What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-25 compared with 2025-02-26 · 160 added, 263 removed, 584 unchanged (42% of the section changed)

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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.

Cabot, which consists of Cabot Credit Management Limited and its subsidiaries and European affiliates, and LAAP, which is comprised of our investments and operations in Latin America and Asia-Pacific.

MCM (United States)

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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 the rest of Europe.

Government Regulation

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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 receivable portfolios subject to Chapter 13 and Chapter 7 bankruptcy proceedings.

A small percentage of our capital deployment in the United States is comprised of unsecured personal loans.

We purchase receivables based on robust, account-level valuation methods and employ proprietary statistical and behavioral models across our U.S.

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In Europe, our purchased defaulted debt portfolios primarily consist of credit card and consumer loan accounts.

We purchase receivable portfolios using a proprietary pricing model that utilizes account-level statistical and behavioral data.

This model generally allows us to value portfolios accurately and quantify portfolio performance in order to maximize future collections.

We purchase receivable portfolios using proprietary pricing models that utilize account-level statistical and behavioral data.

These models generally allow us to accurately value portfolios and to develop collection strategies that maximize future returns.

As a result, we have generally been able to realize significant returns from the assets we have acquired.

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MCM (United States)

With lending reaching record levels and the highest U.S.

charge-off rate in ten years, supply remains elevated at a record level.

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.

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Issuers continue to sell their volume in mostly forward flow arrangements that are often committed early in the calendar year.

We believe growth in lending and rising delinquency rates will drive continued growth in supply.

We believe steadying lending and delinquency rates at elevated levels will result in stable and strong market supply.

We believe that smaller competitors continue to face difficulties in the portfolio purchasing market because of the high cost to operate due to regulatory pressure and increasing cost of capital.

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Cabot (Europe)

The UK market for charged-off portfolios generally provides a relatively consistent pipeline of opportunities, despite a historically low level of charge-off rates, as creditors had embedded debt sales as an integral part of their business models.

The UK market for charged-off portfolios generally provides a relatively consistent pipeline of opportunities, despite a historically low level of 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 markets in Europe with significant portfolio sales.

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, underlying default rates are generally low by historic levels, and consumer lending volumes have stagnated.

While sales activity across all of our European 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.

general, portfolio pricing remains competitive across our European footprint, constraining the amount of capital we can deploy in Europe.

general, portfolio pricing remains competitive across our European footprint, constraining the amount of capital we elect to deploy in Europe.

Purchases by Geographic Location

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Total purchases of receivable portfolios $ 1,408,083 $ 1,352,035 $ 1,073,812

In the United States, capital deployment increased during both the year ended December 31, 2024, as compared to 2023, and during the year ended December 31, 2023, as compared to 2022.

In the United States, capital deployment continued to increase during the periods presented.

The majority of our deployments in the U.S.

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were robust as supply increased and pricing remained at favorable levels.

In Europe, capital deployment increased during both the year ended December 31, 2024, as compared to 2023, and during the year ended December 31, 2023, as compared to 2022.

Pricing continues to remain competitive in our European footprint;

constraining the amount of capital we can deploy in Europe.

Capital deployment stayed relatively limited during the nine months ended September 30, 2024.

During the fourth quarter of 2024, we made three large 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.

Collections from Purchased Receivables by Channel and Geographic Location

We utilize three channels for the collection of our purchased receivables:

In Europe, capital deployment decreased during the year ended December 31, 2025, as compared to 2024, and increased during the year ended December 31, 2024, as compared to 2023, due to higher than normal purchases that included large spot-market portfolios in the fourth quarter of 2024.

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 Receivable Portfolios by Channel and Geographic Location

We utilize three channels for the collection of our receivable portfolios:

call center and digital collections;

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2,546 2,793 3,954

Total collections from purchased receivables $ 2,162,478 $ 1,862,567 $ 1,911,537

Gross collections from purchased receivables 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 increase in collections in the United States was primarily a result of consistent increases in capital deployments in the United States in recent years.

increase in collections from purchased receivables in Europe was primarily due to the acquisition of portfolios with higher returns in recent periods.

Total collections

$ 2,592,786 $ 2,162,478 $ 1,862,567

Collections from receivable portfolios 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 increases in collections in the United States were primarily a result of consistent increases in capital deployments and enhanced collections strategies in recent years.

The increases in collections from

receivable portfolios in Europe were 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 $22.1 million, during the year ended December 31, 2025, primarily as a result of the weakening of the U.S.

dollar against the British Pound by approximately 3.0% for the year ended December 31, 2025 as compared to the year ended December 31, 2024.

Gross collections from purchased receivables remained relatively stable during the year ended December 31, 2023, as compared to gross collections during the year ended December 31, 2022.

Results of Operations

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2025 2024 2023

Revenue from receivable portfolios $ 1,302,567 99.0 % $ 1,204,437 98.5 % $ 1,202,361 85.9 %

Portfolio revenue $ 1,455,795 82.3 % $ 1,302,567 99.0 % $ 1,204,437 98.5 %

Changes in recoveries 208,771 11.8 % (89,740) (6.8) % (82,530) (6.7) %

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Servicing revenue

88,388 5.0 % 84,783 6.4 % 83,136 6.8 %

Other revenues 15,848 0.9 % 18,751 1.4 % 17,637 1.4 %

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Total other expense (290,488) (16.4) % (253,545) (19.4) % (196,799) (16.2) %

(Loss) income before income taxes (96,215) (7.3) % (180,264) (14.7) % 310,989 22.2 %

Income (loss) before income taxes 336,159 19.0 % (96,215) (7.3) % (180,264) (14.7) %

Provision for income taxes (79,325) (4.5) % (43,029) (3.3) % (26,228) (2.1) %

Net (loss) income $ (139,244) (10.6) % $ (206,492) (16.8) % $ 194,564 13.9 %

Net income (loss) $ 256,834 14.5 % $ (139,244) (10.6) % $ (206,492) (16.8) %

Comparison of Results of Operations

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, 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 receivable portfolios, net” in our consolidated statements of financial condition.

