect our business, financial condition and operating results. For example, in 2020, the CFPB filed a lawsuit alleging that Encore and certain of our U.S. subsidiaries had violated a consent order (the “2015 Consent Order”) pursuant to which we had previously settled allegations raised by the CFPB arising from practices during the period between 2011 and 2015. In the lawsuit, the CFPB alleged that we did not perfectly adhere to certain operational provisions of the 2015 Consent Order, leading to alleged violations of federal consumer financial law. In 2020, we entered into a stipulated judgment (“Stipulated Judgment”) with the CFPB to resolve the lawsuit. The Stipulated Judgment required us to, among other things, continue to follow a narrow subset of the operational requirements contained in the 2015 Consent Order, all of which have long been part of the Company’s routine practices and pay a $15.0 million civil monetary penalty. The Stipulated Judgment expired in October 2025.

From time to time there are negative news stories about our industry or company, especially with respect to alleged conduct in collecting debt from consumers. These stories may follow the announcements of litigation or regulatory actions involving us or others in our industry. Negative publicity about our alleged or actual debt collection practices, the debt collection industry in general, our cybersecurity or any exfiltration or disclosure of sensitive datadata, and concerns related to the use of new digital or artificial intelligence AI‑enabled collection technologies could adversely affect our stock price, our position in the marketplace in which we compete, and our ability to purchase charged-off receivables, any of which could have an adverse effect on our business, financial condition and operating results.

As described in greater detail in “Note 6: Borrowings” to our consolidated financial statements, as of December 31, 2024,2025, our total long-term indebtedness outstanding was approximately $3.7$4.0 billion. Our substantialsignificant indebtedness could have important consequences to investors. For example, it could:

We have a significant amount of goodwill. Goodwill is tested for impairment at the reporting unit level annually and in interim periods if certain events occur that indicate that the fair value of a reporting unit may be below its carrying value. The goodwill test compares the fair value for each of our reporting units to its associated carrying value. Determining the fair value of a reporting unit requires us to make judgments and involves the use of significant estimates and assumptions. Adverse changes in the Company’s actual or expected operating results, market capitalization, business climate, economic factors or other negative events that may be outside the control of management could result in a material non-cash impairment charge in the future. We recorded a goodwill impairment charge of $100.6 millioncharges at the Cabot reporting unit of $238.2 million and $100.6 million during the fourth quarterquarters of 2024.2023 Weand had2024, previously recorded a goodwill impairment charge of $238.2 million at the Cabot reporting unit in the fourth quarter of 2023.respectively. There can be no assurance that we will not be required to take an additional impairment charge in the future, which could have a material adverse effect on our results of operations.

Encore Capital Group, Inc. (“Encore”) has three business units: MCM, which consists of Midland Credit Management, Inc. and its subsidiaries and domestic affiliates; Cabot, which consists of Cabot Credit Management Limited (“CCM”) and its subsidiaries and European affiliates, and LAAP, which is comprised of our investments and operations in Latin America and Asia-Pacific.

To date, operating results from LAAP have not been significant to our total consolidated operating results. Our long-term growth strategy is focused on continuing to invest in our core portfolio purchasing and recovery business in the United States and United Kingdom and strengthening and developing our business in theFrance restand of Europe.Spain.

In the United States, the defaulted consumer receivable portfolios we purchase are primarily charged-off credit card debt portfolios. A small percentage of our capital deployment in the United States is comprised of receivableunsecured portfoliospersonal subject to Chapter 13 and Chapter 7 bankruptcy proceedings.loans.

In Europe, our purchased defaulted debt portfolios primarily consist of credit card and consumer loan accounts. We purchase receivable portfolios using a proprietary pricing modelmodels that utilizesutilize account-level statistical and behavioral data. ThisThese modelmodels generally allowsallow us to accurately value portfolios accurately and quantifyto portfoliodevelop performancecollection instrategies order tothat maximize future collections.returns. As a result, we have generally been able to realize significant returns from the assets we have acquired. We maintain strong relationships with many of the largest financial services providers in the United Kingdom and Europe.

