What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2026-02-25 compared with 2025-02-26 · 296 added, 346 removed, 1222 unchanged (34% of the section changed)

12 unchanged sentences

Changes in Internal Control over Financial Reporting

Other than new controls related to changes to the systems and processes used to forecast estimated future collections for our investment in receivable portfolios in the UK, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated statements of financial condition of the Company as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive (loss) income, equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 26, 2025 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated statements of financial condition of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income (loss), equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 25, 2026 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Item 9A, Management’s Report on Internal Control over Financial Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

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We have adopted policies and procedures that govern the purchase, sale, or other dispositions of our securities by directors, officers and employees, other covered persons and the Company itself, that we believe are reasonably designed to promote compliance with insider trading laws, rules, and regulations and any applicable listing standards.

A copy of our Insider Trading Policy is filed with this Annual Report on Form 10-K as Exhibit 19.

A copy of our Insider Trading Policy is included as Exhibit 19 to this Annual Report on Form 10-K.

The other information required by this item is incorporated by reference to our Proxy Statement for our 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2025.

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Equity

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S-3 333-163876 4.7 12/21/2009

4.13 Indenture (including form of note), dated September 9, 2019, by and among Encore Capital Group, Inc., Midland Credit Management, Inc., as guarantor, and MUFG Union Bank, N.A., as trustee for 2025 Convertible Notes

8-K 000-26489 4.1 9/10/2019

4.13.1 First Supplemental Indenture, dated October 29, 2020, to the Indenture, dated as of September 9, 2019, by and among Encore Capital Group, Inc., Midland Credit Management, Inc., as guarantor, and MUFG Union Bank, N.A., as trustee

10-Q 000-26489 4.7 11/2/2020

4.14 Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

2 unchanged sentences

8-K 000-26489 4.1 12/21/2020

Incorporated By Reference

Exhibit Number Exhibit Description Form File Number Exhibit Filing Date Filed or Furnished Herewith

4.17.1 First Supplemental Indenture, dated November 14, 2022, to the Indenture, dated December 21, 2020, by and between Encore Capital Group, Inc., the subsidiary guarantors party thereto, Citibank, N.A., London Branch as trustee and Truist Bank as security agent for Encore 2028 Floating Rate Notes

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8-K 000-26489 4.1 6/1/2021

Incorporated By Reference

Exhibit Number Exhibit Description Form File Number Exhibit Filing Date Filed or Furnished Herewith

4.18.1 First Supplemental Indenture, dated November 14, 2022, to the Indenture, dated June 1, 2021, by and between Encore Capital Group, Inc., the subsidiary guarantors party thereto, GLAS Trust Company LLC as trustee and Truist Bank as security agent for Encore 2028 Notes

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8-K 000-26489 4.1 5/21/2024

Indenture dated October 1, 2025 between Encore Capital Group, Inc., the subsidiary guarantors party thereto, GLAS Trust Company LLC as trustee and Truist Bank as security agent

8-K 000-26489 4.1 10/2/2025

10.1+ Form of Indemnification Agreement

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8-K 000-26489 10.6 6/20/2017

Incorporated By Reference

Exhibit Number Exhibit Description Form File Number Exhibit Filing Date Filed or Furnished Herewith

10.11.4+ Form of Stock Option Grant Notice and Award Agreement under the Encore Capital Group, Inc.

2017 Incentive Award Plan

8-K 000-26489 10.7 6/20/2017

10.11.5+ Form of Performance Share Unit Award Grant Notice and Award Agreement (EPS) under the Encore Capital Group, Inc.

2017 Incentive Award Plan (Executive Separation Plan Participant)

8-K 000-26489 10.1 3/15/2018

10.11.6+ Form of Performance Share Unit Award Grant Notice and Award Agreement (EPS) under the Encore Capital Group, Inc.

2017 Incentive Award Plan

8-K 000-26489 10.2 3/15/2018

10.11.7+ Form of Performance Share Unit Award Grant Notice and Award Agreement (TSR) under the Encore Capital Group, Inc.

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8-K 000-26489 10.3 3/15/2018

Incorporated By Reference

Exhibit Number Exhibit Description Form File Number Exhibit Filing Date Filed or Furnished Herewith

10.11.8+ Form of Performance Share Unit Award Grant Notice and Award Agreement (TSR) under the Encore Capital Group, Inc.

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8-K 000-26489 10.1 10/23/2024

Amendment Letter, dated May 22, 2025, to the Amended and Restated Senior Facilities Agreement, dated October 17, 2024, by and among Encore Capital Group, Inc., the several guarantors, banks and other financial institutions and lenders from time to time party thereto and Truist Bank as Agent and Security Agent

8-K 000-26489 10.1 5/23/2025

Form of Capped Call Confirmations for 2029 Convertible Notes

000-26489 10.1 3/3/2023

International Assignment Agreement with John Yung dated July 31, 2023

Employment offer letter by and between Encore Capital Group, Inc.

and Tomas Hernanz dated March 31, 2025

10-Q 000-26489 10.1+ 5/7/2025

10.30+ Transition and Consulting Agreement by and between Encore Capital Group, Inc.

and Jona than Clark dated March 28, 2025

10-Q 000-26489 10.2+

Insider Trading Policy

000-26489 19 2/26/2025

21 List of Subsidiaries

6 unchanged sentences

000-26489 97.1

Incorporated By Reference

Exhibit Number Exhibit Description Form File Number Exhibit Filing Date Filed or Furnished Herewith

101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document X

101.SCH Inline XBRL Taxonomy Extension Schema Document X

Incorporated By Reference

Exhibit Number Exhibit Description Form File Number Exhibit Filing Date Filed or Furnished Herewith

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X

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(Principal Executive Officer) February 25, 2026

/s/ J ONATHAN C.

/s/ T OMAS H ERNANZ

Executive Vice President,

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(Principal Financial and Accounting Officer) February 25, 2026

Tomas Hernanz

/s/ W ILLIAM C.

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Equity

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Derivatives and Hedging Instruments

Investment in Receivable Portfolios, Net

Receivable Portfolios, Net

Composition of Certain Financial Statement Items

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Segment and Geographic Information

Goodwill and Identifiable Intangible Assets

Report of Independent Registered Public Accounting Firm

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We have audited the accompanying consolidated statements of financial condition of Encore Capital Group, Inc.

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive (loss) income, equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

(the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, and comprehensive income (loss), equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

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Estimate of Expected Future Recoveries on Purchased Credit Deteriorated Assets

As described in Note 4 to the consolidated financial statements, the Company’s investment in receivable portfolios, net balance was approximately $3.8 billion at December 31, 2024 and the resulting changes in recoveries for the year ended December 31, 2024 was a decrease of $89.7 million.

As more fully described in Notes 1 and 4 to the consolidated financial statements, investment in receivable portfolios, net is comprised of purchased loans that have experienced significant deterioration of credit quality since origination.

As described in Note 4 to the consolidated financial statements, the Company’s receivable portfolios, net balance was approximately $4.4 billion at December 31, 2025 and the resulting changes in recoveries for the year ended December 31, 2025 was an increase of $208.8 million.

As more fully described in Notes 1 and 4 to the consolidated financial statements, receivable portfolios, net is comprised of purchased loans that have experienced significant deterioration of credit quality since origination.

In accordance with the Company’s charge-off policy, each individual loan is deemed to be uncollectible.

Receivable portfolio purchases are aggregated based on similar risk characteristics (“pool”), and a negative allowance is established based on expected future recoveries of the pool using a discounted cash flow approach.

Subsequent changes (favorable and unfavorable) in expected future recoveries are recognized within changes in recoveries in the consolidated statements of income.

Subsequent changes (favorable and unfavorable) in expected future recoveries are recognized within changes in recoveries in the consolidated statements of operations.

The Company reviews each pool for current trends, actual versus expected performance, and expected timing of future recoveries (curve shape).

The Company then re-forecasts the timing and amounts of expected future recoveries.

We identified management’s judgements and assumptions used in the determination of the estimate of expected future recoveries on purchased credit deteriorated assets as a critical audit matter.

We identified certain assumptions used in the determination of the estimate of expected future recoveries on purchased credit deteriorated assets as a critical audit matter.

Estimated future recoveries are based on historical experience, current conditions and reasonable and supportable forecasts.

Auditing such judgments and assumptions required a high degree of auditor judgment and an increased auditor effort, including the extent of specialized skills and knowledge needed.

Auditing such assumptions required a high degree of auditor judgment and an increased auditor effort.

The primary procedures we performed to address this critical audit matter included:

• Testing the design and operating effectiveness of controls over management’s assessment of the reasonableness of inputs to and outputs from the Company’s proprietary statistical and behavioral models used to forecast expected future recoveries, and performance monitoring of expected future recoveries, which included the observation of certain key governance meetings.

• Testing the collection data used by management to monitor each pool for current trends, actual versus expected performance, and the expected amount and timing of future recoveries (curve shape).

• Testing the existence and accuracy of collection data used by management to monitor each pool for current trends, actual versus expected performance, and the expected amount and timing of future recoveries (curve shape).

• Evaluating management’s process used to develop estimates of expected future recoveries and certain qualitative factors by:

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and (ii) evaluating the reasonableness of assumptions by comparing to historical results, including current and past period forecasts to actual performance, recent performance trends, and curve shape.

• Utilizing personnel with specialized skill and knowledge in financial modeling to assist in assessing the appropriateness of certain assumptions, methodology used and the validity of the methods used to produce the model output of the new forecasting model.

Goodwill Impairment Assessment

As described in Note 15 to the consolidated financial statements, the Company’s goodwill balance was approximately $507.8 million at December 31, 2024, which was allocated between three reporting units, MCM, Cabot and LAAP.

Subsequent to the annual impairment assessment, the Company identified a triggering event during the fourth quarter of 2024, indicating the fair value of the goodwill at the Cabot reporting unit may be below its carrying value due to the significant reduction in the estimated future recoveries for the Company’s investment in receivable portfolios at Cabot.