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 “Receivable 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.

Debt purchasing revenue includes two components:

(1) Revenue from receivable portfolios , which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR), and

(1) Portfolio 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:

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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, all subsequent collections to the ZBA pools are recognized as ZBA revenue, which is included in revenue from receivable portfolios in our consolidated statements of operations.

All subsequent collections to the ZBA pools are recognized as ZBA revenue, which is included in portfolio revenue in our consolidated statements of operations.

We expect our ZBA revenue to continue to decline as we collect on these legacy pools.

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ZBA revenue 23,483 23,100 383 1.7 %

Revenue from receivable portfolios 1,302,567 1,204,437 98,130 8.1 %

Recoveries above (below) forecast

Portfolio revenue

1,455,795 1,302,567 153,228 11.8 %

Recoveries above forecast

197,761 78,202 119,559

Changes in expected future recoveries 11,010 (167,942) 178,952

Changes in recoveries (89,740) (82,530) (7,210) 8.7 %

Changes in recoveries 208,771 (89,740) 298,511 NM

Debt purchasing revenue 1,664,566 1,212,827 451,739 37.2 %

Servicing revenue

88,388 84,783 3,605 4.3 %

Other revenues 15,848 18,751 (2,903) (15.5) %

Total revenues $ 1,768,802 $ 1,316,361 $ 452,441 34.4 %

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NM - Not meaningful.

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.

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The increase in revenue recognized from portfolio basis during the year ended December 31, 2025, as compared to the year ended December 31, 2024, was primarily due to a higher portfolio basis ( i.e.

a higher investment in receivable balance) in the U.S.

a higher receivable portfolios balance) in the U.S.

driven by a consistent higher volume of purchases in recent years.

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 over-performed the forecasted collections by approximately $78.2 million during the year ended December 31, 2024.

Collections under-performed the forecasted collections by approximately $33.4 million during the year ended December 31, 2023.

The over and under performance in the periods presented represented only a small fraction of total collections in the corresponding periods.

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 macroeconomic environment.

During the fourth quarter of 2024, we deployed a new U.K.

forecasting model that develops expected future recoveries for investment in receivable portfolios at Cabot.

The new model update was primarily driven by recent changes in Cabot as it continues to acquire portfolios that have more dynamic characteristics and are better forecasted utilizing a model that processes data inputs at a more granular level.

As part of the new model development process, management updated certain model inputs driven by collection experience, operational performance and recent changes in collection strategies.

This new forecasting model was applied to all vintages, which resulted in a change in the estimate of expected future recoveries.

This change in accounting estimate reduced Cabot’s estimated remaining collections by $361.6 million, which when discounted to present value, resulted in a negative change in expected future recoveries of $75.3 million.

Additionally, we recognized approximately $22.2 million of negative changes in expected future recoveries resulting from the sale of our investment in receivable portfolios associated with the exit of our Italian debt purchasing and recovery business in November 2024.

These significant changes in expected recoveries at Cabot during the fourth quarter of 2024, combined with changes driven by recurring reassessments of the expected future recoveries, reduced Cabot’s total estimated remaining collections by $452.9 million, which when discounted to present value, resulted in a net negative change in expected future recoveries of $129.1 million during the fourth quarter of 2024.

As a result of all the above during the fourth quarter, and the negative changes recorded during the previous quarters in 2024, we recorded a total net negative change in expected future recoveries of approximately $167.9 million during the year ended December 31, 2024.

We recorded approximately $49.1 million in net negative change in expected future recoveries during the year ended December 31, 2023.

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

Collections over-performed the forecasted collections by $197.8 million during the year ended December 31, 2025, primarily as a result of collections over-performance in the U.S.

The collections over-performance in the U.S.

was driven by the deployment of new technologies, enhanced digital capabilities and continued operational innovation, which enabled us to reach more consumers, leading to more payments as well as a larger payer book.

These initiatives had a greater impact on the early stages of a portfolio’s lifecycle, leading to over-performance for our recent vintages.

Collections over-performed the forecasted collections by $78.2 million during the year ended December 31, 2024.

The significant recoveries above forecast in 2025 were carefully evaluated.

We concluded that the recoveries above forecast during the year ended December 31, 2025 were primarily current period collections over-performance and did not represent any material shift in timing of the collections.

Therefore, the updated forecast did not result in a material change in expected future recoveries.

We recorded a net positive change in expected future recoveries of $11.0 million during the year ended December 31, 2025.

We recorded $167.9 million in net negative change in expected future recoveries during the year ended December 31, 2024.