With lending reaching record levels and thecharge-off highestrates remaining near recent peak levels, U.S. charge-off rate in ten years,portfolio supply remainscontinues elevatedto atbe a record level.robust. Issuers have continued to sell predominantly fresh portfolios. Fresh portfolios are portfolios that are generally sold within six months of the consumer’s account being charged-off by the financial institution. Pricing in the fourth quarter remained at favorable levels as a result of elevated market supply. Issuers continue to sell their volume in mostly forward flow arrangements that are often committed early in the calendar year. We believe growth insteadying lending and rising delinquency rates at elevated levels will drive continued growthresult in stable and strong market supply.

The UK market for charged-off portfolios generally provides a relatively consistent pipeline of opportunities, despite a historically low level of charge-off rates,charge-offs, as creditors had embedded debt sales as an integral part of their business models. The percentage of volume that is sold in multi-year forward flow arrangements is increasing.

France and Spain continue to be two of the largest non-performing loan markets in Europe with significant portfolio sales. Financial institutions continue to look to dispose of non-performing loans in these markets.

While we have seen sales activity across all of our European markets,markets remains stable, underlying default rates are generally low by historic levels, and consumer lending volumes have stagnated. Sales levels are expected to fluctuate from quarter to quarter. In general, portfolio pricing remains competitive across our European footprint, constraining the amount of capital we canelect to deploy in Europe.

In the United States, capital deployment increased during both the year ended December 31, 2024, as comparedcontinued to 2023, andincrease during the yearperiods ended December 31, 2023, as compared to 2022.presented. The majority of our deployments in the U.S. come from forward flow agreements, and the timing, contract duration, and volumes for each contract can fluctuate leading to variation when comparing to prior periods. Portfolio purchases in the U.S. were robust as supply increased and pricing remained at favorable levels.

In Europe, capital deployment decreased during the year ended December 31, 2025, as compared to 2024, and increased during both the year ended December 31, 2024, as compared to 2023, anddue duringto higher than normal purchases that included large spot-market portfolios in the yearfourth endedquarter Decemberof 31, 2023, as compared to 2022.2024. Pricing continues to remain competitive in our European footprint;footprint, constraining the amount of capital we canchoose to deploy in Europe. Capital deployment stayedcan relativelyfluctuate limitedbased duringon the ninetiming months ended September 30, 2024. Duringof the fourthforward quarterflow ofcontracts 2024, we made three largeand spot purchases totaling approximately $145.4 million and as a result, capital deployment increased by $93.9 million during the year ended December 31, 2024, as compared to the year ended December 31, 2023.purchases.

Collections from PurchasedReceivable ReceivablesPortfolios by Channel and Geographic Location

We utilize three channels for the collection of our purchasedreceivable receivablesportfolios: call center and digital collections; legal collections; and collection agencies. The call center and digital collections channel consists of collections that result from our call centers, direct mail program and online collections. The legal collections channel consists of collections that result from our internal legal channel or from our network of retained law firms. The collection agencies channel consists of collections from third-party collections agencies to whom we pay a fee or commission. We utilize this channel to supplement capacity in our internal call centers, to service accounts in regions where we do not have collections operations or for accounts purchased where we maintain the collection agency servicing relationship.

Gross collectionsCollections from purchasedreceivable receivablesportfolios increased by $430.3 million, or 19.9%, to $2,592.8 million during the year ended December 31, 2025, from $2,162.5 million during the year ended December 31, 2024. Collections from receivable portfolios increased by $299.9 million, or 16.1%, to $2,162.5 million during the year ended December 31, 2024, from $1,862.6 million during the year ended December 31, 2023. The increaseincreases in collections in the United States waswere primarily a result of consistent increases in capital deployments inand theenhanced Unitedcollections Statesstrategies in recent years. The increaseincreases in collections from purchasedreceivable receivablesportfolios in Europe waswere primarily due to the acquisition of receivable portfolios with higher returns in recent periods. Additionally, collections in Europe were favorably impacted by foreign currency translation by approximately $10.5$22.1 million, during the year ended December 31, 2024,2025, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 2.7%3.0% for the year ended December 31, 20242025 as compared to the year ended December 31, 2023.2024.