As a result, the Company performed a quantitative goodwill impairment assessment for both the MCM and Cabot reporting units as of December 31, 2024.

This analysis utilized a combination of the income and the market approaches.

As described in Note 15 to the consolidated financial statements, the Company’s goodwill balance was approximately $536.3 million at December 31, 2025, which was allocated between three reporting units, MCM, Cabot and EARC.

The Company performed its annual goodwill impairment assessment as of December 31, 2025, and determined that the fair value of each reporting unit was in excess of its carrying value.

For the MCM and Cabot reporting units, management performed a quantitative analysis, which utilized a combination of the income and the market approaches.

The Company also evaluated the aggregate fair value of its reporting units to its aggregate market capitalization at the testing date.

Management determined that the fair value of the Cabot reporting unit was less than its carrying value and recorded an impairment charge of $100.6 million.

We identified the December 31, 2024 goodwill impairment assessment of the MCM and Cabot reporting units as a critical audit matter because of the significant assumptions and judgments management made as part of the assessment to estimate the fair value of the reporting units.

We identified certain assumptions used in the December 31, 2025, goodwill impairment assessment of the MCM and Cabot reporting units as a critical audit matter because of the judgments management made as part of the assessment to estimate the fair value of the reporting units.

The income approach required significant management assumptions, such as certain assumptions used in the cash flow forecasts, the discount rate, and the terminal value.

The market approach required significant management judgment in the selection of appropriate peer group companies and valuation multiples.

Auditing such judgments and assumptions required a high degree of auditor judgment due to the nature and extent of auditor effort, including the extent of specialized skill and knowledge needed.

Auditing such assumptions required a high degree of auditor judgment due to the nature and extent of auditor effort, including the extent of specialized skill and knowledge needed.

The primary procedures we performed to address this critical audit matter included:

• Evaluating management’s process for developing fair value estimates determined using the income and market approaches including testing the relevance and reliability of underlying data, and evaluating significant management assumptions to historical results and market participant data.

• Recalculating the impairment charge to the Cabot reporting unit based on the difference between the fair value and carrying value of the goodwill.

• Testing the reconciliation of the fair value of the Company’s reporting units to the indicated market capitalization of the Company, as a whole.

• Evaluating management’s process for developing fair value estimates determined using the income and market approaches including assessing the relevance and reliability of underlying data and comparing certain assumptions to historical results and market participant data.

• Comparing the reconciliation of the fair value of the Company’s reporting units to the indicated market capitalization of the Company, as a whole.

• Utilizing personnel with specialized skill and knowledge in valuation to assist in:

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Cash and cash equivalents $ 156,784 $ 199,865

Investment in receivable portfolios, net 3,776,369 3,468,432

Receivable portfolios, net

4,371,532 3,776,369

Property and equipment, net 82,080 80,597

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Cash and cash equivalents $ 40,256 $ 23,875

Investment in receivable portfolios, net 895,704 717,556

Receivable portfolios, net

1,151,221 895,704

Other assets 3,540 3,699

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2025 2024 2023

Revenue from receivable portfolios $ 1,302,567 $ 1,204,437 $ 1,202,361

Portfolio revenue

$ 1,455,795 $ 1,302,567 $ 1,204,437

Changes in recoveries 208,771 ( 89,740 ) ( 82,530 )

1 unchanged sentence

Servicing revenue

88,388 84,783 83,136

Other revenues 15,848 18,751 17,637

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Total other expense ( 290,488 ) ( 253,545 ) ( 196,799 )

(Loss) income before income taxes

Income (loss) before income taxes

336,159 ( 96,215 ) ( 180,264 )

Provision for income taxes ( 79,325 ) ( 43,029 ) ( 26,228 )

Net (loss) income

Net income (loss)

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

(Loss) income per share:

Income (loss) per share:

Basic $ 11.05 $ ( 5.83 ) $ ( 8.72 )

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ENCORE CAPITAL GROUP, INC.

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Statements of Comprehensive Income (Loss)

(In Thousands)

1 unchanged sentence

2025 2024 2023

Net (loss) income

Net income (loss)

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

Other comprehensive loss, net of tax:

Change in unrealized (loss) gain on derivative instruments:

Unrealized (loss) gain on derivative instruments

Other comprehensive income (loss), net of tax:

Change in unrealized gain (loss) on derivative instruments:

Unrealized gain (loss) on derivative instruments

1,753 ( 13,627 ) ( 44,478 )

Income tax effect ( 419 ) 352 4,891

Unrealized (loss) gain on derivative instruments, net of tax

Unrealized gain (loss) on derivative instruments, net of tax

1,334 ( 13,275 ) ( 39,587 )

Change in foreign currency translation:

Unrealized (loss) gain on foreign currency translation

Unrealized gain (loss) on foreign currency translation

32,795 ( 29,081 ) 15,376

Income tax effect ( 106 ) 720 ( 893 )

Unrealized (loss) gain on foreign currency translation

Unrealized gain (loss) on foreign currency translation

32,689 ( 24,935 ) 14,483

Other comprehensive loss, net of tax

Other comprehensive income (loss), net of tax

34,023 ( 38,210 ) ( 25,104 )

Comprehensive (loss) income

Comprehensive income (loss)

$ 290,857 $ ( 177,454 ) $ ( 231,596 )

7 unchanged sentences

Comprehensive

(Loss) Income

Balance as of December 31, 2022

23,323 $ 233 $ — $ 1,278,210 $ ( 98,816 ) $ 1,179,627

Net income — — — 194,564 — 194,564

— — — ( 206,492 ) — ( 206,492 )

Other comprehensive loss, net of tax — — — — ( 25,104 ) ( 25,104 )

Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes 222 2 ( 5,108 ) — — ( 5,106 )

Repurchase and retirement of common stock ( 1,497 ) ( 15 ) ( 10,659 ) ( 76,332 ) — ( 87,006 )

Stock-based compensation — — 13,854 — — 13,854

Purchase of capped call options, net of tax effect — — ( 13,865 ) — — ( 13,865 )

Unwind of the existing capped call options — — 30,913 — — 30,913

Settlement of convertible senior notes — — ( 14,742 ) ( 22,547 ) — ( 37,289 )

Other — — ( 794 ) — — ( 794 )

Balance as of December 31, 2023

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— — — — ( 41,636 ) ( 41,636 )

Exercise of stock options and issuance of share-based awards, net of shares withheld for employee taxes 222 2 ( 5,108 ) — — ( 5,106 )

Issuance of share-based awards, net of shares withheld for employee taxes 146 2 ( 5,767 ) — — ( 5,765 )

Stock-based compensation — — 14,012 — — 14,012

Purchase of capped call options, net of tax effect — — ( 13,865 ) — — ( 13,865 )

Unwind of the existing capped call options — — 30,913 — — 30,913

Settlement of convertible senior notes — — ( 14,742 ) ( 22,547 ) — ( 37,289 )

— — — — 3,426 3,426

Balance as of December 31, 2024

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— — — 256,834 — 256,834

Other comprehensive loss, net of tax

Other comprehensive income, net of tax

— — — — 34,023 34,023

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115 1 ( 3,100 ) — — ( 3,099 )

Repurchase and retirement of common stock ( 2,118 ) ( 21 ) ( 28,260 ) ( 62,121 ) — ( 90,402 )

Stock-based compensation — — 18,269 — — 18,269

Other — — — — 3,426 3,426

Settlement of convertible senior notes — — ( 6,206 ) — — ( 6,206 )

Balance as of December 31, 2025

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Operating activities:

Net (loss) income

Net income (loss)

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

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 28,760 32,434 41,737

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Purchases of receivable portfolios, net of put-backs ( 1,389,064 ) ( 1,336,442 ) ( 1,060,206 )

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

Collections applied to receivable portfolios

1,136,991 859,911 658,130

Purchases of real estate owned

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Repayment of convertible senior notes ( 106,206 ) — ( 212,480 )

Repayment of other debt

( 42,469 ) ( 22,078 ) ( 12,715 )

Payments to settle derivative instruments

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Other, net ( 4,137 ) 27,055 5,675

Net cash provided by (used in) financing activities

Net cash provided by financing activities

44,854 317,774 268,300

Net increase (decrease) in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

( 44,533 ) 33,512 19,350

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Cash paid for income taxes, net of refunds 54,766 67,091 68,522

Supplemental schedule of non-cash investing and financing activities:

Investment in receivable portfolios transferred to real estate owned $ 5,966 $ 7,957 $ 1,903

Supplemental schedule of non-cash investing activities:

Receivable portfolios transferred to real estate owned

$ 3,739 $ 5,966 $ 7,957

See accompanying notes to consolidated financial statements

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and its domestic affiliates (collectively, “MCM”), the Company is a market leader in portfolio purchasing and recovery in the United States.

Through Cabot Credit Management Limited (“CCM”) and its subsidiaries and European affiliates (collectively, “Cabot”) the Company is one of the largest credit management services providers in Europe and the United Kingdom.

Through Cabot Credit Management Limited and its subsidiaries and European affiliates (collectively, “Cabot”), the Company is one of the largest credit management services providers in Europe and the United Kingdom.

These are the Company’s primary operations.

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On January 1, 2025, the Company adopted Accounting Standard Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

The ASU requires disclosure of the measure of segment performance, significant segment expenses, and segment assets that are regularly provided to the Chief Operating Decision Maker.

The ASU also includes amendments that expand other existing reportable segment disclosure.

The Company adopted ASU 2023-07 using the retrospective approach.

The Company expanded its segment reporting disclosure as a result of adopting this new accounting standard.

Recent Accounting Standards or Updates Not Yet Effective

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

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The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes.

The new standard is effective for annual periods beginning after December 15, 2024.

The Company does not expect a material impact on its consolidated financial statements and related disclosures.