The following tables summarize collections 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 ):

Year Ended December 31, 2025 As of December 31, 2025

Collections Revenue from Receivable Portfolios Changes in Recoveries Investment in Receivable Portfolios Monthly EIR

Collections Portfolio Revenue

Changes in Recoveries Receivable Portfolios Monthly EIR

United States:

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2025 293,593 208,451 42,529 1,126,992 3.2 %

40,123 24,203 3,683 30,546 5.6 %

64,231 34,103 4,148 57,724 4.0 %

112,391 61,473 (1,517) 108,256 3.8 %

127,555 69,461 (2,867) 126,055 3.7 %

131,870 69,185 6,921 119,734 3.9 %

254,329 121,998 (2,765) 262,669 3.1 %

471,838 277,750 16,152 610,793 3.3 %

2024 238,635 173,924 23,821 954,105 3.4 %

Subtotal 1,949,299 1,087,398 180,905 2,810,234 3.4 %

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2025 44,123 26,499 (1,756) 217,650 2.1 %

47,174 27,687 (10,131) 100,030 1.9 %

31,454 20,055 (11,885) 53,577 2.2 %

2021 52,278 34,892 (21,063) 116,711 1.9 %

2022 64,555 34,045 (14,916) 142,813 1.5 %

2023 89,799 39,774 (3,124) 187,267 1.5 %

2024 50,469 28,759 361 321,419 2.2 %

Subtotal 640,941 368,397 28,123 1,548,584 2.0 %

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Year Ended December 31, 2024 As of December 31, 2024

Collections Revenue from Receivable Portfolios Changes in Recoveries Investment in Receivable Portfolios Monthly EIR

Collections Portfolio Revenue Changes in Recoveries Receivable Portfolios Monthly EIR

United States:

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238,635 173,924 23,821 954,105 3.3%

2017 57,985 35,121 3,380 42,838 5.5%

2018 89,548 51,015 (6,206) 83,861 4.0%

2019 164,106 91,341 (2,668) 160,976 3.8%

2020 194,522 104,555 (3,622) 187,358 3.7%

2021 188,895 109,241 (23,969) 175,906 3.9%

2022 268,516 179,175 (51,222) 398,824 3.1%

184,182 136,249 29,359 793,117 3.2%

Subtotal 1,571,654 931,420 60,529 2,329,356 3.6%

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50,469 28,759 361 321,419 1.9%

2019 54,544 31,767 1,059 133,484 1.9%

2020 37,363 23,939 920 83,638 2.2%

2021 58,515 40,972 (10,828) 166,490 1.9%

70,385 40,530 (5,161) 199,024 1.6%

40,975 18,857 7,258 248,185 1.5%

Subtotal 588,031 371,147 (152,497) 1,430,182 2.0%

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_______________________

(1) Portfolio balance includes non-accrual pool groups.

The EIR presented is only for pool groups that accrete portfolio revenue.

(1) All portfolios are on non-accrual basis.

Annual pool groups for other geographies have been aggregated for disclosure purposes.

Servicing revenues and other revenues remained relatively consistent during the year ended December 31, 2024, as compared to the year ended December 31, 2023.

Servicing revenue increased during the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily driven by increased demand for BPO clients.

Servicing revenue was also favorably impacted by foreign currency translation as a result of the weakening of the U.S.

dollar against the British Pound.

Other revenues decreased during the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily driven by a decrease in gains recognized on the sale of real estate assets.

Operating Expenses

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Salaries and Employee Benefits

The increase in salaries and employee benefits during the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily due to the following reasons:

• An increase in salaries and bonus of approximately $22.6 million primarily due to an increase in overall average headcount and general increase in wage during the year ended December 31, 2024 as compared to 2023;

• An increase in employee benefits and payroll taxes of approximately $8.6 million.

The increase in salaries and employee benefits during the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily driven by a general increase in wages and higher account manager compensation as a result of higher collection performance.

Cost of Legal Collections

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Total cost of legal collections $ 315,451 $ 259,298 $ 56,153 21.7 %

The increase in cost of legal collections during the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily due to an increase in court costs due to increased legal placements in this channel in the U.S.

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.

The increase in cost of legal collections during the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to increased legal placements in this channel in the United States.

General and Administrative Expenses

The increase in general and administrative expenses during the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily due to the following reasons:

• An increase in information technology expenses of approximately $8.9 million;

• An increase in consulting fees of approximately $4.5 million;

• An increase in miscellaneous general and administrative related expenses of approximately $3.8 million.

General and administrative expenses remained relatively consistent during the year ended December 31, 2025, compared to the year ended December 31, 2024.

Other Operating Expenses

The increase in other operating expenses during the year ended December 31, 2024, compared to the year ended December 31, 2023, 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 million.

The increase in other operating expenses during the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to an increase in postage and printing expenses of $13.1 million.

Collection Agency Commissions

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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 million during the year ended December 31, 2024, compared to the year ended December 31, 2023.

The decrease was primarily due to fewer accounts placed with external agencies and favorable commission rates received from such agencies in Europe.

Collection agency commissions decreased by $1.3 million during the year ended December 31, 2025, compared to the year ended December 31, 2024.

The decrease was primarily due to fewer accounts placed with external agencies in the United States.

Depreciation and Amortization

The decrease in depreciation and amortization expenses during the year ended December 31, 2024, compared to the year ended December 31, 2023, 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, compared to the year ended December 31, 2023.

Depreciation and amortization expenses decreased by $3.7 million during the year ended December 31, 2025, compared to the year ended December 31, 2024.

The decrease was primarily due to a smaller depreciable and amortizable asset balances during the year ended December 31, 2025, compared to the year ended December 31, 2024.

Goodwill Impairment

During the fourth quarter of 2024, we performed our annual goodwill impairment assessment as of October 1, 2024, which did not result in any goodwill impairment charge.