Our revenues primarily include debt purchasing revenue, which is revenue recognized from engaging in debt purchasing and recovery activities. We apply our charge-off policy and fully write-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables we acquire immediately after purchasing the portfolio. We then record a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which is presented as “Investment in receivableReceivable portfolios, net” in our consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) established based on the purchase price of the portfolio and the expected future cash flows at the time of purchase.

(1) RevenuePortfolio from receivable portfolios,revenue, which is the accretion of the discount on the negative allowance due to the passage of time (generally the receivable portfolio balance multiplied by the EIR), and (2) Changes in recoveries, which includes:

Certain pools already fully recovered their cost basis and became zero basis portfolios (“ZBA”) prior to our adoption of the accounting standard for Financial Instruments - Credit Losses (“CECL”) in January 2020. We did not establish a negative allowance for these pools as we elected the Transition Resource Group for Credit Losses’ practical expedient to retain the integrity of these legacy pools. Similar to how we treated ZBA collections prior to the adoption of CECL, allAll subsequent collections to the ZBA pools are recognized as ZBA revenue, which is included in portfolio revenue from receivable portfolios in our consolidated statements of operations. We expect our ZBA revenue to continue to decline as we collect on these legacy pools. We do not expect to have new ZBA pools in the future.

The increase in revenue recognized from portfolio basis during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, was primarily due to a higher portfolio basis (i.e. a higher investmentreceivable in receivableportfolios balance) in the U.S. driven by a consistent higher volume of purchases in recent years.

The following tables summarize collections from purchased receivables, revenue from receivable portfolios, portfolio revenue, changes in recoveries, end of period receivable portfolios balance and other related supplemental data, by year of purchase (in thousands, except percentages):

The increase in salaries and employee benefits during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, was primarily duedriven toby thea followinggeneral reasons:increase in wages and higher account manager compensation as a result of higher collection performance.

The increase in cost of legal collections during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, was primarily due to an increase in court costs due to increased legal placements in this channel in the U.S.United The increase was partially offset by decreased contingent fees paid to our external network of attorneys as we grow our legal collection activities through our internal legal channel.States.

The increase in generalGeneral and administrative expenses remained relatively consistent during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023, was primarily due to the following reasons:2024.

The increase in other operating expenses during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, was primarily due to an increase in postage and printing expenses of approximately $10.3 million and an increase in costs relating to skip tracing of approximately $7.1$13.1 million.

Collection agency commissions are commissions paid to third-party collection agencies. Collections through the collections agencies channel are predominately in Europe and vary from period to period depending on, among other things, the number of accounts placed with an agency versus accounts collected internally. Commission rates vary depending on, among other things, the amount of time that has passed since the charge-off of the accounts placed with an agency, the asset class, and the geographic location of the receivables. Generally, freshly charged-off accounts have a lower commission rate than accounts that have been charged off for a longer period of time, and commission rates for purchased bankruptcy portfolios are lower than the commission rates for charged-off credit card accounts. Collection agency commissions decreased by approximately $5.1$1.3 million during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024. The decrease was primarily due to fewer accounts placed with external agencies and favorable commission rates received from such agencies in Europe.the United States.

The decrease in depreciationDepreciation and amortization expenses decreased by $3.7 million during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024. The decrease was primarily due to a decrease in depreciation expenses of approximately $5.8 million and a decrease in amortizable expenses of approximately $3.5 million as a result of smaller depreciable and amortizable asset balances during the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024.

We did not incur any asset impairment charge during the year ended December 31, 2025. During the fourthyear quarterended ofDecember 31, 2024, we tested for impairment of our long-lived assets held at our servicing business and recorded an impairment charge relatingof $18.5 million related to theour computeracquired systemsdefinite-lived ofintangible approximatelyassets $18.5within million.our debt servicing business. Refer to “Property and Equipment, Net” in “Note 5: Composition of Certain Financial Statement Items” to our consolidated financial statements for further details. We recorded an impairment charge of $18.7 million for our acquired definite-lived intangible assets during the year ended December 31, 2023.

•The effect resulting from increased average debt balance of approximately $25.2$32.1 million; and

Loss on extinguishment of debt associated with write-offsvarious offinancing unamortizedtransactions debtwas discount$1.6 million and debt issuance costs relating to the early redemptions of our senior secured notes and the refinancing of the Cabot Securitisation Senior Facility was $7.8 million during the year ended December 31, 2024.2025 and 2024, respectively. Refer to “Note 6: Borrowings” in the notes to our consolidated financial statements for details of our financing activities.