The Company adopted ASU 2023-09 using the prospective approach.

The Company expanded its income tax disclosure as a result of adopting this new accounting standard.

Recent Accounting Standards or Updates Not Yet Effective

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

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The new standard is effective for annual periods beginning after December 15, 2025.

The Company is currently evaluating the potential impact, but we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements and related disclosures.

The Company is currently evaluating the potential impact, but does not expect the adoption of this guidance to have a material impact on its consolidated financial statements and related disclosures.

In November 2025, the FASB issued ASU 2025-08, Financial Instruments - Credit Losses (Topic 326):

Purchased loans.

Under ASU 2025-08, loans acquired without credit deterioration and deemed “seasoned” will be considered purchased seasoned loans and accounted for using the gross-up approach at acquisition.

The amendments in this update also clarify the recognition and measurement guidance for purchased seasoned loans, including the determination of the initial allowance for credit losses and the subsequent accounting for changes in expected credit losses.

The new guidance is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted.

The Company is currently evaluating the potential impact, but does not expect the adoption of this guidance to have a material impact on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements.

ASU 2025-09 introduces targeted amendments intended to further align hedge accounting with an entity’s risk management activities and to simplify the application of certain aspects of the hedge accounting guidance in ASC 815.

The new standard is effective for annual periods beginning after December 15, 2026, with early adoption permitted.

The Company is currently evaluating the potential impact, but does not expect the adoption of this guidance to have a material impact on its consolidated financial statements and related disclosures.

Use of Estimates

The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

On an ongoing basis, the Company evaluates significant estimates, including estimated future recoveries on its investment in receivable portfolios, fair value of goodwill, and income taxes, among others.

On an ongoing basis, the Company evaluates significant estimates, including estimated future recoveries on its receivable portfolios, fair value of goodwill, and income taxes, among others.

The Company bases its estimates on assumptions, both historical and forward looking, that are believed to be reasonable.

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Cash and cash equivalents consist of highly liquid investments with maturities of three months or less at the date of purchase.

The Company maintains its cash and cash equivalents in multiple financial institutions and certain account balances exceed federally insurable limits.

The Company maintains its cash and cash equivalents in multiple financial institutions and certain account balances exceed federally insurable limits, which exposes the Company to credit risk.

To date, the Company has experienced no loss or lack of access to cash in its bank accounts.

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The balance of cash held for clients was $ 22.5 million and $ 21.5 million as of December 31, 2025 and 2024, respectively.

Investment in Receivable Portfolios

Receivable Portfolios

The Company purchases portfolios of loans that have experienced significant deterioration of credit quality since origination from banks and other financial institutions.

2 unchanged sentences

Since each loan is deeply delinquent and deemed uncollectible at the individual loan level, the Company applies its charge-off policy and fully writes-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables immediately after purchasing the portfolio.

The Company then records 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 ultimately equals the amount paid for a portfolio purchase and presented as “Investment in receivable portfolios, net” in the Company’s consolidated statements of financial condition.

The Company then records 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 ultimately equals the amount paid for a portfolio purchase and presented as “Receivable portfolios, net” in the Company’s consolidated statements of financial condition.

The discount rate is an effective interest rate (or “purchase EIR”) based on the purchase price of the portfolio and the expected future cash flows at the time of purchase.

The amount of the negative allowance (i.e., investment in receivable portfolios) will not exceed the total amortized cost basis of the loans written-off.

The amount of the negative allowance (i.e., receivable portfolios) will not exceed the total amortized cost basis of the loans written-off.

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

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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

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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 the Company’s collection staff.

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

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

The Company elected not to maintain its previously formed pool groups with amortized costs at transition.

Certain pools already fully recovered their cost basis and became ZBA prior to the transition.

The Company did not establish a negative allowance from ZBA pools as the Company elected the Transition Resource Group for Credit Losses’ practical expedient to retain the integrity of its legacy pools.

All subsequent collections to the ZBA pools are recognized as ZBA revenue, which is included in revenue from receivable portfolios in the Company’s consolidated statements of operations.

Transfers of Financial Assets

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The Company typically invoices for its services monthly with payment terms of 30 days.

Goodwill and Other Intangible Assets

Goodwill represents the excess of purchase price over the value assigned to tangible and identifiable intangible assets, liabilities assumed, and noncontrolling interest of businesses acquired.

Acquired intangible assets other than goodwill are amortized over their useful lives unless the lives are determined to be indefinite.

Goodwill is tested at the reporting unit level annually for impairment and in interim periods if certain events occur indicating the fair value of a reporting unit may be below its carrying value.

See “Note 15:

Goodwill and Identifiable Intangible Assets” for further discussion of the Company’s goodwill and other intangible assets.

Goodwill” for further discussion of the Company’s goodwill.

Property and Equipment

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decrease the respective valuation allowance, with a corresponding positive adjustment to earnings.

The calculation of tax liabilities involves significant judgement in estimating the impact and timing of resolution of uncertainties in the application of complex tax laws.

The calculation of tax liabilities involves significant judgment in estimating the impact and timing of resolution of uncertainties in the application of complex tax laws.

Resolution of these uncertainties in a manner inconsistent with the Company’s expectations could have a material impact on the Company’s results of operation and financial position.

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The number of shares used to calculate the diluted earnings per share is computed by using the basic weighted-average number of common shares outstanding plus any potentially dilutive potential common shares outstanding during the period, except when their effect is anti-dilutive.

Dilutive potential common shares include outstanding stock based awards, and the dilutive effect of the convertible and exchangeable senior notes, if applicable.

Dilutive potential common shares include outstanding stock based awards, and the dilutive effect of the convertible senior notes, if applicable.

A reconciliation of shares used in calculating income or loss per basic and diluted shares follows (in thousands, except per share amounts) :

1 unchanged sentence

2025 2024 2023

Net (loss) income

Net income (loss)

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

3 unchanged sentences

Total weighted-average dilutive shares outstanding 23,534 23,873 23,670

Basic (loss) income per share

Basic income (loss) per share

$ 11.05 $ ( 5.83 ) $ ( 8.72 )

Diluted (loss) income per share

Diluted income (loss) per share

$ 10.91 $ ( 5.83 ) $ ( 8.72 )

The Company had no employee stock options outstanding during the year ended December 31, 2024.

Anti-dilutive employee stock options outstanding were negligible during the years ended December 31, 2023, and 2022.

The Company had no employee stock options outstanding during the years ended December 31, 2025, and 2024.

Anti-dilutive employee stock options outstanding were negligible during the years ended December 31, 2023.

Fair Value Measurements

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Interest rate cap contracts $ — $ 252 $ — $ 252

Cross-currency swap agreements — 361 — 361

Interest rate swap agreements — ( 18,360 ) — ( 18,360 )

Cross-currency swap agreements — ( 28,039 ) — ( 28,039 )

Derivative Contracts:

The Company uses derivative instruments to manage its exposure to fluctuations in interest rates and foreign currency exchange rates.

Fair values of these derivative instruments are estimated using models that project future cash flows and

discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign currency exchange rates, and forward and spot prices for currencies.

Contingent Consideration:

The Company carries certain contingent liabilities resulting from its mergers and acquisition activities.

Certain sellers of the Company’s acquired entities could earn additional earn-out payments in cash based on the entities’ subsequent operating performance.

The Company recorded the acquisition date fair values of these contingent liabilities, based on the likelihood of contingent earn-out payments, as part of the consideration transferred.

The earn-out payments are subsequently remeasured to fair value at each reporting date, based on actual and forecasted operating performance.

All of the Company’s contingent consideration obligations were fully resolved as of December 31, 2022.

There were no new contingent liabilities resulted from mergers and acquisitions activities for the years ended December 31, 2024 and 2023.

The following table provides a roll-forward of the fair value of contingent consideration, for the year ended December 31, 2022 (in thousands) :

Balance as of December 31, 2021 $ 5,218

Change in fair value of contingent consideration 794

Payment of contingent consideration ( 5,273 )

Effect of foreign currency translation ( 739 )

Balance as of December 31, 2022 $ —

Fair values of these derivative instruments are estimated using models that project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign currency exchange rates, and forward and spot prices for currencies.

Non-Recurring Fair Value Measurement:

Certain assets are measured at fair value on a nonrecurring basis.

The fair values of goodwill and intangible assets are determined using various valuation techniques under Level 3 fair value hierarchy, refer to “Note 15, Goodwill and Identifiable Intangible Assets” for further details.

Goodwill and property and equipment are adjusted to fair value when an impairment charge is recognized.

Such fair values are determined using various valuation techniques under Level 3 fair value hierarchy.

REO assets are classified as held for sale at the lower of their carrying value or fair value less cost to sell.

The fair value of the assets held for sale and estimated selling expenses were determined at the time of initial recognition and in each reporting period using Level 3 measurements based on appraised values using market comparables.

The fair value estimate of the assets held for sale was approximately $ 38.1 million and $ 70.6 million as of December 31, 2024 and December 31, 2023, respectively.

The fair value estimate of the assets held for sale was $ 18.1 million and $ 38.1 million as of December 31, 2025 and December 31, 2024, respectively.

Financial Instruments Not Required To Be Carried At Fair Value

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$ 156,784 $ 156,784 $ 199,865 $ 199,865

Investment in receivable portfolios, net Level 3

Receivable portfolios, net

4,371,532 4,895,167 3,776,369 4,052,645

6 unchanged sentences

631,998 631,998 865,365 865,365

Encore private placement notes Level 2 — — 29,310 28,922

Senior secured notes (2)

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________________________

(1) Carrying amount represents historical cost, adjusted for any related debt discount.

(1) Only includes financial instruments not required to be carried at fair value.

Derivative instruments, which are required to be carried at fair value are excluded.

Investment in Receivable Portfolios:

The fair value of investment in receivable portfolios is measured by discounting the estimated future cash flows generated by the Company’s proprietary forecasting models.