Subsequent to the annual goodwill impairment test, we significantly lowered the estimated future recoveries for our investment in receivable portfolios at Cabot during the fourth quarter of 2024, management considered this a triggering event and conducted another quantitative test for goodwill impairment as of December 31, 2024.

This subsequent goodwill impairment analysis resulted in an impairment charge for the Cabot reporting unit of $100.6 million.

The decline in the fair value of the Cabot reporting unit below its carrying value primarily resulted from changes in expected future cash flows as compared to our previous financial forecasts, and to a lesser extent, a decline in market multiples.

We also recorded a goodwill impairment charge of $238.2 million during the year ended December 31, 2023.

No triggering events were identified during the interim periods between the two annual goodwill impairment tests.

During the fourth quarter of 2025, we performed our annual goodwill impairment assessment as of December 31, 2025, which did not result in any goodwill impairment charge.

We recorded a goodwill impairment charge of $100.6 million during the year ended December 31, 2024.

Refer to “Note 15:

Goodwill and Identifiable Intangible Assets” to our consolidated financial statements for further details.

Goodwill” to our consolidated financial statements for further details.

Impairment of Assets

During the fourth quarter of 2024, we tested for impairment of our long-lived assets held at our servicing business and recorded an impairment charge relating to the computer systems of approximately $18.5 million.

We did not incur any asset impairment charge during the year ended December 31, 2025.

During the year ended December 31, 2024, we recorded an impairment charge of $18.5 million related to our acquired definite-lived intangible assets within 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.

Interest Expense

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The increase in interest expense during the year ended December 31, 2025, compared to the year ended December 31, 2024, was primarily due to the following reasons:

• The effect resulting from rising interest rates of approximately $23.9 million;

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

• The effect resulting from higher weighted average interest rates on our borrowings of approximately $6.0 million;

• An unfavorable impact of foreign currency translation of approximately $3.3 million driven by the weakening of the U.S.

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Loss on Extinguishment of Debt

Loss on extinguishment of debt associated with write-offs of unamortized debt discount 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.

Loss on extinguishment of debt associated with various financing transactions was $1.6 million and $7.8 million during the year ended December 31, 2025 and 2024, respectively.

Refer to “Note 6:

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Other income was $5.0 million and $6.8 million during the years ended December 31, 2025 and 2024, respectively.

Interest income included in other income, net of other expense, was approximately $7.0 million and $4.7 million during the years ended December 31, 2024 and 2023, respectively.

Interest income included in other income, net of other expense, was $5.0 million and $7.0 million during the years ended December 31, 2025 and 2024, respectively.

Provision for Income Taxes

During the years ended December 31, 2024 and 2023, we recorded income tax provisions of $43.0 million and $26.2 million, respectively.

The effective tax rates for the respective periods are shown below:

The following table summarizes provision for income taxes and the respective effective tax rate during the periods presented ( in thousands, except percentages ):

Year Ended December 31,

Federal provision 21.0 % 21.0 %

State provision (5.7) % (3.0) %

Foreign rate differential (2.8) % 0.6 %

Change in valuation allowance (1)

(32.2) % 7.3 %

Goodwill impairment (2)

(22.4) % (28.3) %

Taxable gain in foreign jurisdiction (3)

Nondeductible compensation (1.2) % (0.6) %

Return to provision adjustments (1.3) % 0.6 %

Forfeit benefit due to merger/liquidations (4)

Income (loss) before income taxes

$ 336,159 $ (96,215)

Effective rate (44.7) % (14.5) %

Provision for income taxes

79,325 43,029 36,296 84.4 %

(1) The change in valuation allowance during the year ended December 31, 2024 reflected certain foreign subsidiaries’ operating losses.

The change in valuation allowance during the year ended December 31, 2023 was primarily due to the forfeit of tax benefits on merger or liquidation of foreign subsidiaries that maintained full valuation allowances on their deferred tax assets.

(2) During the years ended December 31, 2024 and 2023, we recorded a non-cash goodwill impairment charge of $100.6 million and $238.2 million at our Cabot reporting unit, respectively.

Refer to “Note 15:

Goodwill and Identifiable Intangible Assets” to our consolidated financial statements for further details.

(3) Represents taxable foreign currency movement recognized in a foreign subsidiary.

(4) Represents the forfeit of tax benefits on merger or liquidation of foreign subsidiaries that maintained full valuation allowances on their deferred tax assets during the year ended December 31, 2023.

Effective tax rate

For the year ended December 31, 2025, the difference between our effective tax rate and the federal statutory rate was primarily due to state income taxes, offset by other foreign adjustments.

For the year ended December 31, 2024, the difference between our effective tax rate and the federal statutory rate was primarily due to a non-cash goodwill impairment charge of $100.6 million at our Cabot reporting unit and a change in valuation allowance for certain foreign subsidiaries’ operating losses.

The change in our effective tax rate during the year ended December 31, 2025, as compared to 2024, was primarily due to the impact of the goodwill impairment charge and the change in valuation allowance recorded in 2024.

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.

Non-GAAP Disclosure

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2025 2024 2023

GAAP net (loss) income, as reported

GAAP net income (loss), as reported

$ 256,834 $ (139,244) $ (206,492)

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therefore, adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.

(3) During the years ended December 31, 2024 and 2023, we recorded a non-cash goodwill impairment charge of $100.6 million and $238.2 million, respectively.

(3) During the years ended December 31, 2024 and 2023, we recorded non-cash goodwill impairment charges 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.