Other income or expense consists primarily of foreign currency exchange gains or losses, interest income and gains or losses recognized on certain transactions outside of our normal course of business. Other income was $6.8$5.0 million and $5.1$6.8 million during the years ended December 31, 20242025 and 2023,2024, respectively. Interest income included in other income, net of other expense, was approximately $7.0$5.0 million and $4.7$7.0 million during the years ended December 31, 20242025 and 2023,2024, respectively.

Our effective tax rate could fluctuate significantly on a quarterly basis and could be adversely affected to the extent earnings are lower than anticipated in countries that have lower statutory tax rates and higher than anticipated in countries that have higher statutory tax rates. Refer to “Note 11: Income Taxes” to our consolidated financial statements for further details.

(3)During the years ended December 31, 2024 and 2023, we recorded a non-cash goodwill impairment chargecharges of $100.6 million and $238.2 million, respectively. We recorded a non-cash impairment of long-lived assets of $18.5 million and a non-cash impairment of intangible assets of $18.7 million during the years ended December 31, 2024 and 2023, respectively. We believe these non-cash impairment charges are not indicative of ongoing operations, therefore adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results. Refer to “Note 15: Goodwill and Identifiable Intangible Assets” and “Property and Equipment, Net” in “Note 5: Composition of Certain Financial Statement Items” to our consolidated financial statements for further details.

Cumulative Collections Money Multiple - Cumulative Collections from PurchasedReceivable ReceivablesPortfolios to Purchase Price Multiple

The following table summarizes our receivable purchases, related gross collections, and cumulative collections money multiples (in thousands, except multiples):

With lending and charge-off rates remaining near recent peak levels, U.S. portfolio supply continues to be robust. Issuers have continued to sell predominantly fresh portfolios. Fresh portfolios are portfolios that are generally sold within six months of the consumer’s account being charged-off by the financial institution. Pricing in the firstsecond quarter remained at favorable levels as a result of elevated market supply. Issuers continue to sell their volume in mostly forward flow arrangements that are often committed early in the calendar year. We believe steady lending and delinquency rates at elevated levels will result in stable and strong market supply.

In the United States, capital deploymentdeployments remained consistentincreased during the three and six months ended MarchJune 31,30, 2026, as compared to the corresponding periodperiods in the prior year. The majority of our deployments in the U.S. come from forward flow agreements, and the timing, contract duration, and volumes for each contract can fluctuate leading to variation when comparing to prior periods. Portfolio purchases in the U.S. were robust as supply increased and pricing remained at favorable levels. Our record purchases in the U.S. during the second quarter included opportunistic spot market purchases.

In Europe, capital deploymentdeployments decreasedincreased during the three and six months ended MarchJune 31,30, 2026, as compared to the corresponding periodperiods in the prior year. Capital deployment can fluctuate based on the timing of the forward flow contracts and spot purchases. Pricing continues to remain competitive in our European footprint, constraining the amount of capital we choose to deploy in Europe. Capital deployment can fluctuate based on the timing of the forward flow contracts and spot purchases.

Collections from purchased receivables increased by $113.6$81.9 million, or 18.8%,12.5%, to $718.4$736.9 million during the three months ended MarchJune 31,30, 2026, as compared to $604.8$655.0 million during the three months ended MarchJune 31,30, 2025. Gross collections from purchased receivables increased by $195.5 million, or 15.5%, to $1,455.3 million during the six months ended June 30, 2026, as compared to $1,259.8 million during the six months ended June 30, 2025. The increaseincreases in collections in the United States waswere primarily a result of consistent increases in capital deployments in the United States in recent periods. Collections in Europe were favorably impacted by foreign currency translation by approximately $12.2$1.7 million and $13.9 million, during the three and six months ended MarchJune 31,30, 2026, respectively, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 6.6%0.5% and 3.6% for the three and six months ended MarchJune 31,30, 2026, as compared to the three and six months ended MarchJune 31,30, 2025.2025, respectively.