(2) Carrying amount represents historical cost, adjusted for any related debt discount.

Receivable Portfolios:

The fair value of receivable portfolios is measured by discounting the estimated future cash flows generated by the Company’s proprietary forecasting models.

The key inputs include the estimated future gross cash flow, average cost to collect, and discount rate.

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The Company evaluates the use of these key inputs on an ongoing basis and refines the data as it continues to obtain better information from market participants in the debt recovery and purchasing business.

The Company’s convertible notes, senior secured notes and private placement notes are carried at historical cost, adjusted for the applicable debt discount.

The fair value estimate for the convertible notes incorporates quoted market prices.

The fair value of the senior secured notes and private placement notes is estimated using discounted cash flow analyses based on available market information on discount and borrowing rates with similar terms, maturities, and credit ratings.

The carrying value of the Company’s senior secured revolving credit facility, securitisation senior facility, U.S.

facility and other borrowings approximates fair value due to the use of current market rates that are repriced frequently.

The Company’s cash and cash equivalents, certain other assets, accounts payable and accrued liabilities, and other liabilities approximate their fair values due to their short-term nature.

The Company’s convertible notes and senior secured notes are carried at historical cost, adjusted for the applicable debt discount.

The fair value estimate for the convertible notes and the senior secured notes incorporates quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

The carrying values of the Company’s senior secured revolving credit facility, securitisation senior facility, U.S.

facility and other borrowings approximate their respective fair values due to the use of current market rates that are repriced frequently.

The carrying values of the Company’s cash and cash equivalents, certain other assets, accounts payable and accrued liabilities, and other liabilities approximate their respective fair values due to their short-term nature.

Derivatives and Hedging Instruments

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Location Fair Value

Derivatives designated as hedging instruments:

Interest rate cap contracts Other assets $ 286 Other assets $ 252

Interest rate swap agreements Other liabilities ( 16,338 ) Other liabilities ( 18,360 )

Cross-currency swap agreements — — Other assets 361

Cross-currency swap agreements — — Other liabilities ( 28,039 )

Derivatives not designated as hedging instruments:

Interest rate cap contracts — — Other assets 2,386

Derivatives Designated as Hedging Instruments

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2024 Cap September 2024 September 2026 Cash flow hedge $ 343.5 million SONIA

2025 Cap September 2026 January 2028 Cash flow hedge $ 343.5 million SONIA

December 2025 October 2028 Cash flow hedge $ 130.0 million 1-month SOFR CME Term

Interest rate swap agreements

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June 2024 January 2028 Cash flow hedge $ 487.5 million 3-month EURIBOR

2023 SOFR IR Swaps

2023 SOFR IR Swaps - U.S.

November 2023 October 2026 Cash flow hedge $ 150.0 million 1-month SOFR CME Term

As discussed in “Note 6:

Borrowings,” on October 15, 2024, the Company fully redeemed its Senior Secured Notes due October 2025 (the “Encore 2025 Notes”), and on November 15, 2024, the Company fully redeemed its Senior Secured Notes due February 2026 (the “Encore 2026 Notes”).

In connection with the early redemptions of the Encore 2025 Notes and the Encore 2026 Notes, the Company settled the corresponding 2020 Euro Swaps and the 2023 GBP Swaps on the respective loan redemption dates for approximately $ 40.0 million.

As a result of the early settlement, the Company reclassed the remaining OCI balance associated with these cross-currency swaps of approximately $ 0.1 million gain into interest expense during the fourth quarter of 2024.

2025 SOFR IR Swaps - U.S.Facility January 2025 October 2027 Cash flow hedge $ 125.0 million 1-month SOFR CME Term

2025 SOFR IR Swaps - Global Senior Facility April 2025 April 2027 Cash flow hedge $ 150.0 million 1-month SOFR CME Term

December 31, 2024

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Interest rate cap contracts

2019 Cap January 2020 June 2024 Cash flow hedge $ 441.5 million 3-month EURIBOR

November 2021 September 2024 Cash flow hedge $ 318.3 million SONIA

2024 Cap September 2024 September 2026 Cash flow hedge $ 319.1 million SONIA

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June 2024 January 2028 Cash flow hedge $ 429.6 million 3-month EURIBOR

2023 SOFR IR Swaps

2023 SOFR IR Swaps - U.S.

November 2023 October 2026 Cash flow hedge $ 150.0 million 1-month SOFR CME Term

Cross-currency swap agreements

2020 Euro Swaps September 2020 October 2025 Fair value hedge $ 386.3 million —

2023 GBP Swaps July 2023 February 2026 Fair value hedge $ 381.9 million —

_______________________

(1) The total notional amount of the 2021 Cap was $ 445.6 million, of which $ 318.3 million was hedge designated and $ 127.3 million was not hedge designated as of December 31, 2023.

The Company expects to reclassify approximately $ 6.7 million of derivative loss from OCI into earnings relating to its cash flow designated derivatives within the next 12 months.

The Company expects to reclassify approximately $ 10.6 million of net derivative loss from OCI into earnings relating to its cash flow designated derivatives within the next 12 months.

This amount will vary due to fluctuations in benchmark interest rates.

The following table summarizes the effects of derivatives designated as hedging instruments in the Company’s consolidated financial statements (in thousands):

Derivatives Designated as Hedging Instruments Gain (Loss)

Recognized in OCI Location of Gain (Loss) Reclassified from OCI into Income Gain (Loss)

from OCI into

Derivatives Designated as Hedging Instruments (Loss) Gain

Recognized in OCI

Location of (Loss) Gain Reclassified from OCI into Income (Loss)

(Loss) Gain Reclassified

Year Ended December 31, Year Ended December 31,

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The gains or losses on these unhedged derivative contracts are recognized in other income or expense based on the changes in fair value.

The Company did not have any derivatives that were not designated as hedging instruments as of December 31, 2024.

The Company did not have any derivatives that were not designated as hedging instruments as of December 31, 2025 and 2024.

The following table summarizes the effects of derivatives not designated as hedging instruments on the Company’s consolidated statements of operations during the periods presented (in thousands) :

4 unchanged sentences

$ — $ 267 $ ( 556 )

Investment in Receivable Portfolios, Net

Investment in receivable portfolios, net consist of the following as of the dates presented ( in thousands ):

Receivable Portfolios, Net

Receivable portfolios, net consist of the following as of the dates presented ( in thousands ):

Year Ended December 31,

2 unchanged sentences

Balance, end of period $ 4,371,532 $ 3,776,369

The following table summarizes the changes in the balance of investment in receivable portfolios, net during the periods presented ( in thousands ):

The following table summarizes the changes in the balance of receivable portfolios, net during the periods presented ( in thousands ):

Year Ended December 31,

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Balance, beginning of period $ 3,776,369 $ 3,468,432 $ 3,088,261

Negative allowance for expected recoveries - current period purchases (1)

Negative allowance for expected recoveries - portfolio purchases (1)

1,408,083 1,352,035 1,073,812

Collections applied to investment in receivable portfolios, net (2)

Collections applied to receivable portfolios, net (2)

( 1,136,991 ) ( 859,911 ) ( 658,130 )

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Negative allowance 1,408,083 1,352,035 1,073,812

Negative allowance for expected recoveries - current period purchases $ 1,352,035 $ 1,073,812 $ 800,507

(2) Collections applied to investment in receivable portfolios, net, is calculated as follows during the periods presented:

Negative allowance for expected recoveries - portfolio purchases

$ 1,408,083 $ 1,352,035 $ 1,073,812

(2) Collections applied to receivable portfolios, net, is calculated as follows during the periods presented:

Year Ended December 31,

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

Less - amounts classified to revenue from receivable portfolios ( 1,302,567 ) ( 1,204,437 ) ( 1,202,361 )

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

Less - amounts classified to portfolio revenue

( 1,455,795 ) ( 1,302,567 ) ( 1,204,437 )

Collections applied to receivable portfolios, net

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

(3) Changes in recoveries is calculated as follows during the periods presented, where recoveries include cash collections, put-backs and recalls, and other cash-based adjustments:

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Recoveries above or below forecast represent over and under-performance in the reporting period, respectively.

Collections during the year ended December 31, 2024, over-performed the projected cash flows by approximately $ 78.2 million.

Collections during the year ended December 31, 2025, over-performed the projected cash flows by $ 197.8 million, primarily driven by collections over-performance in the U.S.

resulting from enhanced collections strategies.

Changes in expected future recoveries are reassessed each quarter, the Company considers, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment when updating the forecasts of expected lifetime recoveries.

During the fourth quarter of 2024, the Company 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 at 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.

The change in accounting estimate negatively impacted the Company’s basic and diluted loss per share by $ 3.15 per share for the year ended December 31, 2024.

Additionally, the Company recognized approximately $ 22.2 million of negative changes in expected future recoveries resulting from the sale of its investment in receivable portfolios associated with the exit of its Italian debt purchasing and recovery business in November 2024, and approximately $ 7.8 million of negative changes in expected future recoveries resulting from the sale of certain secured mortgage portfolios in September 2024.

As a result of these significant changes in expected recoveries discussed above, and the changes driven by recurring reassessments of the expected future recoveries, the Company recorded a total net negative change in expected future recoveries of approximately $ 167.9 million during the year ended December 31, 2024.

The significant recoveries above forecast during the year ended December 31, 2025

were carefully evaluated.

Management concluded that the recoveries above forecast 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.

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

Composition of Certain Financial Statement Items

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284,965 264,689

264,689 273,099

accumulated depreciation

1 unchanged sentence

$ 82,080 $ 80,597

During the fourth quarter of 2024, as a result of a significant reduction in estimated future cash flows based on an internal forecast at its debt servicing business, the Company performed a recoverability test of certain fixed assets and concluded that the assets were not recoverable.