(4) Collections applied to principal balance is calculated in the table below:

1 unchanged sentence

2025 2024 2023

Collections applied to investment in receivable portfolios, net $ 859,911 $ 658,130 $ 709,176

Collections applied to receivable portfolios, net

$ 1,136,991 $ 859,911 $ 658,130

Changes in recoveries

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We utilize proprietary forecasting models to continuously evaluate the economic life of each pool.

Cumulative Collections Money Multiple - Cumulative Collections from Purchased Receivables to Purchase Price Multiple

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

Cumulative Collections Money Multiple - Cumulative Collections from Receivable Portfolios to Purchase Price Multiple

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

Cumulative Collections through December 31, 2025

7 unchanged sentences

2025 1,169,613 — — — — — 293,593 293,593 0.3

2020 537,689 — — — — — — 213,450 430,514 311,573 194,522 127,555 1,277,614 2.4

2021 403,678 — — — — — — — 120,354 240,605 188,895 131,870 681,724 1.7

2022 549,533 — — — — — — — — 98,277 268,516 254,329 621,122 1.1

2023 807,309 — — — — — — — — — 184,182 471,838 656,020 0.8

2024 994,995 — — — — — — — — — — 238,635 238,635 0.2

Subtotal 11,100,841 14,692,377 1,641,698 1,354,932 1,314,582 1,571,654 1,949,299 22,524,542 2.0

5 unchanged sentences

2025 234,058 — — — — — 44,123 44,123 0.2

2020 104,940 — — — — — — 22,721 59,803 45,757 37,363 31,454 197,098 1.9

2021 242,825 — — — — — — — 43,082 66,529 58,515 52,278 220,404 0.9

2022 231,869 — — — — — — — — 36,957 70,385 64,555 171,897 0.7

2023 259,255 — — — — — — — — — 40,975 89,799 130,774 0.5

2024 353,182 — — — — — — — — — — 50,469 50,469 0.1

Subtotal 4,499,368 3,867,902 644,979 553,271 544,031 588,031 640,941 6,839,155 1.5

9 unchanged sentences

(4) Annual pool groups for other geographies have been aggregated for disclosure purposes.

Purchase Price Multiple - Total Estimated Collections from Purchased Receivables to Purchase Price Multiple

The following table summarizes our purchases, resulting historical gross collections, estimated remaining gross collections from purchased receivables, and purchase price multiple (in thousands, except multiples) :

Purchase Price Multiple - Total Estimated Collections from Receivable Portfolios to Purchase Price Multiple

The following table summarizes our purchases, resulting historical collections, estimated remaining collections from receivable portfolios, and purchase price multiple (in thousands, except multiples) :

Purchase Price (1)

1 unchanged sentence

Collections Total Estimated

Gross Collections Purchase Price Multiple (3)

Purchase Price Multiple (3)

United States:

5 unchanged sentences

2025 1,169,613 293,593 2,443,943 2,737,536 2.3

2020 537,689 1,277,614 274,934 1,552,548 2.9

2021 403,678 681,724 270,489 952,213 2.4

2022 549,533 621,122 517,472 1,138,594 2.1

2023 807,309 656,020 1,231,890 1,887,910 2.3

2024 994,995 238,635 2,092,352 2,330,987 2.3

Subtotal 11,100,841 22,524,542 6,042,716 28,567,258 2.6

5 unchanged sentences

2025 234,058 44,123 485,465 529,588 2.3

2020 104,940 197,098 120,280 317,378 3.0

2021 242,825 220,404 252,798 473,202 1.9

2022 231,869 171,897 263,336 435,233 1.9

2023 259,255 130,774 335,809 466,583 1.8

2024 353,182 50,469 695,102 745,571 2.1

Subtotal 4,499,368 6,839,155 3,600,866 10,440,021 2.3

7 unchanged sentences

(2) Cumulative collections from inception through December 31, 2025, excluding collections on behalf of others.

(3) Purchase Price Multiple represents total estimated gross collections divided by the purchase price.

(4) Includes portfolios acquired in connection with certain business combinations.

(3) Purchase Price Multiple represents total estimated collections divided by the purchase price.

(4) Annual pool groups for other geographies have been aggregated for disclosure purposes.

Estimated Remaining Gross Collections by Year of Purchase

The following table summarizes our estimated remaining gross collections from purchased receivable portfolios and estimated future cash flows from real estate-owned assets (in thousands) :

Estimated Remaining Gross Collections by Year of Purchase (1)

Estimated Remaining Collections by Year of Purchase

The following table summarizes our estimated remaining collections from receivable portfolios and estimated future cash flows from real estate-owned assets (in thousands) :

Estimated Remaining Collections by Year of Purchase (1)

2027 2028 2029 2030 2031 2032 2033 2034 >2034

6 unchanged sentences

2025 631,661 585,299 371,868 253,617 181,467 128,405 91,325 63,968 44,694 91,639 2,443,943

2020 86,557 60,147 40,788 27,821 18,927 12,644 8,799 6,206 4,388 8,657 274,934

2021 84,650 59,634 39,528 26,912 18,603 12,845 8,783 6,114 4,306 9,114 270,489

2022 168,280 110,188 75,135 49,788 34,372 24,460 17,364 12,089 8,374 17,422 517,472

2023 408,360 256,644 170,674 121,972 85,134 59,950 41,626 29,019 20,081 38,430 1,231,890

2024 542,741 511,967 322,406 214,981 151,775 106,720 75,768 53,087 37,067 75,840 2,092,352