Our operating results are impacted by foreign currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The strengthening of the U.S. dollar relative to other foreign currencies has an unfavorable impact on our international revenues, and the weakening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international revenues. Our revenue was favorably impacted by foreign currency translation by approximately $9.2$1.2 million and $10.4 million during the three and six months ended MarchJune 31,30, 2026, respectively, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 6.6%0.5% and 3.6% for the three and six months ended MarchJune 31,30, 2026, as compared to the three and six months ended MarchJune 31,30, 2025.2025, respectively.

The increaseincreases in revenue recognized from portfolio basis during the three and six months ended MarchJune 31,30, 2026, as compared to the three and six months ended MarchJune 31,30, 2025, waswere primarily due to a higher portfolio basis (i.e. a higher receivable portfolios balance) in the U.S. driven by a consistent higher volume of purchases in recent periods.

Recoveries above or below forecast represent over and under-performance in the reporting period, respectively, and are expected to vary from period to period. Collections during the three and six months ended MarchJune 31,30, 2026 over-performed the forecasted collections by $46.0$53.1 million and $99.2 million, respectively, primarily as a result of collections over-performance in the U.S. The collections over-performance in the U.S. washas been driven by the deployment of new technologies, enhanced digital capabilities and continued operational innovation, which has enabled us to reach more consumers, leading to more payments as well as a larger payer book. These initiatives have had a greater impact on the early stages of a portfolio’s lifecycle, leading to over-performance for our recent vintages. Collections during the three and six months ended MarchJune 31,30, 2025 over-performed the forecasted collections by $27.0$52.3 million.million and $79.2 million, respectively.

We reassess the forecasts of expected lifetime recoveries each quarter by considering, among other factors, historical and current collection performance, changes in consumer behaviors, and the macroeconomic environment. The significant recoveries above forecast during the three and six months ended MarchJune 31,30, 2026 were carefully evaluated. We concluded that the recoveries above forecast during the three months ended March 31, 2026 were primarily current period collections over-performance and did not represent any material shift in timing of the collections. Additionally, the sustained over-performance in recent quarters led to increases in forecasted future recoveries for recently acquired vintages. As a result, we recorded a net positive change of $16.7$18.0 million and $34.7 million in expected future recoveries during the three and six months ended MarchJune 31,30, 2026.2026, respectively. During the three and six months ended MarchJune 31,30, 2025, we recorded a net positive change of $3.3 million and a net negative change of $5.5$2.2 million in expected future recoveries.recoveries, respectively.

Servicing revenue decreased during the three and six months ended MarchJune 31,30, 2026, as compared to the three and six months ended MarchJune 31,30, 2025, primarily driven by decreases in BPO revenue and collection service fees. Other revenues decreased during the three and six months ended MarchJune 31,30, 2026, as compared to the three and six months ended MarchJune 31,30, 2025, primarily driven by a decreasedecreases in gains recognized on the sale of real estate assets.

The following tabletables summarizessummarize operating expenses during the periods presented (in thousands, except percentages):

Our operating results are impacted by foreign currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The strengthening of the U.S. dollar relative to other foreign currencies has a favorable impact on our international operating expenses, and the weakening of the U.S. dollar relative to other foreign currencies has an unfavorable impact on our international operating expenses. Our operating expenses were unfavorably impacted by foreign currency translation by approximately $6.6$0.9 million and $7.4 million, during the three and six months ended MarchJune 31,30, 2026, respectively, primarily as a result of the weakening of the U.S. dollar against the British Pound by approximately 6.6%0.5% and 3.6% for the three and six months ended MarchJune 31,30, 2026, as compared to the three and six months ended MarchJune 31,30, 2025.2025, respectively.

The increase in salaries and employee benefits during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025, was primarily due to the following reasons:

•An increase in salariesemployee and bonusesbenefits of $6.2$1.3 million, primarily attributable to higher performance-basedhealth bonusesinsurance awarded to employees as a result of our strong overall performance for the year ended December 31, 2025costs; and

The following tabletables summarizessummarize our cost of legal collections during the periods presented (in thousands, except percentages):

The increaseincreases of cost of legal collections during the three and six months ended MarchJune 31,30, 2026, as compared to the three and six months ended MarchJune 31,30, 2025, waswere primarily due to increased legal placements in this channel in the United States.