The Company subsequently conducted a fair value analysis of the fixed assets and recorded an impairment charge related to its computer systems of approximately $ 18.5 million for the year ended December 31, 2024.

During the year ended December 31, 2024, the Company recorded an impairment charge of $ 18.5 million related to its computer systems used in its debt servicing business.

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

Depreciation expense related to property and equipment was $ 28.8 million, $ 32.4 million, and $ 38.2 million during the years ended December 31, 2025, 2024, and 2023, respectively.

2 unchanged sentences

Operating lease right-of-use assets $ 56,629 $ 58,089

Real estate owned 38,075 70,590

Prepaid expenses 36,162 35,564

Other financial receivables 21,110 18,952

Real estate owned 18,068 38,075

Service fee receivables 13,131 10,914

Income tax deposits 12,959 10,438

6 unchanged sentences

Global senior secured revolving credit facility $ 631,998 $ 865,365

Encore private placement notes — 29,310

Senior secured notes 2,324,335 1,846,047

11 unchanged sentences

In September 2020, the Company entered into a multi-currency senior secured revolving credit facility agreement (as amended and restated, the “Global Senior Facility”).

On October 17, 2024, the Company agreed to amend and restate the Global Senior Facility to, among other things, (1) upsize the facility by $ 92.0 million from $ 1,203.0 million to $ 1,295.0 million, (2) extend the termination date of the facility from September 2027 to September 2028 except for a $ 22.5 million tranche that will continue to terminate in September 2027, and (3) decrease the interest margin by 0.25 % from 2.50 % to 2.25 %.

On May 22, 2025, the Company issued an additional commitment increase notice and entered into an amendment letter that amended and supplemented the Global Senior Facility to, among other things, (1) reflect a $ 190.0 million upsize of the facility from $ 1,295.0 million to $ 1,485.0 million, and (2) extend the termination date of the facility from September 2028 to September 2029, except for a $ 69.5 million tranche that terminates in September 2028.

The amendment was accounted for as a debt modification.

12 unchanged sentences

Available capacity under the Global Senior Facility, after taking into account applicable debt covenants, was approximately $ 814.3 million as of December 31, 2025.

Encore Private Placement Notes

In August 2017, Encore entered into $ 325.0 million in senior secured notes with a group of insurance companies (the “Encore Private Placement Notes”).

The Encore Private Placement Notes bore an annual interest rate of 5.625 %.

The covenants and material terms for the Encore Private Placement Notes were substantially similar to those for the Global Senior Facility.

The Encore Private Placement Notes matured in August 2024.

Senior Secured Notes

1 unchanged sentence

December 31, 2025 December 31, 2024 Issue Currency Maturity Date Interest Payment Dates Interest Rate

Encore 2025 Notes $ — $ 386,324 EUR Oct 15, 2025 Apr 15, Oct 15 4.875 %

Encore 2026 Notes — 381,937 GBP Feb 15, 2026 Feb 15, Aug 15 5.375 %

Encore 2028 Notes $ 336,803 $ 312,880 GBP Jun 1, 2028 Jun 1, Dec 1 4.250 %

4 unchanged sentences

500,000 500,000 USD May 15, 2030 May 15, Nov 15 8.500 %

Encore 2031 Notes

500,000 — USD Apr 15, 2031 Apr 15, Oct 15

$ 2,324,335 $ 1,846,047

4 unchanged sentences

Subject to the intercreditor agreement described above under the section “Global Senior Secured Revolving Credit Facility,” Super Senior Liabilities that are secured by assets that also secure the Senior Secured Notes will receive priority with respect to any proceeds received upon any enforcement action over any such assets.

The 2028 Floating Rate Notes had a weighted average interest rate of 7.96 % and 7.44 % for the years ended December 31, 2024 and 2023, respectively.

As discussed in “Note 3:

Derivatives and Hedging Instruments,” the Company uses interest rate derivative contracts to manage its risk related to the interest rate fluctuation in its variable interest rate bearing debt.

The weighted average interest rate of the 2028 Floating Rate Notes including the effect of the hedging instruments was 6.36 % and 4.52 % for the years ended December 31, 2024 and 2023, respectively.

In March 2024, the Company issued $ 500.0 million in aggregate principal amount of 9.250 % Senior Secured Notes due April 2029 at an issue price of 100.000 % (the “Encore 2029 Notes”).

Interest on the Encore 2029 Notes is payable semi-annually, in arrears, on April 1 and October 1 of each year, commencing on October 1, 2024.

The Company used the proceeds from this offering to pay down $ 493.0 million of the drawings under its Global Senior Facility and to pay certain transaction fees and expenses incurred in connection with the offering of the Encore 2029 Notes.

In May 2024, the Company issued $ 500.0 million in aggregate principal amount of 8.500 % Senior Secured Notes due May 2030 at an issue price of 100.000 % (the “Encore 2030 Notes”).

Interest on the Encore 2030 Notes is payable semi-annually, in arrears, on May 15 and November 15 of each year, commencing on November 15, 2024.

The Company used the proceeds from this offering to pay down $ 448.7 million of the drawings under its Global Senior Facility, pay certain transaction fees and expenses incurred in connection with the offering of the Encore 2030 Notes and for general corporate purposes.

Using drawings from its Global Senior Facility and cash on hand, the Company fully redeemed the Encore 2025 Notes at par on October 15, 2024, and fully redeemed the Encore 2026 Notes at par on November 15, 2024.

In connection with the early redemptions of the Encore 2025 Notes and Encore 2026 Notes, the Company also settled the corresponding 2020 Euro Swaps and 2023 GBP Swaps for approximately $ 40.0 million.

Refer to “Note 3:

Derivatives and Hedging Instruments” for further detail of the early settlements of the cross currency swap contracts.

In connection with the redemptions of the Encore 2025 and 2026 Notes, the Company wrote off the related unamortized debt discount and issuance costs and recognized a loss on extinguishment of debt of approximately $ 4.1 million during the year ended December 31, 2024.

In October 2025, the Company issued $ 500.0 million in aggregate principal amount of 6.625 % Senior Secured Notes due April 2031 at an issue price of 100.000 % (the “Encore 2031 Notes”).

Interest on the Encore 2031 Notes is payable semi-annually, in arrears, on April 15 and October 15 of each year, commencing on April 15, 2026.

The Company used the proceeds from this offering to pay down drawings under its Global Senior Facility and to pay certain transaction fees and expenses incurred in connection with the offering of the Encore 2031 Notes.

In November 2025, the Company 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 the Encore 2028 Floating Rate Notes.

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

In connection with the partial repayment of the Encore 2028 Floating Rate Notes, the Company wrote off the related unamortized debt discount and issuance costs and recognized a loss on extinguishment of debt of $ 1.6 million during the year ended December 31, 2025.

The Encore 2028 Floating Rate Notes had a weighted average interest rate of 6.58 % and 7.96 % for the years ended December 31, 2025 and 2024, respectively.

Convertible Notes

6 unchanged sentences

$ 230,000 $ 330,000

In October 2025, the Company settled its $ 100.0 million 2025 Convertible Notes upon conversion in cash for $ 106.2 million, of which $ 6.2 million (the excess above the principal amount) represented the conversion spread and was recognized as a reduction in the Company’s stockholders’ equity in the Company’s consolidated statement of financial condition as of December 31, 2025.

No gain or loss was recognized as a result of the conversion of the 2025 Convertible Notes.

The settlement was funded by borrowings from the Company’s Global Senior Facility.

In order to reduce the risk related to the potential dilution and/or the potential cash payments the Company may be required to make in the event that the market price of the Company’s common stock becomes greater than the conversion prices of the Convertible Notes, the Company may enter into hedge programs that increase the effective conversion price for the Convertible Notes.

In connection with the issuance of the 2029 Convertible Notes, the Company entered into privately negotiated capped call transactions that effectively raised the conversion price of the 2029 Convertible Notes from $ 65.89 to $ 82.69 .

These hedging instruments have been determined to be indexed to the Company’s own stock and meet the criteria for equity classification and therefore the cost was included as a reduction to stockholder’s equity in the consolidated statement of financial condition as of December 31, 2024.

Subsequent changes in fair value of these financial instruments are not recognized in the Company’s consolidated financial statements.

The Company did not hedge the 2025 Convertible Notes.

In connection with the issuance of the 2029 Convertible Notes, the Company entered into privately

negotiated capped call transactions that effectively raised the conversion price of the 2029 Convertible Notes from $ 65.89 to $ 82.69 .

These hedging instruments have been determined to be indexed to the Company’s own stock and meet the criteria for equity classification.

The Company recorded the cost of the hedge instruments as a reduction in additional paid-in capital, and does not recognize subsequent changes in fair value of these financial instruments in its condensed consolidated financial statements.

Certain key terms related to the convertible features as of December 31, 2025 are listed below ($ in thousands, except conversion or exchange price) :

2025 Convertible Notes 2029 Convertible Notes

2029 Convertible Notes

Initial conversion price

$ 40.00 $ 65.89

Closing stock price at date of issuance $ 51.68

Closing stock price date Sep 4, 2019 Feb 28, 2023

Closing stock price date Feb 28, 2023

Initial conversion rate (shares per $1,000 principal amount) 15.1763

25.0000 15.1763

Adjusted conversion rate (shares per $1,000 principal amount)

25.1310 15.1763

Adjusted conversion price (1)

$ 39.79 $ 65.89

Adjusted effective conversion price (2)

$ 39.79 $ 82.69

Effective conversion price (1)

Excess of if-converted value compared to principal (2)

Conversion date

Jul 1, 2025 Dec 15, 2028

______________________

(1) Pursuant to the indenture for the Company’s 2025 Convertible Notes, the conversion rate for the 2025 Convertible Notes was adjusted upon the completion of the Company’s tender offer in December 2021.

(1) As discussed above, the Company maintains a hedge program that increases the effective conversion price for the 2029 Convertible Notes to $ 82.69 .