Subtotal 1,804,039 1,345,750 884,351 608,320 429,113 302,664 213,211 148,274 103,108 203,886 6,042,716

5 unchanged sentences

2025 83,437 74,794 60,668 49,585 40,370 32,961 27,239 23,265 19,726 73,420 485,465

2020 24,016 18,820 14,795 11,690 9,447 7,756 6,450 5,429 4,597 17,280 120,280

2021 40,709 36,540 30,199 26,340 22,066 19,117 15,905 13,284 11,174 37,464 252,798

2022 50,168 41,476 34,246 27,391 22,310 18,130 15,038 12,446 10,044 32,087 263,336

2023 62,890 53,115 43,972 36,716 29,530 23,549 19,155 15,634 12,789 38,459 335,809

2024 115,279 104,300 85,419 70,653 57,820 47,208 38,974 32,921 28,507 114,021 695,102

Subtotal 584,757 507,628 424,787 355,934 297,625 251,079 214,840 185,978 161,201 617,037 3,600,866

6 unchanged sentences

________________________

(1) As of December 31, 2024, ERC for Zero Basis Portfolios includes approximately $38.9 million for purchased consumer and bankruptcy receivables in the United States.

(1) As of December 31, 2025, ERC for Zero Basis Portfolios includes $26.9 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 include approximately $25.4 million from non-accrual portfolios, primarily in other geographies.

ERC also include $16.5 million from non-accrual portfolios, primarily in other geographies.

(2) Represents the expected remaining gross cash collections over a 180-month period.

As of December 31, 2024, ERC for 84-month was:

United States $ 4,729,938

Europe 2,434,084

Other geographies 21,892

Portfolio ERC 7,185,914

REO ERC 60,485

Total ERC $ 7,246,399

(3) Includes portfolios acquired in connection with certain business combinations.

As of December 31, 2025, ERC for 84-month was $8,264.6 million.

(3) Annual pool groups for other geographies have been aggregated for disclosure purposes.

(5) Real estate-owned assets (“REO”) ERC includes approximately $59.9 million and $0.6 million of estimated future cash flows for Europe and Other Geographies, respectively.

Estimated Future Collections Applied to Investment in Receivable Portfolios

As of December 31, 2024, we had $3.8 billion in investment in receivable portfolios.

The estimated future collections applied to the investment in receivable portfolios net balance is as follows (in thousands):

(4) Real estate-owned assets (“REO”) ERC includes $23.8 million and $0.4 million of estimated future cash flows for Europe and Other Geographies, respectively.

Estimated Future Collections Applied to Receivable Portfolios

As of December 31, 2025, we had $4.4 billion in receivable portfolios.

The estimated future collections applied to the receivable portfolios net balance is as follows (in thousands):

Years Ending December 31,

17 unchanged sentences

Total $ 2,810,234 $ 1,548,584 $ 12,714 $ 4,371,532

Headcount by Function by Geographic Location

The following table summarizes our headcount by function and by geographic location:

Headcount as of December 31,

2024 2023 2022

United States:

General & Administrative 1,040 999 929

Account Manager 424 407 306

Subtotal 1,464 1,406 1,235

General & Administrative 896 955 1,030

Account Manager 1,942 1,883 2,062

Subtotal 2,838 2,838 3,092

Other Geographies (1) :

General & Administrative 1,379 1,252 1,150

Account Manager 1,665 1,879 1,456

Subtotal 3,044 3,131 2,606

Total 7,346 7,375 6,933

________________________

(1) Headcount for other geographies includes employees in India and Costa Rica that service accounts originated in the United States.

Supplemental quarterly financial information

8 unchanged sentences

$ 300,159 $ 399,809 (25) %

GAAP net loss (2)

Net income (loss)

$ 76,657 $ (225,307) NM

GAAP loss per share (2)

Income (loss) per share

$ 3.37 $ (9.42) NM

__________________

(1) Includes U.S.

purchases of $295.3 million and $208.5 million, and Europe purchases of $199.8 million and $84.0 million in Q4 2024 and Q4 2023, respectively.

NM - Not meaningful.

2 unchanged sentences

(in thousands)

Revenue from receivable portfolios $ 336,666 $ 304,892

Portfolio revenue

$ 379,277 $ 336,666

Changes in recoveries 68,072 (95,760)

1 unchanged sentence

Servicing revenue

21,366 20,525

Other revenues 4,837 4,188

10 unchanged sentences

Total operating expenses 300,159 399,809

Loss from operations

Income (loss) from operations

173,393 (134,190)

2 unchanged sentences

Loss on extinguishment of debt (1,614) (7,832)

Other income (expense) 541 (2)

Total other expense (75,575) (75,789)

Loss before income taxes

Income (loss) before income taxes

97,818 (209,979)

(Provision) benefit for income taxes (15,328) 934

Net loss $ (225,307) $ (270,762)

Provision for income taxes

(21,161) (15,328)

Net income (loss)

$ 76,657 $ (225,307)

Quarterly revenues summary

Three Months Ended December 31,

2025 2024 $ Change % Change

Revenue recognized from portfolio basis $ 373,570 $ 331,560 $ 42,010 12.7 %

ZBA revenue 5,707 5,106 601 11.8 %

Portfolio revenue

379,277 336,666 42,611 12.7 %

Recoveries above forecast

57,087 26,944 30,143

Changes in expected future recoveries 10,985 (122,704) 133,689

Changes in recoveries 68,072 (95,760) 163,832 NM

Debt purchasing revenue 447,349 240,906 206,443 85.7 %

Servicing revenue

21,366 20,525 841 4.1 %

Other revenues 4,837 4,188 649 15.5 %

Total revenues $ 473,552 $ 265,619 $ 207,933 78.3 %

__________________

NM - Not meaningful.