The decrease in general and administrative expense during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025, was primarily attributable to a decrease in consulting and audit fees of $1.9$4.4 million. The decrease was partially offset by an increase in information technology expenses of $1.1$1.8 million.

Other operating expenses remained relatively consistent during the three and six months ended MarchJune 31,30, 2026, as compared to the three and six months ended MarchJune 31,30, 2025.

Collection agency commissions are commissions paid to third-party collection agencies. Collections through the collections agencies channel are predominately in Europe and vary from period to period depending on, among other things, the number of accounts placed with an agency versus accounts collected internally. Commission rates vary depending on, among other things, the amount of time that has passed since the charge-off of the accounts placed with an agency, the asset class, and the geographic location of the receivables. Generally, freshly charged-off accounts have a lower commission rate than accounts that have been charged off for a longer period of time, and commission rates for purchased bankruptcy portfolios are lower than the commission rates for charged-off credit card accounts. Collection agency commissions slightly decreased during the three and six months ended MarchJune 31,30, 2026, as compared to the same periodperiods in the prior year, primarily due to fewer accounts placed with external agencies in the United States.

Depreciation and amortization expenses decreased by $0.5$0.2 million and $0.7 million during the three and six months ended MarchJune 31,30, 2026, respectively, as compared to the three and six months ended MarchJune 31,30, 2025. The decreasedecreases waswere primarily due to smaller depreciable and amortizable asset balances during the three and six months ended MarchJune 31,30, 2026, as compared to the corresponding periodperiods in the prior year.

The following tabletables summarizessummarize our interest expense for the periods presented (in thousands, except percentages):

The slight increase in stated interest expense during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025, was primarily due to the following reasons:

•The effect resulting from ana slightly unfavorable impact of foreign currency translation of approximately $1.7$0.2 million driven by the weakening of the U.S. dollar against the British Pound.

Other income or expense consists primarily of foreign currency exchange gains or losses, interest income, and gains or losses recognized on certain transactions outside of our normal course of business. Other income, net, was $0.8$0.4 million and $1.6$1.2 million during the three and six months ended MarchJune 31,30, 20262026, respectively. Other income, net, was $1.2 million and $2.9 million during the three and six months ended June 30, 2025, respectively. Interest income included in other income, net of other expense, was $1.1 million and $1.5$2.2 million during the three and six months ended MarchJune 31,30, 20262026, respectively. Interest income included in other income, net of other expense, was $1.4 million and $2.9 million during the three and six months ended June 30, 2025, respectively.

For the three and six months ended MarchJune 31,30, 2026 and 2025, the differences between our effective tax rate and the federal statutory rate were primarily due to state income taxes offset by other foreign adjustments.

(2)Cumulative collections from inception through MarchJune 31,30, 2026, excluding collections on behalf of others.

(3)Cumulative Collections Money Multiple (“CCMM”) through MarchJune 31,30, 2026 refers to cumulative collections as a multiple of purchase price.

(2)Cumulative collections from inception through MarchJune 31,30, 2026, excluding collections on behalf of others.

(1)As of MarchJune 31,30, 2026, ERC for Zero Basis Portfolios includes $22.9$20.1 million for purchased consumer and bankruptcy receivables in the United States. ERC for Zero Basis Portfolios in Europe and other geographies was immaterial. ERC also includes $15.2$13.9 million from non-accrual portfolios, primarily in other geographies.

(2)Represents the expected remaining cash collections over a 180-month period. As of MarchJune 31,30, 2026, ERC for 84-months was $8,414.6$8,733.1 million.

(3)Amount for 2026 consists of ninesix months data from AprilJuly 1, 2026 to December 31, 2026.

As of MarchJune 31,30, 2026, we had $4.4$4.6 billion in receivable portfolios. The estimated future collections applied to the receivable portfolios net balance is as follows (in thousands):

(1)Amount for 2026 consists of ninesix months data from AprilJuly 1, 2026 to December 31, 2026.

Net cash provided by operating activities was $82.3$52.9 million and $45.3$54.8 million during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Operating cash flows are derived by adjusting net income for non-cash operating items such as depreciation and amortization, changes in recoveries, stock-based compensation charges, deferred income tax, and changes in operating assets and liabilities which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations. Adjusting for the changes in recoveries resulted in a decrease in operating cash flows by $62.7$133.9 million and $77.1 million during the threesix months ended MarchJune 31,30, 2026 and a2025, decrease in operating cash flows by $21.5 million during the three months ended March 31, 2025.respectively. Refer to “Note 5: Receivable Portfolios, Net” in the notes to our condensed consolidated financial statements for discussion relating to changes in recoveries.

Net cash used in investing activities was $27.4$130.7 million and $100.3$169.7 million during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Cash provided by or used in investing activities is primarily affected by receivable portfolio purchases offset by collection proceeds applied to the principal of our receivable portfolios. Receivable portfolio purchases, net of put-backs, were $359.5$800.3 million and $362.7$725.4 million during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Collection proceeds applied to the principal of our receivable portfolios were $328.4$665.0 million and $259.6$553.4 million during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Refer to Purchases and Collections within “Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations” for discussion relating to purchases and collections.

Net cash provided by financing activities was $18.6$106.8 million and $40.3$87.2 million during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Financing cash flows are generally affected by borrowings under our credit facilities and proceeds from various debt offerings, offset by repayments of amounts outstanding under our credit facilities and repayments of various notes. Borrowings under our credit facilities were $358.0$791.1 million and $246.4$549.6 million during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Repayments of amounts outstanding under our credit facilities were $304.2$723.8 million and $185.8$418.5 million during the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. During the six months ended June 30, 2026, we issued $750.0 million in senior secured notes that mature in 2032. We used a portion of the proceeds from this offering to redeem the $500.0 million principal outstanding under the Encore 2029 Notes in full. During the six months ended June 30, 2026, we issued €325.0 million (approximately $371.2 million based on an exchange rate of $1.00 to €0.88, the exchange rate as of June 30, 2026) in floating rate senior secured notes due 2033. We used the proceeds from this offering, together with drawings under our Global Senior Facility, to redeem the €415.0 million (approximately $474.0 million based on an exchange rate of $1.00 to €0.88, the exchange rate as of June 30, 2026) principal outstanding under the Encore 2028 Floating Rate Notes in full.

We are in material compliance with all covenants under our financing arrangements. See “Note 7: Borrowings” in the notes to our condensed consolidated financial statements for a further discussion of our debt. Available capacity under our Global Senior Facility, was $791.3$793.4 million as of MarchJune 31,30, 2026.

In May 2021, our Board of Directors authorized a $300.0 million share repurchase program. In November 2025, our Board of Directors authorized an increase of an additional $300.0 million under the share repurchase program. Repurchases under this program are expected to be made from cash on hand and/or a drawing from our Global Senior Facility and may be made from time to time, subject to market conditions and other factors, in the open market, through private transactions, block transactions, or other methods as determined by our management and Board of Directors, and in accordance with market conditions, other corporate considerations, and applicable regulatory requirements. The program does not obligate us to acquire any particular amount of common stock, and it may be modified or suspended at our discretion. During the three and six months ended MarchJune 31,30, 2026 and 2025 ,2026, we repurchased 345,548330,121 and 289,425675,669 shares of our common stock for $20.0$26.7 million and $10.0$46.7 million, respectively, under the share repurchase program. During the three and six months ended June 30, 2025, we repurchased 418,499 and 707,924 shares of our common stock for $15.0 million and $25.0 million, respectively, under the share repurchase program. As of MarchJune 31,30, 2026, we had remaining authority to purchase $282.4$255.7 million of our common stock. Our practice is to retire the shares repurchased.

Our cash and cash equivalents as of MarchJune 31,30, 2026, consisted of $68.5$58.4 million held by U.S.-based entities and $158.7$124.5 million held by foreign entities. Most of our cash and cash equivalents held by foreign entities is indefinitely reinvested and may be subject to material tax effects if repatriated. However, we believe that our sources of cash and liquidity are sufficient to meet our business needs in the United States and do not expect that we will need to repatriate the funds.

Included in cash and cash equivalents is cash that was collected on behalf of, and remains payable to, third-party clients. The balance of cash held for clients was $17.1$14.1 million as of MarchJune 31,30, 2026.