GlobeNewswire Inc | Feb 24, 2021 04:05PM EST

February 24, 2021

-- Encore delivers records for collections, revenues and earnings for the year -- GAAP net income of $212 million in 2020, up 26% -- GAAP EPS of $6.68 in 2020, up 25% -- New global funding structure already delivering benefits, including lower cost of funds -- Leverage reduction continues, down to 2.4x at year-end from 2.7x a year ago

SAN DIEGO, Feb. 24, 2021 (GLOBE NEWSWIRE) -- Encore Capital Group, Inc. (NASDAQ: ECPG), an international specialty finance company, today reported consolidated financial results for the fourth quarter and full year ended December31, 2020.

We continued to execute on our strategy in 2020, delivering strong results and accomplishing a number of key initiatives despite the global COVID-19 pandemic, said Ashish Masih, Encores President and Chief Executive Officer. After adjusting to the realities of a changing world, we delivered strong returns while achieving new highs for collections, revenues and earnings. We also made significant progress on each of our key strategic pillars, which include concentrating on our most valuable markets with the highest risk-adjusted returns, innovating to continually enhance our competitive advantages and continuing to optimize our balance sheet. In particular, we successfully implemented our global funding structure in September and are now financed by one of the best, most flexible balance sheets in our industry.

In the U.S., we improved our operating leverage by growing collections to a record level while reducing our costs through our operational innovation, increased productivity and by driving a higher proportion of collections through our cost-efficient call center and digital channel. At the same time, we deployed capital at the highest purchase multiples we have seen in years.

In Europe, our focus on operating efficiency and expense management in 2020 enabled us to deliver continued solid profitability despite the pressure on European economies caused by the pandemic. After enduring a challenging first half of the year, our collections performance in Europe improved substantially through the remainder of 2020.

Overall, in the fourth quarter we continued to deliver strong earnings and operating results while leveraging our new funding structure to reduce our cost of capital. We refinanced $840 million of our bonds at significantly better pricing, saving millions of dollars of interest expense and lengthening our debt maturity profile.

We are off to a good start as we begin 2021 and we remain very optimistic about our future. In the new year, we expect to continue to deliver strong earnings and also what we believe are the highest returns in our industry. As a result of years of focused effort and our accomplishments in 2020, we are well positioned financially and operationally for the opportunities that lie ahead, said Masih.

Financial Highlights for the Full Year of 2020:

Year Ended December 31,(in thousands, exceptpercentages, earnings per 2020 2019 Changeshare and leverage ratio)Total collections $ 2,111,848 $ 2,026,928 4 %Total revenues $ 1,501,400 $ 1,397,681 7 %Portfolio purchases^(1) $ 659,872 $ 999,858 (34 ) %Estimated Remaining $ 8,525,984 $ 7,825,474 9 %Collections (ERC)Total operating expenses $ 967,838 $ 951,336 2 %GAAP net incomeattributable to Encore^ $ 211,848 $ 167,869 26 %(2)GAAP earnings per share^ $ 6.68 $ 5.33 25 %(2)Adjusted net income^(2) $ 245,795 $ 187,288 31 %Economic earnings per $ 7.75 $ 5.95 30 %share^(2)Leverage Ratio^(3) 2.4x 2.7x -0.3x

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(1)Includes U.S. purchases of $543.0 million and $681.8 million, Europe purchases of $116.9 million and $306.5 million, and other geography purchases of $0 and $11.6 million in 2020 and 2019, respectively.

(2)Negatively impacted by $50.5 million of expenses ($40.0 million after tax), or $1.26 per share, related to establishing the companys global funding structure as well as refinancing transactions in 2020.

(3)Leverage ratio is the ratio of Net Debt to (Adjusted EBITDA + collections applied to principal balance), the industry standard for leverage.

Financial Highlights for the Fourth Quarter of 2020:

Three Months Ended December 31,(in thousands, except percentages 2020 2019 Changeand earnings per share)Total collections $ 536,606 $ 498,799 8 %Total revenues $ 382,610 $ 347,794 10 %Portfolio purchases^(1) $ 127,689 $ 234,916 (46 ) %Total operating expenses $ 258,397 $ 234,584 10 %GAAP net income attributable to $ 37,320 $ 43,085 (13 ) %Encore^(2)GAAP earnings per share^(2) $ 1.17 $ 1.36 (14 ) %Adjusted net income^(2) $ 41,305 $ 49,233 (16 ) %Economic earnings per share^(2) $ 1.30 $ 1.56 (17 ) %

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(1)Includes U.S. purchases of $91.8 million and $154.5 million, and Europe purchases of $35.9 million and $80.5 million in Q4 2020 and Q4 2019, respectively.

(2)Negatively impacted by $26.0 million of expenses ($21.0 million after tax), or $0.66 per share, related to refinancing transactions in Q4 2020.

Conference Call and Webcast

The Company will host a conference call and slide presentation today, February24, 2021, at 2:00 p.m. Pacific time / 5:00 p.m. Eastern time to discuss fourth quarter and full year results.

Members of the public are invited to access the live webcast via the Internet by logging on at the Investor Relations page of Encore's website at www.encorecapital.com. To access the live, listen-only telephone conference portion, please dial (855) 541-0982 or (704) 288-0606.

For those who cannot listen to the live broadcast, a telephonic replay will be available for seven days by dialing (800) 585-8367 or (404) 537-3406 and entering the conference ID number 4425965. A replay of the webcast will also be available shortly after the call on the Company's website.

Non-GAAP Financial Measures

This news release includes certain financial measures that exclude the impact of certain items and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (GAAP). The Company has included adjusted income attributable to Encore and adjusted income attributable to Encore per share (also referred to as economic EPS when adjusted for certain shares associated with our convertible notes that will not be issued but are reflected in the fully diluted share count for accounting purposes) because management uses this measure to assess operating performance, in order to highlight trends in the Companys business that may not otherwise be apparent when relying on financial measures calculated in accordance with GAAP. The Company has included information concerning adjusted EBITDA because management utilizes this information in the evaluation of its operations and believes that this measure is a useful indicator of the Companys ability to generate cash collections in excess of operating expenses through the liquidation of its receivable portfolios. The Company has included information concerning adjusted operating expenses in order to facilitate a comparison of approximate cash costs to cash collections for the portfolio purchasing and recovery business in the periods presented. Adjusted income attributable to Encore, adjusted income attributable to Encore per share/economic EPS, adjusted EBITDA, and adjusted operating expenses have not been prepared in accordance with GAAP. These non-GAAP financial measures should not be considered as alternatives to, or more meaningful than, net income, net income per share, and total operating expenses as indicators of the Companys operating performance. Further, these non-GAAP financial measures, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. The Company has attached to this news release a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

About Encore Capital Group, Inc.

Encore Capital Group is an international specialty finance company that provides debt recovery solutions and other related services for consumers across a broad range of financial assets. Through its subsidiaries around the globe, Encore purchases portfolios of consumer receivables from major banks, credit unions, and utility providers.

Encore partners with individuals as they repay their debt obligations, helping them on the road to financial recovery and ultimately improving their economic well-being. Encore is the first and only company of its kind to operate with aConsumer Bill of Rightsthat provides industry-leading commitments to consumers. Headquartered in San Diego, Encore is a publicly traded NASDAQ Global Select company (ticker symbol: ECPG) and a component stock of the Russell 2000, the S&P Small Cap 600 and the Wilshire 4500. More information about the company can be found at http://www.encorecapital.com. More information about the Company's Cabot Credit Management subsidiary can be found at http://www.cabotcm.com. Information found on the companys or Cabots website is not incorporated by reference.

Forward Looking Statements

The statements in this press release that are not historical facts, including, most importantly, those statements preceded by, or that include, the words will, may, believe, projects, expects, anticipates or the negation thereof, or similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the Reform Act). These statements may include, but are not limited to, statements regarding our future operating results, performance, business plans or prospects. For all forward-looking statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act. Such forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company and its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors are discussed in the reports filed by the Company with the Securities and Exchange Commission, including the most recent reports on Forms 10-K and 10-Q, each as it may be amended from time to time. The Company disclaims any intent or obligation to update these forward-looking statements.

Contact:Bruce ThomasEncore Capital Group, Inc.Vice President, Global Investor Relations(858) 309-6442bruce.thomas@encorecapital.com

SOURCE: Encore Capital Group, Inc.

FINANCIAL TABLES FOLLOW

ENCORE CAPITAL GROUP, INC.Consolidated Statements of Financial Condition(In Thousands, Except Par Value Amounts)

December 31, December 31, 2020 2019Assets Cash and cash equivalents $ 189,184 $ 192,335 Investment in receivable portfolios, net 3,291,918 3,283,984 Deferred court costs, net ? 100,172 Property and equipment, net 127,297 120,051 Other assets 349,162 329,223 Goodwill 906,962 884,185 Total assets $ 4,864,523 $ 4,909,950 Liabilities and Equity Liabilities: Accounts payable and accrued liabilities $ 215,920 $ 223,911 Borrowings 3,281,634 3,513,197 Other liabilities 146,893 147,436 Total liabilities 3,644,447 3,884,544 Commitments and contingencies Equity: Convertible preferred stock, $0.01 parvalue, 5,000 shares authorized, no shares ? ? issued and outstandingCommon stock, $0.01 par value, 75,000shares authorized, 31,345 shares and 31,097shares issued and outstanding as of 313 311 December 31, 2020 and December31, 2019,respectivelyAdditional paid-in capital 230,440 222,590 Accumulated earnings 1,055,668 888,058 Accumulated other comprehensive loss (68,813 ) (88,766 ) Total Encore Capital Group, Inc. 1,217,608 1,022,193 stockholders? equityNoncontrolling interest 2,468 3,213 Total equity 1,220,076 1,025,406 Total liabilities and equity $ 4,864,523 $ 4,909,950

The following table presents certain assets and liabilities of consolidated variable interest entities (VIEs) included in the consolidated statements of financial condition above. Most assets in the table below include those assets that can only be used to settle obligations of consolidated VIEs. The liabilities exclude amounts where creditors or beneficial interest holders have recourse to the general credit of the Company.

December 31, December 31, 2020 2019Assets Cash and cash equivalents $ 2,223 $ 34 Investment in receivable portfolios, net 553,621 539,596 Other assets 5,127 4,759 Liabilities Borrowings 478,131 464,092 Other liabilities 37 ?

ENCORE CAPITAL GROUP, INC.Consolidated Statements of Operations(In Thousands, Except Per Share Amounts)

(Unaudited) Year Ended December 31, Three Months Ended December 31, 2020 2019 2020 2019Revenues Revenue fromreceivable $ 339,576 $ 329,418 $ 1,374,717 $ 1,269,288 portfoliosChanges inexpectedcurrent and 9,449 ? 7,246 ? futurerecoveriesServicing 32,701 29,128 115,118 126,527 revenueOther revenues 884 9,301 4,319 9,974 Total revenues 382,610 367,847 1,501,400 1,405,789 Net allowanceson receivable (20,053 ) (8,108 ) portfoliosTotalrevenues, 347,794 1,397,681 adjusted bynet allowancesOperating expensesSalaries andemployee 98,232 91,666 378,176 376,365 benefitsCost of legal 75,053 53,224 239,071 202,670 collectionsGeneral andadministrative 35,159 37,921 149,113 148,256 expensesOtheroperating 25,417 23,520 108,944 108,433 expensesCollectionagency 13,192 16,960 49,754 63,865 commissionsDepreciationand 11,344 11,293 42,780 41,029 amortizationGoodwill ? ? ? 10,718 impairmentTotaloperating 258,397 234,584 967,838 951,336 expensesIncome from 124,213 113,210 533,562 446,345 operationsOther(expense) incomeInterest (51,393 ) (53,515 ) (209,356 ) (217,771 ) expenseLoss onextinguishment (25,963 ) ? (40,951 ) (8,989 ) of debtOther income 854 (2,577 ) (357 ) (18,343 ) (expense)Total other (76,502 ) (56,092 ) (250,664 ) (245,103 ) expenseIncome before 47,711 57,118 282,898 201,242 income taxesProvision for (10,499 ) (13,886 ) (70,374 ) (32,333 ) income taxesNet income 37,212 43,232 212,524 168,909 Net loss(income)attributable 108 (147 ) (676 ) (1,040 ) tononcontrollinginterestNet incomeattributableto Encore $ 37,320 $ 43,085 $ 211,848 $ 167,869 Capital Group,Inc.stockholders Earnings pershareattributable to EncoreCapital Group,Inc.:Basic $ 1.18 $ 1.38 $ 6.74 $ 5.38 Diluted $ 1.17 $ 1.36 $ 6.68 $ 5.33 Weightedaverage shares outstanding:Basic 31,500 31,233 31,427 31,210 Diluted 31,826 31,612 31,710 31,474

ENCORE CAPITAL GROUP, INC.Consolidated Statements of Cash Flows(In Thousands)

Year Ended December 31, 2020 2019 2018Operating activities: Net income $ 212,524 $ 168,909 $ 109,736 Adjustments to reconcile netincome to net cash provided by operating activities:Depreciation and amortization 42,780 41,029 41,228 Expense related to financing 51,117 3,523 11,710 Other non-cash interest 23,639 30,299 38,549 expense, netStock-based compensation 16,560 12,557 12,980 expenseDeferred income taxes 11,898 22,339 16,814 Goodwill impairment ? 10,718 ? Changes in expected current (7,246 ) ? ? and future recoveriesProvision for (reversal of)allowances on receivable ? 8,108 (41,473 ) portfolios, netOther, net 16,260 9,794 (7,016 ) Changes in operating assets and liabilitiesDeferred court costs ? (3,646 ) (17,701 ) Other assets 8,980 29,025 (17,925 ) Prepaid income tax and income (27,693 ) (25,678 ) 24,284 taxes payableAccounts payable, accruedliabilities and other (35,955 ) (62,244 ) 15,605 liabilitiesNet cash provided by operating 312,864 244,733 186,791 activitiesInvesting activities: Purchases of receivable (644,048 ) (1,035,130 ) (1,131,095 ) portfolios, net of put-backsCollections applied toinvestment in receivable 737,131 757,640 809,688 portfolios, netPurchases of property and (34,600 ) (39,602 ) (67,475 ) equipmentProceeds from sale of ? 107,937 ? portfoliosOther, net 24,343 6,822 (8,634 ) Net cash provided by (used in) 82,826 (202,333 ) (397,516 ) investing activitiesFinancing activities: Payment of loan and debt (82,455 ) (11,586 ) (23,286 ) refinancing costsProceeds from credit 1,820,634 603,634 942,186 facilitiesRepayment of credit facilities (2,290,822 ) (586,429 ) (571,144 ) Proceeds from senior secured 1,313,385 454,573 ? notesRepayment of senior secured (1,033,765 ) (470,768 ) (91,578 ) notesProceeds from issuance ofconvertible and exchangeable ? 100,000 172,500 senior notesRepayment of convertible (89,355 ) (84,600 ) ? senior notesPayment for the purchase ofPECs and noncontrolling ? ? (234,101 ) interestOther, net (40,822 ) (24,594 ) (28,200 ) Net cash (used in) provided by (403,200 ) (19,770 ) 166,377 financing activitiesNet (decrease) increase in (7,510 ) 22,630 (44,348 ) cash and cash equivalentsEffect of exchange ratechanges on cash and cash 4,359 12,287 (10,373 ) equivalentsCash and cash equivalents, 192,335 157,418 212,139 beginning of periodCash and cash equivalents, end $ 189,184 $ 192,335 $ 157,418 of period Supplemental disclosures of cash flow information:Cash paid for interest $ 169,553 $ 178,948 $ 198,797 Cash paid for income taxes, 88,816 43,973 5,734 net of refundsSupplemental schedule ofnon-cash investing and financing activities:Stock consideration for the $ ? $ ? $ 180,559 Cabot TransactionInvestment in receivableportfolios transferred to real 2,214 5,058 4,701 estate ownedProperty and equipmentacquired through finance 3,276 5,299 3,283 leases

ENCORE CAPITAL GROUP, INC.Supplemental Financial Information

Reconciliation of Adjusted Income Attributable to Encore to GAAP Net Income Attributable to Encore, Adjusted EBITDA to GAAP Net Income, and Adjusted Operating Expenses Related to Portfolio Purchasing and Recovery Business to GAAP Total Operating Expenses(In Thousands, Except Per Share amounts) (Unaudited)

Three Months Ended December 31, 2020 2019 $ Per Diluted $ Per Diluted Share ShareGAAP net incomeattributable to $ 37,320 $ 1.17 $ 43,085 $ 1.36 Encore, as reportedAdjustments: Convertible andexchangeable notesnon-cash interest and 3,239 0.10 3,930 0.13 issuance costamortizationAcquisition,integration and 22 ? 704 0.02 restructuring relatedexpenses^(1)Amortization ofcertain acquired 1,803 0.06 1,659 0.05 intangible assets^(2)Change in tax ? ? 1,245 0.04 accounting method^(3)Income tax effect of (1,079 ) (0.03 ) (1,390 ) (0.04 ) the adjustments^(4)Adjusted net income $ 41,305 $ 1.30 $ 49,233 $ 1.56 attributabletoEncore

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(1)Amount represents acquisition, integration and restructuring related expenses. We adjust for this amount because we believe these expenses are not indicative of ongoing operations; therefore, adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors results.

(2)We have acquired intangible assets, such as trade names and customer relationships, as a result of our acquisition of debt solution service providers. These intangible assets are valued at the time of the acquisition and amortized over their estimated lives. We believe that amortization of acquisition-related intangible assets, especially the amortization of an acquired companys trade names and customer relationships, is the result of pre-acquisition activities. In addition, the amortization of these acquired intangibles is a non-cash static expense that is not affected by operations during any reporting period. As a result, the amortization of certain acquired intangible assets is excluded from our adjusted income attributable to Encore and adjusted income per share.

(3)Amount represents the benefit from the tax accounting method change related to revenue reporting. We adjust for certain discrete tax items that are not indicative of our ongoing operations.

(4)Amount represents the total income tax effect of the adjustments, which is generally calculated based on the applicable marginal tax rate of the jurisdiction in which the portion of the adjustment occurred. Additionally, we adjust for certain discrete tax items that are not indicative of our ongoing operations.

Year Ended December 31, 2020 2019 $ Per Diluted $ Per Diluted Share ShareGAAP net incomeattributable to $ 211,848 $ 6.68 $ 167,869 $ 5.33 Encore, as reportedAdjustments: CFPB settlement fees^ 15,009 0.47 ? ? (1)Convertible andexchangeable notesnon-cash interest and 14,444 0.46 15,501 0.50 issuance costamortizationAcquisition,integration and 4,962 0.16 7,049 0.22 restructuring relatedexpenses^(2)Amortization ofcertain acquired 7,010 0.22 7,017 0.22 intangible assets^(3)Loss on Baycorp ? ? 12,489 0.40 Transaction^(4)Goodwill impairment^ ? ? 10,718 0.34 (4)Net gain on fair valueadjustments to ? ? (2,300 ) (0.07 ) contingentconsiderations^(5)Change in tax ? ? (7,825 ) (0.25 ) accounting method^(6)Income tax effect of (7,478 ) (0.24 ) (23,230 ) (0.74 ) the adjustments^(7)Adjusted net income $ 245,795 $ 7.75 $ 187,288 $ 5.95 attributabletoEncore

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(1)Amount represents a charge resulting from the Stipulated Judgment with the CFPB. We have adjusted for this amount because we believe it is not indicative of ongoing operations; therefore, adjusting for it enhances comparability to prior periods, anticipated future periods, and our competitors results.

(2)Amount represents acquisition, integration and restructuring related expenses. We adjust for this amount because we believe these expenses are not indicative of ongoing operations; therefore, adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors results.

(3)We have acquired intangible assets, such as trade names and customer relationships, as a result of our acquisition of debt solution service providers. These intangible assets are valued at the time of the acquisition and amortized over their estimated lives. We believe that amortization of acquisition-related intangible assets, especially the amortization of an acquired companys trade names and customer relationships, is the result of pre-acquisition activities. In addition, the amortization of these acquired intangibles is a non-cash static expense that is not affected by operations during any reporting period. As a result, the amortization of certain acquired intangible assets is excluded from our adjusted income attributable to Encore and adjusted income per share.

(4)The sale of Baycorp resulted in a goodwill impairment charge of $10.7 million and a loss on sale of $12.5 million during the year ended December 31, 2019. We believe the goodwill impairment charge and the loss on sale are not indicative of ongoing operations, therefore adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors results.

(5)Amount represents the net gain recognized as a result of fair value adjustments to contingent considerations that were established for our acquisitions of debt solution service providers in Europe. We have adjusted for this amount because we do not believe this is indicative of ongoing operations.

(6)Amount represents the benefit from the tax accounting method change related to revenue reporting. We adjust for certain discrete tax items that are not indicative of our ongoing operations.

(7)Amount represents the total income tax effect of the adjustments, which is generally calculated based on the applicable marginal tax rate of the jurisdiction in which the portion of the adjustment occurred. Additionally, we adjust for certain discrete tax items that are not indicative of our ongoing operations. We recognized approximately $17.5 million, or $0.55 per diluted share, in tax benefit as a result of the sale of Baycorp, which is included in this income tax adjustment during the year ended December 31, 2019.