Liquidity and Capital Resources

4 unchanged sentences

Net cash used in investing activities (242,586) (440,430) (401,941)

Net cash provided by (used in) financing activities 317,774 268,300 (107,445)

Net cash provided by financing activities 44,854 317,774 268,300

Operating Cash Flows

4 unchanged sentences

During the year ended December 31, 2023, we recorded a goodwill impairment of $238.2 million and an impairment of intangible assets of $18.7 million.

Changes in recoveries increased the operating cash flows by $89.7 million, and $82.5 million during the years ended December 31, 2024, and 2023, respectively.

Changes in recoveries decreased the operating cash flows by $93.1 million during the year ended December 31, 2022.

Changes in recoveries decreased the operating cash flows by $208.8 million during the year ended December 31, 2025 and increased the operating cash flows by $89.7 million, and $82.5 million during the years ended December 31, 2024, and 2023, respectively.

Refer to “Note 4:

Investment in Receivable Portfolios, Net” in the notes to our consolidated financial statements for discussion relating to changes in recoveries.

Receivable Portfolios, Net” in the notes to our consolidated financial statements for discussion relating to changes in recoveries.

Investing Cash Flows

6 unchanged sentences

Financing Cash Flows

Net cash provided by financing activities was $317.8 million, and $268.3 million during the years ended December 31, 2024 and 2023, respectively.

Net cash used in financing activities was $107.4 million during the year ended December 31, 2022.

Net cash provided by financing activities was $44.9 million, $317.8 million, and $268.3 million during the years ended December 31, 2025, 2024, and 2023, 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.

1 unchanged sentence

Repayments of amounts outstanding under our credit facilities were $1,359.0 million, $1,868.1 million, and $989.6 million during the years ended December 31, 2025, 2024, and 2023, respectively.

During the year ended December 31, 2024, we issued $1.0 billion in senior secured notes (of which $500.0 million matures in 2029 and $500.0 million matures in 2030).

We used a portion of the proceeds from the senior secured notes issuance to repay drawings under our Global Senior Facility.

Proceeds from the issuance of senior secured notes were $104.2 million during the year ended December 31, 2023.

Using drawings from its Global Senior Facility and cash on hand, we fully redeemed the Encore 2025 Notes and the Encore 2026 Notes in the fourth quarter of 2024.

The total repayments of senior secured notes were $789.1 million, $39.1 million, and $39.1 million during the years ended December 31, 2024, 2023, and 2022, respectively.

Additionally, in connection with the early redemptions of the Encore 2025 Notes and the Encore 2026 Notes, we settled the corresponding 2020 Euro Swaps and the 2023 GBP Swaps on the respective loan redemption date for approximately $40.0 million in cash.

During the year ended December 31, 2025, we issued $500.0 million 6.625% in senior secured notes that mature in 2031.

We used a portion of proceeds from this offering to pay down drawings under our Global Senior Facility.

Proceeds from the issuance of senior secured notes were $1.0 billion and $104.2 million during the years ended December 31, 2024, and 2023, respectively.

In 2025, we repaid €100.0 million (approximately $117.5 million based on an exchange rate of $1.00 to €0.85, the exchange rate as of December 31, 2025) of the principal outstanding under our 2028 Floating Rate Notes using borrowings from our Global Senior Facility.

Repayments of senior secured notes were $789.1 million, and $39.1 million during the years ended December 31, 2024, and 2023, respectively.

During the year ended December 31, 2025, we settled our $100.0 million 3.25% 2025 convertible notes using borrowings from our Global Senior Facility.

During the year ended December 31, 2023, we issued $230.0 million 4.00% convertible senior notes that mature in 2029, and used $212.5 million in cash to repurchase and settle our exchangeable senior notes due 2023.

We repaid $221.2 million of convertible senior notes using cash on hand during the year ended December 31, 2022.

During the year ended December 31, 2024, in connection with the early redemptions of our senior secured notes due 2026 and 2026, we settled the corresponding cross currency swaps on the respective loan redemption date for $40.0 million in cash.

Repayments of other debt were $42.5 million, $22.1 million, and $12.7 million during the years ended December 31, 2025, 2024, and 2023, respectively.

Capital Resources

Our primary sources of capital are cash collections from our investment in receivable portfolios, bank borrowings, debt offerings, and equity offerings.

Our primary sources of capital are cash collections from our receivable portfolios, bank borrowings, debt offerings, and equity offerings.

Depending on the capital markets, we consider additional financings to fund our operations and any potential acquisitions.

4 unchanged sentences

Available capacity under our Global Senior Facility was $814.3 million as of December 31, 2025.

In March 2024, we issued $500.0 million in aggregate principal amount of 9.250% Senior Secured Notes due 2029 at an issue price of 100.000% through a private placement offering.

Additionally, in May 2024, we issued $500.0 million in aggregate principal amount of 8.500% Senior Secured Notes due 2030 at an issue price of 100.000% through a separate private placement offering.

In October 2024, we fully redeemed the Encore 2025 Notes at par using drawings from our Global Senior Facility and cash on hand.

The Global Senior Facility was subsequently upsized by $92.0 million from $1,203.0 million to $1,295.0 million in October 2024.