(2) Represents the premium the Company would have to pay assuming the Convertible Notes were converted on December 31, 2025 using a hypothetical share price based on the closing stock price on December 31, 2025.

Prior to the close of business on the business day immediately preceding their respective free conversion dates (listed above), holders may convert their Convertible Notes under certain circumstances set forth in the applicable indentures.

On or after their respective free conversion dates until the close of business on the second scheduled trading day immediately preceding their respective maturity dates, holders may convert their notes at any time.

Prior to the close of business on the business day immediately preceding the free conversion date (listed above), holders may convert their Convertible Notes under certain circumstances set forth in the indenture.

On or after the free conversion date until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their notes at any time.

In the event of conversion, the Convertible Notes are convertible into cash up to the aggregate principal amount of the notes and the excess conversion premium, if any, may be settled in cash or shares of the Company’s common stock at the Company’s election and subject to certain restrictions contained in each of the indentures governing the Convertible Notes.

The Company’s convertible notes are carried as a single liability, which reflects the principal amount of the convertible notes.

Interest expense related to the Convertible Notes was approximately $ 12.5 million, $ 12.6 million, and $ 12.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Interest expense related to the Convertible Notes was $ 11.6 million, $ 12.5 million, and $ 12.6 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Cabot Securitisation Senior Facility

Prior to December 18, 2024, Cabot Securitisation UK Ltd (“Cabot Securitisation”), an indirect subsidiary of Encore, had a senior facility for a committed amount of £ 255.0 million (as amended, the “Cabot Securitisation Senior Facility”), which had a maturity date in September 2028.

Funds drawn under the Cabot Securitisation Senior Facility bore interest at a rate per annum equal to SONIA plus a margin of 3.20 % plus, for periods after September 18, 2026, a step up margin ranging from zero to 1.00 %.

On December 18, 2024, the obligations under the Cabot Securitisation Senior Facility were paid off in full and the Cabot Securitisation Senior Facility was terminated.

On December 18, 2024, Cabot Securitisation entered into a new £ 255.0 million senior facility (the “2024 Cabot Securitisation Senior Facility”) with different lenders.

Cabot Securitisation UK Ltd (“Cabot Securitisation”), an indirect subsidiary of Encore, has a senior facility for a committed amount of £ 255.0 million (as amended, the “Cabot Securitisation Senior Facility”).

Funds drawn under the Cabot Securitisation Senior Facility bear interest at a rate per annum equal to SONIA plus a margin of 3.20 % plus, for periods after January 18, 2028, a step up margin ranging from zero to 1.00 %.

The Cabot Securitisation Senior Facility matures in January 2030.

In connection with the termination of the Cabot Securitisation Senior Facility, the Company wrote off related unamortized debt issuance costs and recognized a loss on extinguishment of debt of approximately $ 3.7 million during the year ended December 31, 2024.

As of December 31, 2025, the outstanding borrowings under the Cabot Securitisation Senior Facility were £ 255.0 million (approximately $ 343.5 million based on an exchange rate of $1.00 to £ 0.74 , the exchange rate as of December 31, 2025).

The obligations of Cabot Securitisation under the 2024 Cabot Securitisation Senior Facility are secured by first ranking security interests over all of Cabot Securitisation’s property, assets and rights (including receivables purchased from Cabot Financial UK from time to time), the book value of which was approximately £ 324.1 million (approximately $ 405.6 million based on an exchange rate of $1.00 to £ 0.80 , the exchange rate as of December 31, 2024) as of December 31, 2024.

The weighted average interest rate of the Cabot Securitisation Senior Facility or the Cabot Securitisation Senior Facility, as the case may be, was 8.32 % and 7.68 % for the years ended December 31, 2024 and 2023, respectively.

As discussed in “Note 3:

Derivatives and Hedging Instruments,” the Company uses interest rate derivative contracts to manage its risk related to the interest rate fluctuation in its variable interest rate bearing debt.

The weighted average interest rate of the Cabot Securitisation Senior Facility or the 2024 Cabot Securitisation Senior Facility, as the case may be, including the effect of the hedging instruments was 6.27 % and 5.41 % for the years ended December 31, 2024 and 2023, respectively.

The obligations of Cabot Securitisation under the Cabot Securitisation Senior Facility are secured by first ranking security interests over all of Cabot Securitisation’s property, assets and rights (including receivables purchased from Cabot Financial UK from time to time), the book value of which was £ 279.4 million (approximately $ 376.4 million based on an exchange rate of $1.00 to £ 0.74 , the exchange rate as of December 31, 2025) as of December 31, 2025.

The weighted average interest rate of the Cabot Securitisation Senior Facility, was 7.44 % and 8.32 % for the years ended December 31, 2025 and 2024, respectively.

Cabot Securitisation is a securitized financing vehicle and is a VIE for consolidation purposes.

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In October 2023, an indirect subsidiary of Encore (“U.S.

Financing Subsidiary”), entered into a facility for a committed amount of $ 175.0 million (the “U.S.

The Company amended its U.S.

Facility, effective September 17, 2024, to extend the maturity date from October 2026 to October 2027 and to increase the committed amount from $ 175.0 million to $ 300.0 million.

Financing Subsidiary”), entered into a facility (as amended, the “U.S.

On July 3, 2025, the U.S.

Facility was amended to extend the maturity date from October 2027 to October

2028 and to increase the committed amount from $ 300.0 million to $ 450.0 million.

The amendment was accounted for as a debt modification.

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Financing Subsidiary’s assets and rights.

As of December 31, 2024, this included receivables acquired from MCM, the book value of which was approximately $ 486.1 million.

As of December 31, 2025, this included receivables acquired from MCM, the book value of which was $ 770.5 million.

The weighted average interest rate of the U.S.

Facility was 7.71 % and 8.62 % for the years ended December 31, 2025 and 2024, respectively.

As discussed in “Note 3:

Derivatives and Hedging Instruments,” the Company uses interest rate derivative contracts to manage its risk related to the interest rate fluctuation in its variable interest rate bearing debt.

The weighted average interest rate of the U.S.

Facility including the effect of the hedging instruments was 7.93 % and 8.25 % for the years ended December 31, 2024 and 2023, respectively.

Facility is a securitized financing vehicle and is a VIE for consolidation purposes.

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The Company has finance lease liabilities primarily for computer equipment.

As of December 31, 2024, the Company’s finance lease liabilities were approximately $ 1.1 million.

As of December 31, 2025, the Company’s finance lease liabilities were $ 0.6 million.

Refer to “Note 12:

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2028 1,351,932

2029 1,296,125

Thereafter 500,000

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rather, they represent claims against the specific assets of the VIE.

On August 12, 2015, the Company’s Board of Directors approved a $ 50.0 million share repurchase program.

On May 5, 2021, the Company announced that the Board of Directors had approved an increase in the size of the repurchase program from $ 50.0 million to $ 300.0 million (an increase of $ 250.0 million).

On August 12, 2015, the Company’s Board of Directors authorized a $ 50.0 million share repurchase program.

On May 5, 2021, the Company announced that the Board of Directors had authorized an increase in the size of the repurchase program from $ 50.0 million to $ 300.0 million (an increase of $ 250.0 million).

On November 3, 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 with cash on hand 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 the Company’s management and Board of Directors, and in accordance with market conditions, other corporate considerations, and applicable regulatory requirements.

The program does not obligate the Company to acquire any particular amount of common stock, and it may be modified or suspended at any time at the Company’s 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.

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

The program does not obligate the Company to acquire any particular amount of common stock, and it may be

modified or suspended at any time at the Company’s discretion.

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

The Company did not make any repurchases under the share repurchase program during the years ended December 31, 2024 or 2023.

The Company’s practice is to retire the shares repurchased.

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$ 36,494 $ ( 135,310 ) $ ( 98,816 )

Other comprehensive income (loss) before reclassification 5,737 ( 78,232 ) ( 72,495 )

Other comprehensive (loss) income before reclassification ( 41,508 ) 15,376 ( 26,132 )

Reclassification ( 2,970 ) — ( 2,970 )

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( 3,093 ) ( 120,827 ) ( 123,920 )

Other comprehensive (loss) income before reclassification ( 41,508 ) 15,376 ( 26,132 )

Other comprehensive loss before reclassification ( 25,167 ) ( 29,081 ) ( 54,248 )

Reclassification 11,540 — 11,540

Other — 3,426 3,426

Tax effect 352 720 1,072

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( 16,368 ) ( 145,762 ) ( 162,130 )

Other comprehensive loss before reclassification

Other comprehensive (loss) income before reclassification

( 4,531 ) 32,795 28,264

Reclassification 6,284 — 6,284

— 3,426 3,426

Tax effect ( 419 ) ( 106 ) ( 525 )

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Total stock-based compensation expense during the years ended December 31, 2025, 2024, and 2023 was $ 18.3 million, $ 14.0 million, and $ 13.9 million, respectively.

The actual tax benefit from stock-based compensation arrangements totaled $ 1.2 million, $ 1.8 million, and $ 4.2 million for the years ended December 31, 2024, 2023, and 2022, respectively.

The Company recognized tax benefit on total stock-based compensation expense of $ 2.5 million, $ 1.9 million, and $ 1.6 million for the years ended December 31, 2025, 2024, and 2023, respectively.

The tax benefit realized related to awards vested was $ 1.2 million, $ 1.2 million, and $ 1.8 million for the years ended December 31, 2025, 2024, and 2023, respectively.

The Company’s current stock-based awards are primarily restricted stock units.

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Compensation expense is recognized only for the awards that ultimately vest.

The Company has certain share awards that include market conditions that affect vesting.

has certain share awards that include market conditions that affect vesting.

These shares vest based on the Company’s three-year relative total stockholder return compared to the other companies in the S&P SmallCap 600 Financial Sector Index as of the date of grant.

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Foreign 50,178 ( 233,316 ) ( 241,620 )

Total (loss) income before provision for income taxes

Total income (loss) before provision for income taxes

$ 336,159 $ ( 96,215 ) $ ( 180,264 )

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2025 2024 2023

Current expense (benefit):

Current expense:

Federal $ 36,002 $ 48,272 $ 59,558

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Provision for income taxes $ 79,325 $ 43,029 $ 26,228

The reconciliation of federal statutory income tax rate to our effective tax rate was as follows:

The reconciliation of the U.S.

federal statutory income tax rate to the Company’s effective tax rate for the year ended December 31, 2025 after the adoption of ASU 2023-09 was as follows ($ in thousands) :

Year Ended December 31, 2025

federal statutory income tax rate

$ 70,593 21.0 %

Federal provision 21.0 % 21.0 % 21.0 %

State provision ( 5.7 ) % ( 3.0 ) % 5.0 %

State and local income tax, net of federal income tax effect (1)

Foreign tax effects

United Kingdom

Changes in valuation allowances

( 6,735 ) ( 2.0 ) %

Other 142 — %

Other foreign jurisdictions

Other adjustments (2)

( 288 ) ( 0.1 ) %

Total provision for income taxes and effective tax rate

$ 79,325 23.6 %

________________________

(1) State taxes in California, Georgia, Illinois, Michigan, New York, Pennsylvania and Wisconsin made up the majority (greater than 50 %) of the tax effect in this category.

(2) The Company has reconciling items related to other prescribed categories that were determined to be immaterial and thus are not separately presented in the rate reconciliation.

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the U.S.

federal statutory income tax rate as follows:

Year Ended December 31,

federal statutory income tax rate

21.0 % 21.0 %

State and local income tax, net of federal income tax effect

( 5.7 ) % ( 3.0 ) %

Foreign rate differential ( 2.8 ) % 0.6 %

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( 22.4 ) % ( 28.3 ) %

Taxable gain (deductible loss) in foreign jurisdiction (3)

2.6 % 2.9 % ( 2.7 ) %

Taxable gain in foreign jurisdiction (3)

Nondeductible compensation ( 1.2 ) % ( 0.6 ) %

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( 2.7 ) % ( 0.3 ) %

Effective rate ( 44.7 ) % ( 14.5 ) % 37.4 %

Effective tax rate

( 44.7 ) % ( 14.5 ) %

________________________

(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.

The change in valuation allowance during the year ended December 31, 2022 included valuation allowance recorded on U.K.

deferred tax assets.

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

Refer to “Note 15:

Goodwill and Identifiable Intangible Assets” for further details.

Goodwill” for further details.

(3) Represents taxable foreign currency movement recognized in a foreign subsidiary for the years ended December 31, 2024 and 2023.

For the year ended December 2022, the Company had deductible loss recognized in a foreign subsidiary that maintains a full valuation allowance on its deferred tax assets.

Accordingly, the deductible loss increased the valuation allowance and did not result in any tax benefit.

(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.

The Company’s subsidiary in Costa Rica is operating under a 100 % tax holiday through December 31, 2026.

The Company’s subsidiary in Costa Rica is operating under a 100 % tax holiday through August 13, 2026.

The exemption under this tax holiday will decrease to 50 % through August 13, 2030, and then 0 % thereafter.

The impact of the tax holiday in Costa Rica for the years ended December 31, 2025, 2024 and 2023 was immaterial.

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Accrued expenses ( 4 ) ( 44 )

Difference in basis of bond and loan costs — ( 445 )

Difference in basis of receivable portfolio ( 54,974 ) ( 27,252 )

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As of December 31, 2025 valuation allowances increased by $ 0.5 million, as compared to December 31, 2024.

The change in valuation allowance is primarily related to current operating losses at certain foreign entities during the period.

As of December 31, 2024, valuation allowances increased by $ 29.2 million, as compared to December 31, 2023.

The changes in valuation allowance for both years were primarily related to current operating losses at certain foreign entities during the periods.

A reconciliation of the beginning and ending amounts of unrecognized tax benefit is as follows (in thousands) :

December 31, 2022 $ 3,988

Decrease related to prior year tax positions ( 1,296 )

Decrease related to settlements with taxing authorities ( 713 )

Decrease related to expiration of statute of limitations ( 115 )

Increase related to prior year tax positions 2,302

Increase related to current year tax positions 649

December 31, 2022 $ 3,988

Increase related to prior year tax positions 2,302

Increase related to current year tax positions 649

Decrease related to expiration of statute of limitations ( 69 )

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Other ( 107 )

Balance as of December 31, 2024 $ 6,255

December 31, 2024

Decrease related to expiration of statute of limitations

Decrease related to prior year tax positions

Decrease related to settlements with taxing authorities

Increase related to current year tax positions

December 31, 2025

The Company had gross unrecognized tax benefits, inclusive of penalties and interest, of $ 4.9 million, $ 7.9 million and $ 8.2 million as of December 31, 2025, 2024, and 2023 respectively.

As of December 31, 2025, 2024 and 2023, there was $ 4.2 million, $ 6.6 million and $ 5.0 million, respectively, of unrecognized tax benefit that if recognized, would result in a net tax benefit.

During the year ended December 31, 2024, the increase in the Company’s gross unrecognized tax benefit was primarily due to the release of a prior year position related to a domestic entity.

During the year ended December 31, 2023, the increase in the Company’s gross unrecognized tax benefit was primarily due to a prior year position related to a domestic entity.

During the year ended December 31, 2022, the decrease in the Company’s gross unrecognized tax benefit was primarily due the release of prior year positions related to foreign entities.

During the year ended December 31, 2025, the decrease in the Company’s gross unrecognized tax benefit was primarily due to the settlements with taxing authorities and the release of a prior year position related to a domestic entity.

During the year ended December 31, 2024, the decrease in the Company’s gross unrecognized tax benefit was primarily due to the release of a prior year position related to a domestic entity.

During the year ended December 31, 2023, the increase in the Company’s gross unrecognized tax benefit was primarily due the release of prior year position related to domestic entity.

The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations.

However, it is reasonably possible that certain changes may occur within the next 12 months, which could significantly increase or decrease the balance of the Company’s gross unrecognized tax benefits.

The Company recognizes interest and penalties related to income tax as a component of the provision for income taxes.

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Interest and penalties accrued as of December 31, 2025, 2024 and 2023 were immaterial .

In December 2021, the Organization for Economic Cooperation and Development (“OECD”) enacted model rules for a new global minimum tax framework (“Pillar Two”).

Under the Pillar Two rules, a company is required to determine a combined effective tax rate for each jurisdiction.

If the jurisdictional effective tax rate determined under the Pillar Two rules is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%.

In December 2022, European Union Member States adopted a directive implementing the Pillar Two rules requiring Member States to enact the directive into their national laws and these began to go into effect from January 1, 2024.

The Company has estimated the applicable top-up tax and recorded this in tax expense for the year ended December 31, 2025.

The estimated impact of top-up tax for the period was immaterial.

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA”), which includes a broad range of tax reform provisions affecting businesses.

The legislation features permanent extension, with modifications, of key 2017 Tax Cuts and Jobs Act provisions that were set to change at the end of 2025.

The effects of the OBBBA were included for the year ended December 31, 2025 and the impact was immaterial.

The Company files federal, state and non-U.S.

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If any issues addressed in the Company’s tax examinations are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.

The amounts of cash taxes paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 were as follows (in thousands) :

Year Ended December 31, 2025

US state and local 12,741

Ireland ( 3,202 )

Cash paid for income taxes, net of refunds received

The majority of the Company’s leases are for corporate offices, various facilities, and information technology equipment.

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Many continue on for some length of time and involve substantial investigation, litigation, negotiation, and other expense and effort before a result is achieved, and during the process the Company often cannot determine the substance or timing of any eventual outcome.

In September 2015, the Company entered into a consent order (the “2015 Consent Order”) with the Consumer Financial Protection Bureau (the “CFPB”) in which the Company settled allegations arising from its practices between 2011 and 2015.

In October 2020, the Company entered into a stipulated judgment (“Stipulated Judgment”) with the CFPB to resolve a subsequent lawsuit related to the 2015 Consent Order.

In connection with the Stipulated Judgment, the CFPB formally terminated the 2015 Consent Order.

Additionally, we are subject to ancillary state Attorney General investigations related to similar debt collection practices.

We are subject to ancillary state Attorney General investigations related to historical debt collection practices.

We have entered into settlement agreements with the Attorneys General of various U.S.

states in connection with our debt collection and litigation practices.

states in connection with our debt collection and

litigation practices.

The Company has discussed with additional state attorneys general potential resolution of these investigations, which could include penalties, restitution, and/or the adoption of new operational requirements.

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Certain of these forward flow purchase agreements may also have termination clauses, whereby the agreements can be canceled by either party upon providing a certain specified amount of notice.

As of December 31, 2024, the Company had entered into forward flow purchase agreements for the purchase of nonperforming loans with an estimated minimum aggregate purchase price of approximately $ 344.1 million.

As of December 31, 2025, the Company had entered into forward flow purchase agreements for the purchase of nonperforming loans with an estimated minimum aggregate purchase price of $ 436.6 million.

The Company expects actual purchases under these forward flow purchase agreements to be significantly greater than the estimated minimum aggregate purchase price.

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The Company also has defined contribution plans for eligible employees in other countries.

The Company recognized expense of approximately $ 8.3 million, $ 6.8 million, and $ 2.8 million for the years ended December 31, 2024, 2023, and 2022, respectively, in salaries and employee benefits in its consolidated statements of operations.

The Company recognized expense of $ 8.7 million, $ 8.3 million, and $ 6.8 million for the years ended December 31, 2025, 2024, and 2023, respectively, in salaries and employee benefits in its consolidated statements of operations.

Encore’s Certificate of Incorporation and indemnification agreements between the Company and its officers and directors provide that the Company will indemnify and hold harmless its officers and directors for certain events or occurrences arising as a result of the officer or director serving in such capacity.

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The Company determined its operating segments meet the aggregation criteria, and therefore, it has one reportable segment, debt purchasing and recovery segment, based on similarities among the operating units including economic characteristics, the nature of the services, the nature of the production process, customer types for their services, the methods used to provide their services and the nature of the regulatory environment.

The Company’s Chief Operating Decision Maker, which is the Company’s chief executive officer, relies on internal management reporting processes that provide segment revenues, segment total operating expenses, segment operating income, and segment asset information in order to make financial decisions.

The measure of segment performance is segment operating income.

The Company’s Chief Operating Decision Maker, which is the Company’s chief executive officer, relies on internal management reporting processes that provide segment revenues, segment total operating expenses, operating income, and segment asset information in order to make financial decisions.

The measure of segment performance is operating income.

The Company’s Chief Operating Decision Maker assesses the segment’s performance and makes decisions about the allocation of capital resources to each segment accordingly.

Corporate and other unallocated represents corporate overhead and other items not allocated to any of the Company’s operating segments.

Segment assets are presented in the Company’s Consolidated Statements of Financial Position as total assets.

The following tables present the results of operations of the Company’s reportable segment for the years ended December 31, 2025, 2024, and 2023, respectively (in thousands) :

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Other segment items (2)

( 1,000 ) ( 1,000 )

Interest expenses (3)

3 unchanged sentences

_______________________

(1) Certain corporate activities that are not allocated to the debt purchasing and recovery segment are recorded under corporate and other unallocated.

During the year ended December 31, 2024, such non-allocated operating expenses primarily consisted of salaries and employee benefits of approximately $ 37.8 million for corporate employees and general and administrative expenses of approximately $ 19.3 million.

During the year ended December 31, 2025, such non-allocated operating expenses primarily consisted of salaries and employee benefits of $ 44.6 million for corporate employees and general and administrative expenses of $ 20.6 million.

(2) The other segment items category includes other income, and loss on extinguishment of debt.

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Other segment items (2)

( 1,000 ) ( 1,000 )

Interest expenses (3)

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(1) Certain corporate activities that are not allocated to the debt purchasing and recovery segment are recorded under corporate and other unallocated.

During the year ended December 31, 2023, such non-allocated operating expenses primarily consisted of salaries and employee benefits of approximately $ 33.9 million for corporate employees and general and administrative expenses of approximately $ 22.9 million.

(2) The other segment items category includes other income.

During the year ended December 31, 2024, such non-allocated operating expenses primarily consisted of salaries and employee benefits of $ 37.8 million for corporate employees and general and administrative expenses of $ 19.3 million.

(2) The other segment items category includes other income, and loss on extinguishment of debt.

(3) The Company manages its available capital resources at the corporate level.

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$ ( 206,492 )

________________________

(1) Certain corporate activities that are not allocated to the debt purchasing and recovery segment are recorded under corporate and other unallocated.

During the year ended December 31, 2022, such non-allocated operating expenses primarily consisted of salaries and employee benefits of approximately $ 32.0 million for corporate employees and general and administrative expenses of approximately $ 21.3 million.

During the year ended December 31, 2023, such non-allocated operating expenses primarily consisted of salaries and employee benefits of $ 33.9 million for corporate employees and general and administrative expenses of $ 22.9 million.

(2) The other segment items category includes other income.

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(2) None of these countries comprise greater than 10% of the Company’s consolidated long-lived assets.

Goodwill and Identifiable Intangible Assets

The Company’s goodwill is tested for impairment at the reporting unit level annually as of the first day of the fourth quarter 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 Company’s goodwill is tested for impairment at the reporting unit level annually in the fourth quarter and in interim periods if certain events occur that indicate that the fair value of a reporting unit may be below its carrying value.

Determining the number of reporting units and the fair value of a reporting unit requires the Company to make judgments and involves the use of significant estimates and assumptions.

As of December 31, 2024, the Company had three reporting units, MCM, Cabot, and LAAP, that carried goodwill.

The goodwill for the LAAP reporting unit was recently acquired in December 2024.

As of December 31, 2025, the Company had three reporting units, MCM, Cabot, and Encore Asset Reconstruction Company (“EARC”), that carried goodwill.

Effective for the year ended December 31, 2025, the Company changed its annual goodwill impairment testing date from the first day of the fourth quarter to the last day of the fourth quarter.

This change was applied prospectively and is intended to better align the impairment testing process with the Company’s annual budgeting process.

Management believes this change enhances the reliability and relevance of the impairment analysis by allowing the use of finalized financial projections in the assessment.

In 2024, the Company performed its annual goodwill impairment test as of October 1, 2024, the previous goodwill impairment annual testing date, and subsequently conducted an additional test as of December 31, 2024 which led to a goodwill impairment charge.

As a result, the change in testing date does not result in a period exceeding twelve months between impairment tests.

This change was not material to the Company’s consolidated financial statements as it did not delay, accelerate, or avoid any potential goodwill impairment charge.

The Company applies various valuation techniques to estimate the fair value of each reporting unit when performing a quantitative impairment test, including the income approach and the market approach.

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The cash flow projections are based on five-year financial forecasts developed by management that include purchasing volume, collections forecasts, capital spending trends, and cost assumptions to support anticipated growth, which are updated annually and reviewed by management.

The value of the net cash flows beyond the fifth year (the “Terminal Year”) is determined by applying a market multiple to the projected estimated remaining collections.

The value of the net cash flows beyond the fifth year (the “Terminal Year”) is determined by applying a market multiple to the projected estimated remaining

Annual estimated cash flows and a Terminal Year value are then discounted to their present value at an appropriate discount rate to obtain an indication of fair value.

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In addition, the Company compares the aggregate fair value of the reporting units to its overall market capitalization.

The Company chose to proceed directly to performing quantitative tests for both MCM and Cabot reporting units for the annual goodwill impairment test on October 1, 2024, which did not result in any impairment charge for either of the two reporting units.

Subsequent to the annual impairment test on October 1, 2024, management identified goodwill impairment triggers in connection with the significant reduction in the estimated future recoveries for the Company’s investment in receivable portfolios at Cabot during the fourth quarter of 2024.

As a result, management 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 the Company’s previous financial forecasts, and to a lesser extent, a decline in market multiples.

After recording the goodwill impairment charge, the carrying value of our Cabot reporting unit was equal to its fair value as of December 31, 2024.

The fair value of the MCM reporting unit substantially exceeded its carrying value, as a result, there was no impairment of goodwill for the MCM reporting unit during the year ended

December 31, 2024.

The Company also conducted qualitative analysis on the goodwill carried at its LAAP reporting unit and concluded that no impairment existed as of December 31, 2024.

T he fair value of the Cabot reporting unit approximated its carrying value after recording the goodwill impairment charge.

Any subsequent significant unfavorable changes could result in the fair value being less than the carrying value at the Cabot reporting unit.

The Company chose to proceed directly to performing quantitative tests for both MCM and Cabot reporting units for the annual goodwill impairment test on December 31, 2025, and determined that no goodwill impairment existed at the two reporting units.

The Company also conducted qualitative analysis on the goodwill carried at its EARC reporting unit and concluded that no impairment existed as of December 31, 2025.

Management continues to evaluate and monitor all key factors impacting the carrying value of the Company’s recorded goodwill.

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The following table summarizes the activity in the Company’s goodwill balance (in thousands):

Balance as of December 31, 2021

$ 148,936 $ 748,859 $ — $ 897,795

Effect of foreign currency translation — ( 76,581 ) — ( 76,581 )

Total Company

Balance as of December 31, 2022

148,936 672,278 — 821,214

Goodwill impairment ( 238,200 )

1 unchanged sentence

Balance as of December 31, 2023

148,936 457,539 — 606,475

Goodwill acquired (1)

— — 11,268 11,268

Goodwill impairment ( 100,600 )

1 unchanged sentence

Balance as of December 31, 2024

$ 148,936 $ 347,604 $ 11,268 $ 507,808

________________________

(1) The Company held an investment in Encore Asset Reconstruction Company (“EARC”) in India.

In December 2024, the Company paid $ 11.0 million in total considerations and completed a step up acquisition of EARC.

As a result, the Company recognized approximately $ 11.3 million of goodwill, which was not deductible for tax purposes.

This goodwill balance is included in the Company’s LAAP reporting unit.

The assets acquired and liabilities assumed resulting from the transaction were immaterial.

The accumulated goodwill impairment loss at the Cabot reporting unit was $ 338.8 million and $ 238.2 million as of December 31, 2024 and 2023, respectively.

There was no accumulated goodwill impairment loss as of December 31, 2022.

The Company’s acquired intangible assets only included trade names during the periods presented, the weighted-average useful lives of trade names at the time of acquisition were 7 years.

The following table summarizes the Company’s acquired intangible assets (in thousands) :

As of December 31, 2024 As of December 31, 2023

Amount Accumulated

Amortization Net

Amount Accumulated

Amortization Net

Total intangible assets

Effect of foreign currency translation 28,483

Balance as of December 31, 2025

________________________

The Company recorded an impairment charge of its intangible assets of $ 18.7 million, and $ 4.1 million during the years ended December 31, 2023 and 2022, respectively.

The amortization expense for intangible assets subject to amortization was $ 3.6 million and $ 6.3 million during the years ended December 31, 2023 and 2022, respectively.

The amortization expense was negligible during the year ended December 31, 2024.

The Company had no intangible assets at December 31, 2024.

(1) In December 2024, the Company completed a step up acquisition of EARC and recognized $ 11.3 million of goodwill.

This goodwill balance is included in the Company’s EARC reporting unit.

The accumulated goodwill impairment loss at the Cabot reporting unit was $ 338.8 million as of December 31, 2025 and 2024, and $ 238.2 million as of December 31, 2023.

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 9A. Controls and Procedures