Three Months Ended December 31, Year Ended December31, 2020 2019 2020 2019GAAP netincome, as $ 37,212 $ 43,232 $ 212,524 $ 168,909 reportedAdjustments: Interest 51,393 53,515 209,356 217,771 expenseLoss onextinguishment 25,963 ? 40,951 8,989 of debtInterest (444 ) (843 ) (2,397 ) (3,693 ) incomeProvision for 10,499 13,886 70,374 32,333 income taxesDepreciationand 11,344 11,293 42,780 41,029 amortizationCFPBsettlement ? ? 15,009 ? fees^(1)Stock-basedcompensation 3,371 3,145 16,560 12,557 expenseAcquisition,integrationand 22 704 4,962 7,049 restructuringrelatedexpenses^(2)Loss on sale ? ? ? 12,489 of Baycorp^(3)Goodwill ? ? ? 10,718 impairment^(3)Net gain onfair valueadjustments to ? ? ? (2,300 ) contingentconsiderations^(4)Adjusted $ 139,360 $ 124,932 $ 610,119 $ 505,851 EBITDACollectionsapplied to $ 192,448 $ 189,434 $ 740,350 $ 765,748 principalbalance^(^5)

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(1)Amount represents a charge resulting from the Stipulated Judgment with the CFPB. We have adjusted for this amount because we believe it is not indicative of ongoing operations; therefore, adjusting for it enhances comparability to prior periods, anticipated future periods, and our competitors results.

(2)Amount represents acquisition, integration and restructuring related expenses. We adjust for this amount because we believe these expenses are not indicative of ongoing operations; therefore, adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors results.

(3)The sale of Baycorp resulted in a goodwill impairment charge of $10.7 million and a loss on sale of $12.5 million during the year ended December 31, 2019. We believe the goodwill impairment charge and the loss on sale are not indicative of ongoing operations, therefore adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors results.

(4)Amount represents the net gain recognized as a result of fair value adjustments to contingent considerations that were established for our acquisitions of debt solution service providers in Europe. We have adjusted for this amount because we do not believe this is indicative of ongoing operations.

(5)For periods prior to January 1, 2020, amount represents (a) gross collections from receivable portfolios less the sum of (b) revenue from receivable portfolios and (c) allowance charges or allowance reversals on receivable portfolios. For periods subsequent to January 1, 2020 amount represents (a) gross collections from receivable portfolios less the sum of (b) revenue from receivable portfolios and (c) changes in expected recoveries. For consistency with the Company debt covenant reporting, for periods subsequent to June 30, 2020, the collections applied to principal balance also includes proceeds applied to basis from sales of REO assets and related activities; prior period amounts have not been adjusted to reflect this change as such amounts were immaterial.

Three Months Ended December 31, Year Ended December31, 2020 2019 2020 2019GAAP totaloperating $ 258,397 $ 234,584 $ 967,838 $ 951,336 expenses, asreportedAdjustments: Operatingexpensesrelated tonon-portfolio (45,054 ) (42,373 ) (182,930 ) (173,190 ) purchasing andrecoverybusiness^(1)CFPBsettlement ? ? (15,009 ) ? fees^(2)Stock-basedcompensation (3,371 ) (3,145 ) (16,560 ) (12,557 ) expenseAcquisition,integrationandrestructuring (22 ) (704 ) (154 ) (7,049 ) relatedoperatingexpenses^(^3)Goodwillimpairment^(^ ? ? ? (10,718 ) 4)Net gain onfair valueadjustments to ? ? ? 2,300 contingentconsiderations^(5)Adjustedoperatingexpensesrelated to $ 209,950 $ 188,362 $ 753,185 $ 750,122 portfoliopurchasing andrecoverybusiness

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(1)Operating expenses related to non-portfolio purchasing and recovery business include operating expenses from other operating segments that primarily engage in fee-based business, as well as corporate overhead not related to our portfolio purchasing and recovery business.

(2)Amount represents a charge resulting from the Stipulated Judgment with the CFPB. We have adjusted for this amount because we believe it is not indicative of ongoing operations; therefore, adjusting for it enhances comparability to prior periods, anticipated future periods, and our competitors results.

(3)Amount represents acquisition, integration and restructuring related operating expenses. We adjust for this amount because we believe these expenses are not indicative of ongoing operations; therefore, adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors results.

(4)The sale of Baycorp resulted in a goodwill impairment charge of $10.7 million that is included in operating expenses during the year ended December 31, 2019. We believe the goodwill impairment charge is not indicative of ongoing operations, therefore, adjusting for the expense enhances comparability to prior periods, anticipated future periods, and our competitors results.

(5)Amount represents the net gain recognized as a result of fair value adjustments to contingent considerations that were established for our acquisitions of debt solution service providers in Europe. We have adjusted for this amount because we do not believe this is indicative of ongoing operations.