In November, 2024, we fully redeemed the Encore 2026 Senior Secured Notes at par using drawings from our Global Senior Facility and cash on hand.

Our Board of Directors has approved a $300.0 million share repurchase program.

On October 1, 2025, we issued $500.0 million in aggregate principal amount of 6.625% Senior Secured Notes due April 2031 at an issue price of 100.000% through a private placement offering.

Also on October 1, 2025, we settled our $100.0 million 2025 Convertible Notes in cash for $106.2 million, of which $6.2 million (the excess above the principal amount) represented the conversion spread.

In November 2025, we repaid €100.0 million (approximately $117.5 million based on an exchange rate of $1.00 to €0.85, the exchange rate as of December 31, 2025) of the principal outstanding under our 2028 Floating Rate Notes.

This repayment was funded by borrowings from our Global Senior Facility.

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 year ended December 31, 2022, we repurchased 1,497,184 shares of our common stock for approximately $86.9 million under the share repurchase program.

During the year ended December 31, 2025, we repurchased 2,117,733 shares of our common stock for $89.5 million under the share repurchase program.

We did not make any repurchases under the share repurchase program during the years ended December 31, 2024 and 2023.

13 unchanged sentences

Contractual Obligations Total Less

1 Year 1 – 3 Years 3 – 5 Years More

Principal payments on debt $ 4,032,798 $ 21,015 $ 4,011,783

9 unchanged sentences

(1) Estimated interest payments are calculated based on outstanding principal amounts, applicable fixed interest rates or currently effective interest rates as of December 31, 2025 for variable rate debt, timing of scheduled payments and the term of the debt obligations.

(2) We had approximately $7.9 million of liabilities and accrued interests related to uncertain tax positions as of December 31, 2024.

We are unable to reasonably estimate the timing of the cash settlement with the tax authorities due to uncertainties related to these tax matters and, as a result, these obligations are not included in the table.

See “Note 11:

Income Taxes” in the notes to our consolidated financial statements for additional information on our uncertain tax positions.

Critical Accounting Estimates

5 unchanged sentences

We have reviewed our critical accounting policies and estimates with the audit committee of our board of directors.

Investment in Receivable Portfolios and Related Revenue

Receivable Portfolios and Related Revenue

Receivable portfolio purchases are aggregated into pools based on similar risk characteristics.

11 unchanged sentences

Debt purchasing revenue includes two components:

(1) Revenue from receivable portfolios, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR) and also includes all revenue from zero basis portfolio (“ZBA”) collections, and

(1) Portfolio revenue, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR) and also includes all revenue from zero basis portfolio (“ZBA”) collections, and

(2) Changes in recoveries, which includes:

4 unchanged sentences

Factors that may change the expected future recoveries may include both internal as well as external factors.

Internal factors include operational performance, such as capacity and the productivity of our collection staff.

Internal factors include operational performance, such as capacity, the productivity of our collection staff, and the deployment of technologies and digital capabilities.

External factors that may have an impact on our collections include macroeconomic conditions, new laws or regulations, and new interpretations of existing laws or regulations.

During the fourth quarter of 2024, we deployed a new U.K.

forecasting model that develops expected future recoveries for investment in receivable portfolios at Cabot.

As part of the new model development process, management updated certain model inputs driven by collection experience, operational performance and recent changes in collection strategies.

This new forecasting model was applied to all vintages, which resulted in a change in the estimate of expected future recoveries.

This change in estimate had no effect on past periods.

We develop a “best estimate” of our expected future recoveries based on reasonable and supportable information at each reporting period.

We evaluate our estimates in light of developing information.

Future changes to internal and external factors that affect our collection forecasts could have a material adverse effect on our financial condition, results of operations, and cash flows.

Investment in Receivable Portfolios, Net” to our consolidated financial statements for further discussion of investment in receivable portfolios.

Receivable Portfolios, Net” to our consolidated financial statements for further discussion of receivable portfolios.

Valuation of Goodwill

2 unchanged sentences

Goodwill is tested annually for impairment and in interim periods if events or changes in circumstances indicate that the assets may be impaired.

We perform our annual goodwill impairment assessment at the reporting unit level as of the first day of the fourth quarter, and any impairment charges resulting from this process are reported in the fourth quarter.

We perform our annual goodwill impairment assessment at the reporting unit level.

Effective for the year ended December 31, 2025, we changed our annual goodwill impairment testing date from the first day of the fourth quarter to the last day of the fourth quarter to better align with our annual budgeting process.

Any impairment charges resulting from this impairment assessment process are reported in the fourth quarter.

We first assess qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test.

10 unchanged sentences

However, they are a non-cash charge and could adversely affect our financial results in the period recognized.

As described further in “Note 15:

Goodwill and Identifiable Intangible Assets” to our consolidated financial statements, we performed goodwill impairment tests in the fourth quarter of 2024 and recorded a goodwill impairment charge of $100.6 million at our Cabot reporting unit.

The carrying value of our Cabot reporting unit was equal to its fair value immediately after the goodwill impairment was recorded.

We continue to evaluate and monitor all key factors impacting the goodwill carried at the Cabot reporting unit.

Adverse changes in our actual or expected operating results, our market capitalization, business climate, economic factors or other negative events could result in further goodwill impairment at our Cabot reporting unit.

The goodwill balance relating to the MCM, Cabot, and LAAP reporting units was $148.9 million, $347.6 million, and $11.3 million, respectively, as of December 31, 2024.

Recent Accounting Pronouncements

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis