ENCORE CAPITAL GROUP INC 10-K

Item 9A—Controls and Procedures Evaluation of Disclosure Controls and Procedures As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e) and 15d-15(e). Based upon that evaluation, our CEO and CFO concluded that, as of December 31, 2025, our disclosure controls and procedures were effective, at the reasonable assurance level, as of such date. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities and Exchange Act of 1934 as a process designed by, or under the supervision of, our executive management and effected by our board of directors, to provide reasonable assurance regarding the reliability of financial reporting and the preparations of financial statements for external purposes in accordance with U.S. GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision of and with the participation of our management, we assessed the effectiveness of our internal control over financial reporting as of December 31, 2025, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2025. BDO USA, P.C., the independent registered public accounting firm that audited the consolidated financial statements included in this Annual Report on Form 10-K, was engaged to attest to and report on the effectiveness of Encore’s internal control over financial reporting as of December 31, 2025, as stated in its report below. Changes in 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. 51 Table of Contents Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Encore Capital Group, Inc. San Diego, California Opinion on Internal Control over Financial Reporting We have audited Encore Capital Group, Inc.’s (the “Company’s”) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). 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, 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. 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. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ BDO USA, P.C. San Diego, California February 25, 2026 52 Item 9B—Other Information On November 26, 2025 , Ryan Bell , President of MCM , adopted a trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) to sell up to 7,500 shares of Encore Capital Group, Inc. common stock between March 2, 2026 and February 26, 2027 , subject to certain conditions. Item 9C—Disclosure Regarding Foreign Jurisdictions that Prevent Inspection None. 53 Table of Contents PART III Item 10—Directors, Executive Officers and Corporate Governance 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 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. Item 11—Executive Compensation The 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. Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The 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. Item 13—Certain Relationships and Related Transactions, and Director Independence The 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. Item 14—Principal Accountant Fees and Services The 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. 54 Table of Contents PART IV Item 15—Exhibits and Financial Statement Schedules (a) Financial Statements. The following consolidated financial statements of Encore Capital Group, Inc. are filed as part of this annual report on Form 10-K: Page Report of Independent Registered Public Accounting Firm F- 1 Consolidated Statements of Financial Condition F- 3 Consolidated Statements of Operations F- 4 Consolidated Statements of Comprehensive Income (Loss) F- 5 Consolidated Statements of Equity F- 6 Consolidated Statements of Cash Flows F- 7 Notes to Consolidated Financial Statements F-9 (b) Exhibits. Incorporated By Reference Exhibit Number Exhibit Description Form File Number Exhibit Filing Date Filed or Furnished Herewith 3.1.1 Restated Certificate of Incorporation S-1/A 333-77483 3.1 6/14/1999 3.1.2 Certificate of Amendment to the Certificate of Incorporation 8-K 000-26489 3.1 4/4/2002 3.1.3 Second Certificate of Amendment to the Certificate of Incorporation 10-Q 000-26489 3.1.3 8/7/2019 3.2 Amended and Restated Bylaws, as amended through December 13, 2022 8-K 000-26489 3.1 12/16/2022 4.1 Form of Common Stock Certificate S-3 333-163876 4.7 12/21/2009 4.14 Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 10-K 000-26489 4.14 2/21/2024 4.17 Indenture dated December 21, 2020 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 8-K 000-26489 4.1 12/21/2020 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 10-K 000-26489 4.17.1 2/22/2023 4.18 Indenture dated June 1, 2021 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 8-K 000-26489 4.1 6/1/2021 55 Table of Contents 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 10-K 000-26489 4.18.1 2/22/2023 4.19 Indenture (including form of note), dated March 3, 2023, by and among Encore Capital Group, Inc. and Truist Bank, as trustee, for 2029 Convertible Notes 8-K 000-26489 4.1 3/3/2023 4.20 Indenture dated March 20, 2024 between Encore Capital Group, Inc., the subsidiary guarantors party thereto, GLAS Trust Company LLC as trustee and Truist Bank as security agent for Encore 2029 Notes 8-K 000-26489 4.1 3/21/2024 4.21 Indenture dated May 21, 2024 between Encore Capital Group, Inc., the subsidiary guarantors party thereto, GLAS Trust Company LLC as trustee and Truist Bank as security agent for Encore 2030 Notes 8-K 000-26489 4.1 5/21/2024 4.22 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 8-K 000-26489 10.1 5/4/2006 10.5+ Encore Capital Group, Inc. Executive Separation Plan 10-K 000-26489 10.5 2/23/2022 10.7+ Non-Employee Director Compensation Program Guidelines, effective June 7, 2024 10-Q 000-26489 10.2 8/7/2024 10.8+ Non-Employee Director Deferred Stock Compensation Plan 10-Q 000-26489 10.2 8/4/2016 10.8.1+ First Amendment to Non-Employee Director Deferred Stock Compensation Plan, dated August 11, 2016 10-Q 000-26489 10.1 11/9/2016 10.11+ The Encore Capital Group, Inc. 2017 Incentive Award Plan 8-K 000-26489 10.3 6/20/2017 10.11.1+ Form of Restricted Stock Unit Grant Notice and Award Agreement under the Encore Capital Group, Inc. 2017 Incentive Award Plan 8-K 000-26489 10.4 6/20/2017 10.11.2+ Form of Restricted Stock Unit Grant Notice and Award Agreement under the Encore Capital Group, Inc. 2017 Incentive Award Plan (Executive Separation Plan Participant) 8-K 000-26489 10.5 6/20/2017 10.11.3+ Form of Restricted Stock Award Grant Notice and Award Agreement under the Encore Capital Group, Inc. 2017 Incentive Award Plan 8-K 000-26489 10.6 6/20/2017 10.11.7+ Form of Performance Share Unit Award Grant Notice and Award Agreement (TSR) under the Encore Capital Group, Inc. 2017 Incentive Award Plan (Executive Separation Plan Participant) 8-K 000-26489 10.3 3/15/2018 56 Table of Contents 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. 2017 Incentive Award Plan 8-K 000-26489 10.4 3/15/2018 10.11.10+ Form of Performance Share Unit Award Grant Notice and Award Agreement (ROIC) under the Encore Capital Group, Inc. 2017 Incentive Award Plan 10-K 000-26489 10.11.10 2/23/2023 10.19 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 10/23/2024 10.19.1 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 10.27 Form of Capped Call Confirmations for 2029 Convertible Notes 8-K 000-26489 10.1 3/3/2023 10.29 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+ 5/7/2025 19 Insider Trading Policy 10-K 000-26489 19 2/26/2025 21 List of Subsidiaries X 23 Consent of Independent Registered Public Accounting Firm, BDO USA, P.C. X 31.1 Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934 X 31.2 Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934 X 32.1 Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) X 97.1 Encore Policy for Recovery of Erroneously Awarded Compensation 10-K 000-26489 97.1 2/21/2024 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 57 Table of Contents 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 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) + Management contract or compensatory plan or arrangement. In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, copies of certain instruments defining the rights of holders of long-term debt of the Company are not filed herewith. Pursuant to this regulation, we hereby agree to furnish a copy of any such instrument to the SEC upon request. Item 16—Form 10-K Summary None. 58 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ENCORE CAPITAL GROUP, INC., a Delaware corporation By: /s/ A SHISH M ASIH Ashish Masih President and Chief Executive Officer Date: February 25, 2026 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Name and Signature Title Date /s/ A SHISH M ASIH President and Chief Executive Officer and Director (Principal Executive Officer) February 25, 2026 Ashish Masih /s/ T OMAS H ERNANZ Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) February 25, 2026 Tomas Hernanz /s/ W ILLIAM C. G OINGS Director February 25, 2026 William C. Goings /s/ A SHWINI G UPTA Director February 25, 2026 Ashwini Gupta /s/ W ENDY G. H ANNAM Director February 25, 2026 Wendy G. Hannam /s/ J EFFREY A. H ILZINGER Director February 25, 2026 Jeffrey A. Hilzinger /s/ A NGELA A. K NIGHT Director February 25, 2026 Angela A. Knight /s/ M ICHAEL P. M ONACO Director February 25, 2026 Michael P. Monaco /s/ L AURA O LLE Director February 25, 2026 Laura Olle /s/ R ICHARD P. S TOVSKY Director February 25, 2026 Richard P. Stovsky 59 Table of Contents ENCORE CAPITAL GROUP, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm ( BDO USA, P.C. ; San Diego, California ; PCAOB ID # 243 ) F- 1 Consolidated Statements of Financial Condition F- 3 Consolidated Statements of Operations F- 4 Consolidated Statements of Comprehensive Income (Loss) F- 5 Consolidated Statements of Equity F- 6 Consolidated Statements of Cash Flows F- 7 Notes to Consolidated Financial Statements F- 8 Note 1: Ownership, Description of Business, and Summary of Significant Accounting Policies F- 8 Note 2: Fair Value Measurements F- 13 Note 3: Derivatives and Hedging Instruments F- 15 Note 4: Receivable Portfolios, Net F- 16 Note 5: Composition of Certain Financial Statement Items F- 18 Note 6: Borrowings F- 19 Note 7: Variable Interest Entities F- 22 Note 8: Common Stock F- 22 Note 9: Accumulated Other Comprehensive Loss F- 23 Note 10: Stock-Based Compensation F- 23 Note 11: Income Taxes F- 24 Note 12: Leases F- 28 Note 13: Commitments and Contingencies F- 29 Note 14: Segment and Geographic Information F- 30 Note 15: Goodwill F- 32 Table of Contents Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Encore Capital Group, Inc. San Diego, California Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statements of financial condition of Encore Capital Group, Inc. (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. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated February 25, 2026, expressed an unqualified opinion thereon. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Estimate of Expected Future Recoveries on Purchased Credit Deteriorated Assets 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 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. F-1 Table of Contents 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 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 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: (i) testing source data; 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. Goodwill Impairment Assessment 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. 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 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 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: (i) assessing the appropriateness of the fair value methodology; (ii) evaluating the reasonableness of certain assumptions used including the discount rate, selection of peer group companies, valuation multiples, and the terminal value; (iii) assessing the reasonableness of the discount rate by developing independent estimates and comparing estimates to those utilized by management; and (iv) evaluating the reasonableness of the market capitalization reconciliation. /s/ BDO USA, P.C. We have served as the Company’s auditor since 2001. San Diego, California February 25, 2026 F-2 Table of Contents ENCORE CAPITAL GROUP, INC. Consolidated Statements of Financial Condition (In Thousands, Except Par Value Amounts) December 31, 2025 December 31, 2024 Assets Cash and cash equivalents $ 156,784 $ 199,865 Receivable portfolios, net 4,371,532 3,776,369 Property and equipment, net 82,080 80,597 Other assets 193,113 225,090 Goodwill 536,291 507,808 Total assets $ 5,339,800 $ 4,789,729 Liabilities and Equity Liabilities: Accounts payable and accrued liabilities $ 230,261 $ 233,545 Borrowings 4,001,293 3,672,762 Other liabilities 131,496 116,091 Total liabilities 4,363,050 4,022,398 Commitments and contingencies (Note 13) Equity: Convertible preferred stock, $ 0.01 par value, 5,000 shares authorized, no shares issued and outstanding — — Common stock, $ 0.01 par value, 75,000 shares authorized, 21,688 shares and 23,691 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively 217 237 Additional paid-in capital — 19,297 Accumulated earnings 1,104,640 909,927 Accumulated other comprehensive loss ( 128,107 ) ( 162,130 ) Total stockholders’ equity 976,750 767,331 Total liabilities and stockholders’ equity $ 5,339,800 $ 4,789,729 The following table presents certain assets and liabilities of consolidated variable interest entities (“VIEs”) included in the consolidated statements of financial condition above. Most assets in the table below include those assets that can only be used to settle obligations of consolidated VIEs. The liabilities exclude amounts where creditors or beneficial interest holders have recourse to the general credit of the Company. See “Note 7: Variable Interest Entities” for additional information on the Company’s VIEs. December 31, 2025 December 31, 2024 Assets Cash and cash equivalents $ 40,256 $ 23,875 Receivable portfolios, net 1,151,221 895,704 Other assets 3,540 3,699 Liabilities Accounts payable and accrued liabilities 3,101 2,946 Borrowings 791,182 599,830 Other liabilities 2,774 887 See accompanying notes to consolidated financial statements F-3 Table of Contents ENCORE CAPITAL GROUP, INC. Consolidated Statements of Operations (In Thousands, Except Per Share Amounts) Year Ended December 31, 2025 2024 2023 Revenues Portfolio revenue $ 1,455,795 $ 1,302,567 $ 1,204,437 Changes in recoveries 208,771 ( 89,740 ) ( 82,530 ) Total debt purchasing revenue 1,664,566 1,212,827 1,121,907 Servicing revenue 88,388 84,783 83,136 Other revenues 15,848 18,751 17,637 Total revenues 1,768,802 1,316,361 1,222,680 Operating expenses Salaries and employee benefits 458,233 422,910 391,532 Cost of legal collections 315,451 259,298 224,252 General and administrative expenses 165,948 163,847 144,862 Other operating expenses 144,476 130,802 111,179 Collection agency commissions 29,287 30,596 35,657 Depreciation and amortization 28,760 32,434 41,737 Goodwill impairment — 100,600 238,200 Impairment of assets — 18,544 18,726 Total operating expenses 1,142,155 1,159,031 1,206,145 Income from operations 626,647 157,330 16,535 Other expense Interest expense ( 293,910 ) ( 252,545 ) ( 201,877 ) Loss on extinguishment of debt ( 1,614 ) ( 7,832 ) — Other income 5,036 6,832 5,078 Total other expense ( 290,488 ) ( 253,545 ) ( 196,799 ) Income (loss) before income taxes 336,159 ( 96,215 ) ( 180,264 ) Provision for income taxes ( 79,325 ) ( 43,029 ) ( 26,228 ) Net income (loss) $ 256,834 $ ( 139,244 ) $ ( 206,492 ) Income (loss) per share: Basic $ 11.05 $ ( 5.83 ) $ ( 8.72 ) Diluted $ 10.91 $ ( 5.83 ) $ ( 8.72 ) Weighted average shares outstanding: Basic 23,234 23,873 23,670 Diluted 23,534 23,873 23,670 See accompanying notes to consolidated financial statements F-4 Table of Contents ENCORE CAPITAL GROUP, INC. Consolidated Statements of Comprehensive Income (Loss) (In Thousands) Year Ended December 31, 2025 2024 2023 Net income (loss) $ 256,834 $ ( 139,244 ) $ ( 206,492 ) 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 gain (loss) on derivative instruments, net of tax 1,334 ( 13,275 ) ( 39,587 ) Change in foreign currency translation: Unrealized gain (loss) on foreign currency translation 32,795 ( 29,081 ) 15,376 Income tax effect ( 106 ) 720 ( 893 ) Other — 3,426 — Unrealized gain (loss) on foreign currency translation 32,689 ( 24,935 ) 14,483 Other comprehensive income (loss), net of tax 34,023 ( 38,210 ) ( 25,104 ) Comprehensive income (loss) $ 290,857 $ ( 177,454 ) $ ( 231,596 ) See accompanying notes to consolidated financial statements F-5 Table of Contents ENCORE CAPITAL GROUP, INC. Consolidated Statements of Equity (In Thousands) Common Stock Additional Paid-In Capital Accumulated Earnings Accumulated Other Comprehensive (Loss) Income Total Equity Shares Par Balance as of December 31, 2022 23,323 $ 233 $ — $ 1,278,210 $ ( 98,816 ) $ 1,179,627 Net loss — — — ( 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 ) 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 ) Balance as of December 31, 2023 23,545 235 11,052 1,049,171 ( 123,920 ) 936,538 Net loss — — — ( 139,244 ) — ( 139,244 ) Other comprehensive loss, net of tax — — — — ( 41,636 ) ( 41,636 ) 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 Other — — — — 3,426 3,426 Balance as of December 31, 2024 23,691 237 19,297 909,927 ( 162,130 ) 767,331 Net income — — — 256,834 — 256,834 Other comprehensive income, net of tax — — — — 34,023 34,023 Issuance of share-based awards, net of shares withheld for employee taxes 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 Settlement of convertible senior notes — — ( 6,206 ) — — ( 6,206 ) Balance as of December 31, 2025 21,688 $ 217 $ — $ 1,104,640 $ ( 128,107 ) $ 976,750 See accompanying notes to consolidated financial statements F-6 Table of Contents ENCORE CAPITAL GROUP, INC. Consolidated Statements of Cash Flows (In Thousands) Year Ended December 31, 2025 2024 2023 Operating activities: Net income (loss) $ 256,834 $ ( 139,244 ) $ ( 206,492 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 28,760 32,434 41,737 Other non-cash interest expense, net 14,364 16,325 17,160 Stock-based compensation expense 18,269 14,012 13,854 Deferred income taxes 29,819 ( 22,280 ) ( 55,916 ) Goodwill impairment — 100,600 238,200 Impairment of assets — 18,544 18,726 Changes in recoveries ( 208,771 ) 89,740 82,530 Other, net 7,654 17,880 ( 2,259 ) Changes in operating assets and liabilities Other assets 9,923 ( 28,245 ) 15,894 Accounts payable, accrued liabilities and other liabilities ( 3,653 ) 56,402 ( 10,443 ) Net cash provided by operating activities 153,199 156,168 152,991 Investing activities: Purchases of receivable portfolios, net of put-backs ( 1,389,064 ) ( 1,336,442 ) ( 1,060,206 ) Collections applied to receivable portfolios 1,136,991 859,911 658,130 Purchases of real estate owned — ( 212 ) ( 26,901 ) Purchases of property and equipment ( 26,270 ) ( 29,007 ) ( 24,807 ) Proceeds from sale of real estate owned 37,650 56,396 52,636 Other, net ( 1,893 ) 8,924 ( 793 ) Net cash used in investing activities ( 242,586 ) ( 440,430 ) ( 401,941 ) Financing activities: Payment of loan and debt refinancing costs ( 10,210 ) ( 21,418 ) ( 13,707 ) Proceeds from credit facilities 1,273,254 2,031,470 1,196,046 Repayment of credit facilities ( 1,359,011 ) ( 1,868,111 ) ( 989,627 ) Proceeds from senior secured notes 500,000 1,000,000 104,188 Repayment of senior secured notes ( 115,965 ) ( 789,106 ) ( 39,080 ) Proceeds from issuance of convertible senior notes — — 230,000 Repayment of convertible senior notes ( 106,206 ) — ( 212,480 ) Repayment of other debt ( 42,469 ) ( 22,078 ) ( 12,715 ) Payments to settle derivative instruments — ( 40,038 ) — Repurchase and retirement of common stock ( 90,402 ) — — Other, net ( 4,137 ) 27,055 5,675 Net cash provided by financing activities 44,854 317,774 268,300 Net (decrease) increase in cash and cash equivalents ( 44,533 ) 33,512 19,350 Effect of exchange rate changes on cash and cash equivalents 1,452 7,989 ( 4,898 ) Cash and cash equivalents, beginning of period 199,865 158,364 143,912 Cash and cash equivalents, end of period $ 156,784 $ 199,865 $ 158,364 Supplemental disclosures of cash flow information: Cash paid for interest $ 259,812 $ 210,580 $ 163,815 Cash paid for income taxes, net of refunds 54,766 67,091 68,522 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 F-7 Table of Contents ENCORE CAPITAL GROUP, INC. Notes to Consolidated Financial Statements Note 1: Ownership, Description of Business, and Summary of Significant Accounting Policies Encore Capital Group, Inc. (“Encore”), through its subsidiaries (collectively with Encore, the “Company”), is an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. The Company purchases portfolios of defaulted consumer receivables at deep discounts to face value and manages them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial obligations to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. The Company also provides debt servicing and other portfolio management services to credit originators for non-performing loans in Europe. Through Midland Credit Management, Inc. 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 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. The Company also has investments and operations in Latin America and Asia-Pacific, which the Company refers to as “LAAP.” Basis of Consolidation The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. The Company also consolidates variable interest entities (“VIEs”) for which it is the primary beneficiary. The primary beneficiary has both (a) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and (b) either the obligation to absorb losses or the right to receive benefits. Refer to “Note 7: Variable Interest Entities” for further details. All intercompany transactions and balances have been eliminated in consolidation. Translation of Foreign Currencies The financial statements of certain of the Company’s foreign subsidiaries are measured using their local currency as the functional currency. Assets and liabilities of foreign operations are translated into U.S. dollars using period-end exchange rates, and revenues and expenses are translated into U.S. dollars using average exchange rates in effect during each period. The resulting translation adjustments are recorded as a component of other comprehensive income or loss. Equity accounts are translated at historical rates, except for the change in retained earnings during the year which is the result of the income statement translation process. Intercompany transaction gains or losses at each period end arising from subsequent measurement of balances for which settlement is not planned or anticipated in the foreseeable future are included as translation adjustments and recorded within other comprehensive income or loss. Translation gains or losses are the material components of accumulated other comprehensive income or loss and are reclassified to earnings upon the substantial sale or liquidation of investments in foreign operations. Recently Adopted Accounting Pronouncements On January 1, 2025, the Company adopted Accounting Standard Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. 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 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): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory; employee compensation; and depreciation, amortization and depletion expenses for each caption on the income statement where such expenses are included. The new standard is effective for annual periods beginning after December 15, 2026. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. F-8 Table of Contents In November 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The new standard is effective for annual periods beginning after December 15, 2025. 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 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. Actual results could materially differ from those estimates. Cash and Cash Equivalents 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, 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. The Company believes any risks are mitigated by maintaining cash with highly rated financial institutions. The carrying amounts reported in the consolidated statements of financial condition for cash and cash equivalents approximate their fair value. Included in cash and cash equivalents is cash collected on behalf of and due to third-party clients. A corresponding balance is included in accounts payable and accrued liabilities. The balance of cash held for clients was $ 22.5 million and $ 21.5 million as of December 31, 2025 and 2024, respectively. Receivable Portfolios The Company purchases portfolios of loans that have experienced significant deterioration of credit quality since origination from banks and other financial institutions. These financial assets are defined as purchased credit deteriorated (or “PCD”) assets under the accounting standard for Financial Instruments - Credit Losses (“CECL”). Under the PCD accounting model, the purchased assets are recognized at their face value with an offsetting allowance and noncredit discount allocated to the individual receivables as the unit of account is at the individual loan level. 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 “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., 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. Examples of risk characteristics include financial asset type, collateral type, size, interest rate, date of origination, term, and geographic location. F-9 Table of Contents The Company’s static pools are typically grouped into credit card, purchased consumer bankruptcy, and mortgage portfolios. The Company further groups these static pools by geographic location. Once a pool is established, the portfolios will remain in the designated pool unless the underlying risk characteristics change. The purchase EIR of a pool will not change over the life of the pool even if expected future cash flows change. Revenue is recognized for each static pool over the economic life of the pool. Debt purchasing revenue includes two components: (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 (a) Recoveries above or below forecast, which is the difference between (i) actual cash collected/recovered during the current period and (ii) expected cash recoveries for the current period, which generally represents over or under performance for the period; and (b) Changes in expected future recoveries, which is the present value change of expected future recoveries, where such change generally results from (i) collections “pulled forward from” or “pushed out to” future periods (i.e. amounts either collected early or expected to be collected later) and (ii) magnitude and timing changes to estimates of expected future collections (which can be increases or decreases). The Company measures expected future recoveries based on historical experience, current conditions, reasonable and supportable forecasts, and other quantitative and qualitative factors. 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, 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. Transfers of Financial Assets The Company accounts for transfers of financial assets as sales when it has surrendered control over the related assets. Whether control has been relinquished requires, among other things, an evaluation of relevant legal considerations and an assessment of the nature and extent of the Company’s ongoing involvement with the assets transferred. Assets obtained and liabilities incurred in connection with transfers reported as sales are initially recognized in the statements of financial condition at fair value. Transfers of financial assets that do not qualify for sale accounting are reported as collateralized borrowings. Accordingly, the related assets remain on the Company’s statements of financial condition and continue to be reported and accounted for as if the transfer had not occurred. Cash proceeds from these transfers are reported as liabilities, with attributable interest expense recognized over the life of the related transactions. To date, the Company has not had any transfers of financial assets that did not qualify for sale accounting. Servicing Revenue Certain of the Company’s subsidiaries earn servicing revenue by providing portfolio management services to credit originators for non-performing loans. The Company recognizes servicing revenue when it satisfies the performance obligation over time by providing debt solution and credit management services. The Company typically invoices for its services monthly with payment terms of 30 days. Goodwill 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. 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” for further discussion of the Company’s goodwill. F-10 Table of Contents Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation and amortization. The provision for depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets as follows: Fixed Asset Category Estimated Useful Life Leasehold improvements Lesser of lease term, including periods covered by renewal options, or useful life Furniture, fixtures and equipment 5 to 10 years Computer hardware and software 3 to 5 years Maintenance and repairs are charged to expense in the year incurred. Expenditures for major renewals that extend the useful lives of fixed assets are capitalized and depreciated over the useful lives of such assets. The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company measures recoverability by comparing the carrying amount to the future undiscounted cash flows that the asset is expected to generate. If the asset is not recoverable, its carrying amount would be adjusted down to its fair value. Real Estate Owned Real estate-owned assets, or REO assets, represent real estate assets acquired when (1) the Company takes possession of the underlying real estate assets of non-performing secured mortgage portfolio previously purchased or (2) when the Company purchases real estate assets. Upon repossession or foreclosure, the Company initially records the property received at its fair value less costs to sell. Subsequent to acquisition, REO is carried at the lower of cost or fair value, less estimated selling costs. Management performs valuations at each reporting period end using Level 3 measurements based on appraised values using market comparables and a valuation allowance is established by a charge to income for any excess of the carrying value over the fair value, less estimated costs to sell the property. The REOs are generally acquired at deeply discounted values and therefore the valuation allowances associated with these assets are immaterial. Recoveries in fair value during the holding period are recognized until the valuation allowance is reduced to zero. Proceeds received in excess of the carrying value of the REO and any associated direct selling costs are recorded as other revenues within the Company’s consolidated statements of operations. Costs related to holding and maintaining the property are charged to operating expenses. Leases The Company recognizes operating lease right-of-use (“ROU”) assets and operating lease liabilities in the consolidated statements of financial condition. ROU assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date based on the net present value of fixed lease payments over the lease term. The Company’s lease term includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option. ROU assets also include any advance lease payments made and are net of any lease incentives. As most of the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would expect to pay to borrow over a similar term, and on a collateralized basis, an amount equal to the lease payments in a similar economic environment. The Company elected not to apply the recognition requirements to short-term leases and not to separate non-lease components from lease components for operating leases. Income Taxes The provision for income taxes is estimated using the asset and liability method of accounting for income taxes, under which deferred tax assets and liabilities are recognized based on temporary differences between the financial statement and income tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the years in which the differences are expected to be realized or settled. At each reporting date, the Company considers new evidence, both positive and negative, that could affect future realization of deferred tax assets including historical earnings, taxable income in prior carryback years if permitted under tax law, projections of future income, timing of reversing temporary differences and the implementation of feasible and prudent tax planning strategies. In the event that it is more likely than not that all or part of the deferred tax assets are determined not to be realizable in the future, the Company would establish or increase a valuation allowance in the period such determination is made, with a corresponding charge to earnings. In the event the Company realizes deferred tax assets that were previously determined to be unrealizable, the Company would release or F-11 Table of Contents decrease the respective valuation allowance, with a corresponding positive adjustment to earnings. 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. The Company records liabilities related to uncertain tax positions when it believes that it is more likely than not that those positions may not be fully sustained upon review by tax authorities, despite its belief that those tax return positions are supportable. The Company includes interest and penalties related to income taxes within its provision for income taxes. See “Note 11: Income Taxes” for further discussion. Stock-Based Compensation The Company determines stock-based compensation expense for all share-based payment awards based on the measurement date fair value. The Company has certain share awards that include market conditions that affect vesting, the fair value of these shares is estimated using a lattice model. Compensation cost is not adjusted if the market condition is not met, as long as the requisite service is provided. For share awards that require service and performance conditions, the Company recognizes compensation cost only for those awards expected to meet the service and performance vesting conditions over the requisite service period of the award. Forfeiture rates are estimated based on the Company’s historical experience. Stock-based compensation expenses are included in “Salaries and Employee Benefits” in the Company’s consolidated statements of operations. See “Note 10: Stock-Based Compensation” for further discussion. Derivative Instruments and Hedging Activities The Company recognizes all derivative financial instruments in its consolidated financial statements at fair value. Changes in the fair value of derivative instruments are recorded in earnings unless hedge accounting criteria are met. The Company designates derivative instruments as cash flow hedges or fair value hedges based on the intended use of the derivative. Changes in the fair value of derivatives that are not highly effective in hedging the changes in fair value of the hedged item are recognized immediately in current earnings. The changes in fair value of derivatives designated as cash flow hedges is recorded each period, net of tax, in accumulated other comprehensive income or loss until the related hedged transaction occurs. If in the event the hedged cash flow does not occur, or it becomes probable that it will not occur, the Company would reclassify the amount of any gain or loss on the related cash flow hedge to income or expense at that time. The hedged cash flows will continue to be recorded in accumulated other comprehensive income or loss until the hedged cash flows occur or are no longer probable of occurring. The Company classifies the cash flows from a derivative instrument that is accounted for as a cash flow hedge (and that does not contain an other-than-insignificant financing element at inception) in the same category as the cash flows from the items being hedged. See “Note 3: Derivatives and Hedging Instruments” for further discussion. The Company’s derivatives are not subject to any master netting or similar agreements and the Company does not offset the fair value of derivative contracts with the same counterparty in its financial statement disclosures. No margin or collateral balances are deposited with or received from counterparties. Concentration of Supply Risk A significant percentage of the Company’s portfolio purchases for any given fiscal quarter or year may be concentrated with a few large sellers, some of which may also involve forward flow arrangements. A significant decrease in the volume of portfolio available from any of the Company’s principal sellers would force the Company to seek alternative sources of charged-off receivables. The Company may be unable to find alternative sources from which to purchase charged-off receivables, and even if it could successfully replace these purchases, the search could take time and the receivables could be of lower quality, cost more, or both, any of which could adversely affect the Company’s business, financial condition and operating results. Income or Loss Per Share Basic income or loss per share is calculated by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. 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 senior notes, if applicable. F-12 Table of Contents A reconciliation of shares used in calculating income or loss per basic and diluted shares follows (in thousands, except per share amounts) : Year Ended December 31, 2025 2024 2023 Net income (loss) $ 256,834 $ ( 139,244 ) $ ( 206,492 ) Total weighted-average basic shares outstanding 23,234 23,873 23,670 Dilutive effect of stock-based awards 223 — — Dilutive effect of convertible and exchangeable senior notes 77 — — Total weighted-average dilutive shares outstanding 23,534 23,873 23,670 Basic income (loss) per share $ 11.05 $ ( 5.83 ) $ ( 8.72 ) Diluted income (loss) per share $ 10.91 $ ( 5.83 ) $ ( 8.72 ) 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. Note 2: Fair Value Measurements Fair value is defined as the price that would be received upon sale of an asset or the price paid to transfer a liability, in an orderly transaction between market participants at the measurement date ( i.e., the “exit price”). The Company uses a fair value hierarchy that prioritizes the inputs used in valuation techniques to measure fair value into three broad levels. The following is a brief description of each level: • Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include 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. • Level 3: Unobservable inputs, including inputs that reflect the reporting entity’s own assumptions. Financial Instruments Required To Be Carried At Fair Value Financial assets and liabilities measured at fair value on a recurring basis are summarized below ( in thousands ): Fair Value Measurements as of December 31, 2025 Level 1 Level 2 Level 3 Total Assets Interest rate cap contracts $ — $ 286 $ — $ 286 Liabilities Interest rate swap agreements — ( 16,338 ) — ( 16,338 ) Fair Value Measurements as of December 31, 2024 Level 1 Level 2 Level 3 Total Assets Interest rate cap contracts $ — $ 252 $ — $ 252 Liabilities Interest rate swap agreements — ( 18,360 ) — ( 18,360 ) 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. F-13 Table of Contents Non-Recurring Fair Value Measurement: Certain assets are measured at fair value on a nonrecurring basis. 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 $ 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 The table below summarizes fair value estimates for the Company’s financial instruments that are not required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company. The carrying amounts in the following table are included in the consolidated statements of financial condition as of December 31, 2025 and December 31, 2024 (in thousands) : December 31, 2025 December 31, 2024 Fair Value Level Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Financial Assets Cash and cash equivalents Level 1 $ 156,784 $ 156,784 $ 199,865 $ 199,865 Receivable portfolios, net Level 3 4,371,532 4,895,167 3,776,369 4,052,645 Other assets (1) Level 2 118,130 118,130 128,674 128,674 Financial Liabilities Accounts payable and accrued liabilities Level 2 230,261 230,261 233,545 233,545 Global senior secured revolving credit facility Level 2 631,998 631,998 865,365 865,365 Senior secured notes (2) Level 2 2,322,890 2,385,645 1,843,386 1,893,367 Convertible senior notes due October 2025 Level 2 — — 100,000 129,100 Convertible senior notes due March 2029 Level 2 230,000 253,260 230,000 232,611 Cabot securitisation senior facility Level 2 343,539 343,539 319,137 319,137 U.S. facility Level 2 450,000 450,000 283,500 283,500 Other borrowings Level 2 52,926 52,926 64,904 64,904 Other liabilities (1) Level 2 115,158 115,158 97,731 97,731 ________________________ (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. (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. The determination of such inputs requires significant judgment, including assessing the assumed market participant’s cost structure, its determination of whether to include fixed costs in its valuation, its collection strategies, and determining the appropriate weighted average cost of capital. 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. Borrowings: 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. F-14 Table of Contents 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. Others: 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. Note 3: Derivatives and Hedging Instruments The Company may periodically enter into derivative financial instruments to manage risks related to interest rates and foreign currency. Certain of the Company’s derivative financial instruments qualify for hedge accounting treatment. The following table summarizes the fair value of derivative instruments as recorded in the Company’s consolidated statements of financial condition (in thousands): December 31, 2025 December 31, 2024 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Interest rate cap contracts Other assets $ 286 Other assets $ 252 Interest rate swap agreements Other liabilities ( 16,338 ) Other liabilities ( 18,360 ) Derivatives Designated as Hedging Instruments The Company may periodically enter into interest rate swap agreements and interest rate cap contracts to reduce its exposure to fluctuations in interest rates on variable interest rate debt and their impact on earnings and cash flows. Under the swap agreements, the Company receives floating interest rate payments and makes interest payments based on fixed interest rates. Under the cap contracts, the Company receives floating interest rate payments and makes interest payments based on capped interest rates. The Company designates its interest rate swap and interest rate cap instruments as cash flow hedges at inception. From time to time, the Company uses cross-currency swap agreements to manage foreign currency exchange risk by converting fixed-rate Euro-denominated borrowings and fixed-rate GBP-denominated borrowings including periodic interest payments and the payment of principal at maturity to fixed-rate USD debt. The Company designates its cross-currency swap agreements as fair value hedges at inception. The following table summarizes the terms of the derivative instruments designated as hedging instruments as recorded in the Company’s consolidated statements of financial condition: December 31, 2025 Effective date Maturity Date Hedge Designation Notional Amount Receive Floating Rate Index Interest rate cap contracts 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 2025 Cap - U.S. Facility December 2025 October 2028 Cash flow hedge $ 130.0 million 1-month SOFR CME Term Interest rate swap agreements 2023 Euro IR Swap October 2023 January 2028 Cash flow hedge $ 117.5 million 3-month EURIBOR 2024 Euro IR Swaps June 2024 January 2028 Cash flow hedge $ 487.5 million 3-month EURIBOR 2023 SOFR IR Swaps - U.S. Facility November 2023 October 2026 Cash flow hedge $ 150.0 million 1-month SOFR CME Term 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 F-15 Table of Contents December 31, 2024 Effective date Maturity Date Hedge Designation Notional Amount Receive Floating Rate Index Interest rate cap contracts 2024 Cap September 2024 September 2026 Cash flow hedge $ 319.1 million SONIA Interest rate swap agreements 2023 Euro IR Swap October 2023 January 2028 Cash flow hedge $ 103.5 million 3-month EURIBOR 2024 Euro IR Swaps June 2024 January 2028 Cash flow hedge $ 429.6 million 3-month EURIBOR 2023 SOFR IR Swaps - U.S. Facility November 2023 October 2026 Cash flow hedge $ 150.0 million 1-month SOFR CME Term 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 (Loss) Gain Recognized in OCI Location of (Loss) Gain Reclassified from OCI into Income (Loss) (Loss) Gain Reclassified from OCI Year Ended December 31, Year Ended December 31, 2025 2024 2023 2025 2024 2023 Interest rate swap agreements $ ( 2,648 ) $ 6,602 $ ( 22,184 ) Interest expense $ ( 4,671 ) $ 2,453 $ 325 Interest rate cap contracts ( 1,883 ) ( 14,309 ) ( 22,820 ) Interest expense ( 1,613 ) ( 2,029 ) ( 1,856 ) Cross-currency swap agreements — ( 17,460 ) 3,496 Interest expense — ( 3,062 ) ( 5,057 ) Other (expense) income — ( 8,902 ) 5,886 Derivatives Not Designated as Hedging Instruments From time to time, the Company enters into currency exchange forward contracts to reduce the effects of currency exchange rate fluctuations. These derivative contracts generally mature within one to six months and are not designated as hedge instruments for accounting purposes. 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, 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) : Derivatives Not Designated as Hedging Instruments Location of Gain (Loss) Recognized in Income on Derivative Amount of Gain (Loss) Recognized in Income Year ended December 31, 2025 2024 2023 Interest rate cap contracts Other income (expense) $ — $ 267 $ ( 556 ) Note 4: Receivable Portfolios, Net Receivable portfolios, net consist of the following as of the dates presented ( in thousands ): Year Ended December 31, 2025 2024 Amortized cost $ — $ — Negative allowance for expected recoveries 4,371,532 3,776,369 Balance, end of period $ 4,371,532 $ 3,776,369 F-16 Table of Contents The following table summarizes the changes in the balance of receivable portfolios, net during the periods presented ( in thousands ): Year Ended December 31, 2025 2024 2023 Balance, beginning of period $ 3,776,369 $ 3,468,432 $ 3,088,261 Negative allowance for expected recoveries - portfolio purchases (1) 1,408,083 1,352,035 1,073,812 Collections applied to receivable portfolios, net (2) ( 1,136,991 ) ( 859,911 ) ( 658,130 ) Changes in recoveries (3) 208,771 ( 89,740 ) ( 82,530 ) Put-backs and Recalls ( 19,019 ) ( 15,593 ) ( 13,606 ) Disposals and transfers to real estate owned ( 3,739 ) ( 26,001 ) ( 7,957 ) Foreign currency translation adjustments 138,058 ( 52,853 ) 68,582 Balance, end of period $ 4,371,532 $ 3,776,369 $ 3,468,432 _______________________ (1) The table below provides the detail on the establishment of negative allowance for expected recoveries of portfolios purchased during the periods presented: Year Ended December 31, 2025 2024 2023 Purchase price $ 1,408,083 $ 1,352,035 $ 1,073,812 Allowance for credit losses 3,760,756 5,489,543 3,430,036 Amortized cost 5,168,839 6,841,578 4,503,848 Noncredit discount 6,708,938 8,661,113 5,333,109 Face value 11,877,777 15,502,691 9,836,957 Write-off of amortized cost ( 5,168,839 ) ( 6,841,578 ) ( 4,503,848 ) Write-off of noncredit discount ( 6,708,938 ) ( 8,661,113 ) ( 5,333,109 ) Negative allowance 1,408,083 1,352,035 1,073,812 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, 2025 2024 2023 Cash Collections $ 2,592,786 $ 2,162,478 $ 1,862,567 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: Year Ended December 31, 2025 2024 2023 Recoveries above (below) forecast $ 197,761 $ 78,202 $ ( 33,405 ) Changes in expected future recoveries 11,010 ( 167,942 ) ( 49,125 ) Changes in recoveries $ 208,771 $ ( 89,740 ) $ ( 82,530 ) Recoveries above or below forecast represent over and under-performance in the reporting period, respectively. 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. The significant recoveries above forecast during the year ended December 31, 2025 F-17 Table of Contents 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. Note 5: Composition of Certain Financial Statement Items Property and Equipment, Net Property and equipment consist of the following as of the dates presented ( in thousands ): December 31, 2025 December 31, 2024 Computer equipment and software $ 210,861 $ 188,487 Leasehold improvements 40,810 38,769 Furniture, fixtures and equipment 22,282 21,373 Construction in process 9,494 14,588 Other 1,518 1,472 284,965 264,689 Less: accumulated depreciation ( 202,885 ) ( 184,092 ) $ 82,080 $ 80,597 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. Other Assets Other assets consist of the following as of the dates presented ( in thousands ): December 31, 2025 December 31, 2024 Operating lease right-of-use assets $ 56,629 $ 58,089 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 Deferred tax assets 5,766 8,418 Other 29,288 44,640 Total $ 193,113 $ 225,090 F-18 Table of Contents Note 6: Borrowings The Company is in compliance in all material respects with all covenants under its financing arrangements as of December 31, 2025. The components of the Company’s consolidated borrowings were as follows (in thousands) : December 31, 2025 December 31, 2024 Global senior secured revolving credit facility $ 631,998 $ 865,365 Senior secured notes 2,324,335 1,846,047 Convertible senior notes 230,000 330,000 Cabot securitisation senior facility 343,539 319,137 U.S. facility 450,000 283,500 Other 52,926 64,904 Finance lease liabilities 596 1,065 4,033,394 3,710,018 Less: debt discount and issuance costs, net of amortization ( 32,101 ) ( 37,256 ) Total $ 4,001,293 $ 3,672,762 Encore is the parent of the restricted group for the Global Senior Facility and the Senior Secured Notes, both of which are guaranteed by the same group of material Encore subsidiaries and secured by the same collateral, which represents substantially all of the assets of those subsidiaries. Global Senior Secured Revolving Credit Facility 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 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. As of December 31, 2025, the Global Senior Facility included the following key provisions: • Interest at Term SOFR (or EURIBOR for any loan drawn in Euro or a rate based on SONIA for any loan drawn in British Pound), with a Term SOFR (or EURIBOR or SONIA) floor of 0.00 %, plus a margin of 2.25 %, plus in the case of Term SOFR borrowings, a credit adjustment spread of 0.10 %; • An unused commitment fee of 0.40 % per annum, payable quarterly in arrears; • A restrictive covenant that limits the LTV Ratio (defined in the Global Senior Facility) to 0.75 in the event that the Global Senior Facility is more than 20 % utilized; • A restrictive covenant that limits the SSRCF LTV Ratio (defined in the Global Senior Facility) to 0.275 ; • A restrictive covenant that requires the Company to maintain a Fixed Charge Coverage Ratio (as defined in the Global Senior Facility) of at least 2.0 ; • Additional restrictions and covenants which limit, among other things, the payment of dividends and the incurrence of additional indebtedness and liens; and • Standard events of default which, upon occurrence, may permit the lenders to terminate the Global Senior Facility and declare all amounts outstanding to be immediately due and payable. The Global Senior Facility is secured by substantially all of the assets of the Company and the guarantors. Pursuant to the terms of an intercreditor agreement entered into with respect to the relative positions of (1) the Global Senior Facility and any super priority hedging liabilities (collectively, “Super Senior Liabilities”) and (2) the Senior Secured Notes, 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. As of December 31, 2025, the outstanding borrowings under the Global Senior Facility were $ 632.0 million. The weighted average interest rate of the Global Senior Facility was 6.39 % and 7.51 % for the years ended December 31, 2025 and December 31, 2024, respectively. Available capacity under the Global Senior Facility, after taking into account applicable debt covenants, was approximately $ 814.3 million as of December 31, 2025. F-19 Table of Contents Senior Secured Notes The following table provides a summary of the Company’s senior secured notes (the “Senior Secured Notes”) ( $ in thousands ): December 31, 2025 December 31, 2024 Issue Currency Maturity Date Interest Payment Dates Interest Rate Encore 2028 Notes $ 336,803 $ 312,880 GBP Jun 1, 2028 Jun 1, Dec 1 4.250 % Encore 2028 Floating Rate Notes 487,532 533,167 EUR Jan 15, 2028 Jan 15, Apr 15, Jul 15, Oct 15 EURIBOR + 4.250 % (1) Encore 2029 Notes 500,000 500,000 USD Apr 1, 2029 Apr 1, Oct 1 9.250 % Encore 2030 Notes 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 6.625 % $ 2,324,335 $ 1,846,047 ______________________ (1) Interest rate is based on three-month EURIBOR (subject to a 0 % floor) plus 4.250 % per annum, resets quarterly. The Senior Secured Notes are secured by the same collateral as the Global Senior Facility. The guarantees provided in respect of the Senior Secured Notes are pari passu with each such guarantee given in respect of the Global Senior Facility. 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. 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 The following table provides a summary of the principal balance, maturity date and interest rate for the Company’s convertible senior notes (the “Convertible Note”) ( $ in thousands ): December 31, 2025 December 31, 2024 Maturity Date Interest Payment Dates Interest Rate 2025 Convertible Notes $ — $ 100,000 Oct 1, 2025 Apr 1, Oct 1 3.250 % 2029 Convertible Notes 230,000 230,000 Mar 15, 2029 Mar 15, Sep 15 4.000 % $ 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 F-20 Table of Contents 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) : 2029 Convertible Notes Initial conversion price $ 65.89 Closing stock price at date of issuance $ 51.68 Closing stock price date Feb 28, 2023 Initial conversion rate (shares per $1,000 principal amount) 15.1763 Effective conversion price (1) $ 82.69 Excess of if-converted value compared to principal (2) $ — Conversion date Dec 15, 2028 ______________________ (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 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 $ 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 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. 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 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. Refer to “Note 7: Variable Interest Entities” for further details. U.S. Facility In October 2023, an indirect subsidiary of Encore (“U.S. Financing Subsidiary”), entered into a facility (as amended, the “U.S. Facility”). On July 3, 2025, the U.S. Facility was amended to extend the maturity date from October 2027 to October F-21 Table of Contents 2028 and to increase the committed amount from $ 300.0 million to $ 450.0 million. The amendment was accounted for as a debt modification. Funds drawn under the U.S. Facility bear interest at a rate per annum equal to Term SOFR plus a margin of 3.50 %. As of December 31, 2025, the outstanding borrowings under the U.S. Facility were $ 450.0 million. The obligations under the U.S. Facility are secured by first ranking security interests over all of U.S. Financing Subsidiary’s assets and rights. 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. The U.S. Facility is a securitized financing vehicle and is a VIE for consolidation purposes. Refer to “Note 7: Variable Interest Entities” for further details. Finance Lease Liabilities The Company has finance lease liabilities primarily for computer equipment. As of December 31, 2025, the Company’s finance lease liabilities were $ 0.6 million. Refer to “Note 12: Leases” for further details. Maturity Schedule The aggregate amounts of the Company’s borrowings, including finance lease liabilities, maturing in each of the next five years and thereafter are as follows (in thousands) : 2026 $ 21,301 2027 20,497 2028 1,351,932 2029 1,296,125 2030 843,539 Thereafter 500,000 Total $ 4,033,394 Note 7: Variable Interest Entities A VIE is defined as a legal entity whose equity owners do not have sufficient equity at risk, or, as a group, the holders of the equity investment at risk lack any of the following three characteristics: decision-making rights, the obligation to absorb expected losses, or the right to receive expected residual returns of the entity. The primary beneficiary is identified as the variable interest holder that has both the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and the obligation to absorb expected losses or the right to receive residual returns from the entity that could potentially be significant to the VIE. The Company consolidates VIEs when it is the primary beneficiary. As of December 31, 2025, the Company’s VIEs include certain securitized financing vehicles and other immaterial special purpose entities that were created to purchase receivable portfolios in certain geographies. The Company is the primary beneficiary of these VIEs. The Company has the power to direct the activities of the VIEs including the ability to exercise discretion in the servicing of the financial assets and has the right to receive residual returns that could potentially be significant to the VIEs. The Company’s exposure to loss is limited to the total of the carrying value of the VIEs. The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. Most assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the VIE. Note 8: Common Stock 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 F-22 Table of Contents 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. The Company records the excess of repurchase price over the par amount to additional paid-in capital, then to retained earnings once additional paid-in capital is reduced to zero. Direct costs relating to the stock repurchases are treated as stock issuance costs and are included in stockholders’ equity. Note 9: Accumulated Other Comprehensive Loss A summary of the Company’s changes in accumulated other comprehensive loss by component is presented below (in thousands): Derivatives Currency Translation Adjustments Accumulated Other Comprehensive Loss Balance at December 31, 2022 $ 36,494 $ ( 135,310 ) $ ( 98,816 ) Other comprehensive (loss) income before reclassification ( 41,508 ) 15,376 ( 26,132 ) Reclassification ( 2,970 ) — ( 2,970 ) Tax effect 4,891 ( 893 ) 3,998 Balance at December 31, 2023 ( 3,093 ) ( 120,827 ) ( 123,920 ) 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 Balance at December 31, 2024 ( 16,368 ) ( 145,762 ) ( 162,130 ) Other comprehensive (loss) income before reclassification ( 4,531 ) 32,795 28,264 Reclassification 6,284 — 6,284 Tax effect ( 419 ) ( 106 ) ( 525 ) Balance at December 31, 2025 $ ( 15,034 ) $ ( 113,073 ) $ ( 128,107 ) Note 10: Stock-Based Compensation In April 2017, Encore’s Board of Directors (the “Board”) approved the Encore Capital Group, Inc. 2017 Incentive Award Plan (the “2017 Plan”), which was then approved by the Company’s stockholders on June 15, 2017. Board members, employees, and consultants of Encore and its subsidiaries and affiliates are eligible to receive awards under the 2017 Plan. Subject to certain adjustments, the Company may grant awards for an aggregate of 5,713,571 shares of the Company’s common stock under the 2017 Plan. The aggregate number of shares available for issuance under the 2017 Plan is reduced by 2.12 shares for each share delivered in settlement of any full value award and by one share for each share delivered in settlement of any stock option or stock appreciation right. When an award under the 2017 Plan expires, lapses or is terminated, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised or forfeited, the unused shares covered by such award will again become available for award grants under the 2017 Plan. Shares available under the 2017 Plan will be increased by 2.12 shares for each share subject to a full value award and by one share for each share subject to a stock option or a stock appreciation right, in each case, that become or again be available for issuance pursuant to the foregoing share counting provisions. The 2017 Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, dividend equivalent rights, stock appreciation rights, cash awards, performance-based awards and any other types of awards not inconsistent with the 2017 Plan. 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 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. The fair value of restricted stock units with a service condition and/or a performance condition that affect vesting is equal to the closing sale price of the Company’s common stock on the grant date. Compensation expense is recognized only for the awards that ultimately vest. The Company F-23 Table of Contents 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. The fair value of these shares is estimated using a lattice model. For the majority of restricted stock units, shares are issued on the vesting dates net of the number of shares needed to satisfy minimal statutory tax withholding requirements. The tax obligations are then paid by the Company on behalf of the employees. A summary of the Company’s stock award activities as of December 31, 2025, and changes during the year then ended, is presented below: Non-Vested Shares (1) Weighted Average Grant Date Fair Value Non-vested as of December 31, 2024 607,459 $ 52.84 Awarded 533,685 $ 35.46 Vested ( 221,224 ) $ 51.30 Cancelled ( 48,780 ) $ 68.63 Non-vested as of December 31, 2025 871,140 $ 41.70 ________________________ (1) Certain of the Company’s stock awards have a vesting matrix under which the stock awards can vest at a maximum level that is up to 200 % of the shares that would vest for achieving the performance goals at target. The number of shares presented is based on achieving the performance goals at target levels as defined in the stock award agreements. As of December 31, 2025 and 2024, the maximum number of shares that could vest if non-vested performance shares vested at maximum levels was 1,099,291 and 757,061 , respectively. Unrecognized compensation expense related to restricted stock units as of December 31, 2025 was $ 20.9 million. The weighted-average remaining expense period, based on the unamortized value of these outstanding non-vested shares, was approximately 1.4 years. The fair value of restricted stock units vested for the years ended December 31, 2025, 2024, and 2023 was $ 8.0 million, $ 13.8 million, and $ 15.7 million, respectively. The weighted average grant date fair value for stock awards granted during the years ended December 31, 2025, 2024, and 2023 was $ 35.46 , $ 49.73 , and $ 49.97 , respectively. Note 11: Income Taxes Income or loss before provision for income taxes consisted of the following (in thousands) : Year Ended December 31, 2025 2024 2023 US $ 285,981 $ 137,101 $ 61,356 Foreign 50,178 ( 233,316 ) ( 241,620 ) Total income (loss) before provision for income taxes $ 336,159 $ ( 96,215 ) $ ( 180,264 ) The provision for income tax consisted of the following (in thousands) : Year Ended December 31, 2025 2024 2023 Current expense: Federal $ 36,002 $ 48,272 $ 59,558 State 9,275 11,242 17,677 Foreign 4,229 5,795 4,909 49,506 65,309 82,144 Deferred expense (benefit): Federal 24,344 ( 19,653 ) ( 49,028 ) State 4,171 ( 3,423 ) ( 8,685 ) Foreign 1,304 796 1,797 29,819 ( 22,280 ) ( 55,916 ) Provision for income taxes $ 79,325 $ 43,029 $ 26,228 F-24 Table of Contents 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 $ % U.S. federal statutory income tax rate $ 70,593 21.0 % State and local income tax, net of federal income tax effect (1) 14,024 4.2 % Foreign tax effects  United Kingdom   Changes in valuation allowances ( 6,735 ) ( 2.0 ) %   Other 142 — % Other foreign jurisdictions 1,589 0.5 % 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, 2024 2023 U.S. 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 % Change in valuation allowance (1) ( 32.2 ) % 7.3 % Goodwill impairment (2) ( 22.4 ) % ( 28.3 ) % Taxable gain in foreign jurisdiction (3) 2.6 % 2.9 % Nondeductible compensation ( 1.2 ) % ( 0.6 ) % Return to provision adjustments ( 1.3 ) % 0.6 % Forfeit benefit due to merger/liquidations (4) — % ( 14.7 ) % Other ( 2.7 ) % ( 0.3 ) % 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. (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” for further details. (3) Represents taxable foreign currency movement recognized in a foreign subsidiary for the years ended December 31, 2024 and 2023. (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 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. The Company has not provided for applicable income or withholding taxes on the undistributed earnings from continuing operations for certain of its subsidiaries operating outside of the United States. Undistributed net income of these subsidiaries as of December 31, 2025, were approximately $ 184.4 million. Such undistributed earnings are considered permanently reinvested. F-25 Table of Contents The Company does not provide deferred taxes on translation adjustments of unremitted earnings under the indefinite reinvestment exemption. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practical due to the complexities of a hypothetical calculation. Subsidiaries operating outside of the United States for which the Company does not consider under the indefinite reinvestment exemption have no material undistributed earnings or outside basis differences and therefore no U.S. taxes have been provided. Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the carrying amounts for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands) : December 31, 2025 December 31, 2024 Deferred tax assets: Net operating losses $ 67,738 $ 58,008 Operating lease liabilities 10,522 11,523 Accrued expenses 11,490 10,490 Difference in basis of bond and loan costs 2,874 3,370 Difference in basis of receivable portfolio 10,689 12,316 Stock-based compensation 4,847 4,427 Difference in basis of depreciable and amortizable assets 2,776 4,353 Accrued interest expense 5,736 14,118 Other 6,651 6,437 Total deferred tax assets 123,323 125,042 Valuation allowance ( 84,615 ) ( 84,155 ) Total deferred tax assets net of valuation allowance 38,708 40,887 Deferred tax liabilities: Accrued expenses ( 4 ) ( 44 ) Difference in basis of receivable portfolio ( 54,974 ) ( 27,252 ) Stock-based compensation — ( 19 ) Right-of-use asset ( 8,730 ) ( 9,360 ) Difference in basis of depreciable and amortizable assets ( 5,445 ) ( 4,282 ) Prepaid expenses ( 1,002 ) ( 1,260 ) Other ( 369 ) ( 730 ) Total deferred tax liabilities ( 70,524 ) ( 42,947 ) Net deferred tax liability (1) $ ( 31,816 ) $ ( 2,060 ) ________________________ (1) The Company operates in multiple jurisdictions. In accordance with authoritative guidance relating to income taxes, deferred taxes and liabilities are netted for each tax-paying component of the Company within a particular tax jurisdiction, and presented as a single amount in the statement of financial condition. As of December 31, 2025, certain of the Company’s foreign subsidiaries have net operating loss carry forwards of approximately $ 306.4 million, of which $ 20.8 million will begin to expire in 2027 and the remainder will carry forward indefinitely. Certain of the Company’s domestic subsidiaries have state net operating losses, which will begin to expire in 2038. Valuation allowances are recorded against deferred tax assets, including certain net operating losses recorded as deferred tax assets, if the Company believes it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2025 valuation allowances increased by $ 0.5 million, as compared to December 31, 2024. 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. F-26 Table of Contents A reconciliation of the beginning and ending amounts of unrecognized tax benefit is as follows (in thousands) : Amount 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 ) Other 91 December 31, 2023 6,961 Decrease related to expiration of statute of limitations ( 1,044 ) Decrease related to prior year tax positions ( 38 ) Increase related to current year tax positions 483 Other ( 107 ) December 31, 2024 6,255 Decrease related to expiration of statute of limitations ( 529 ) Decrease related to prior year tax positions ( 23 ) Decrease related to settlements with taxing authorities ( 1,745 ) Increase related to current year tax positions 196 Other 130 December 31, 2025 $ 4,284 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, 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. The Company recognizes interest and penalties related to income tax as a component of the provision for income taxes. Interest and penalties expensed during the years ended December 31, 2025, 2024 and 2023 were immaterial . 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. income tax returns in jurisdictions with varying statutes of limitations. The Company is subject to examination of its income tax returns by various taxing authorities, and the timing of the resolution of income tax examinations cannot be predicted with certainty. In general, the Company is subject to examination for tax years after December 31, 2021 for the U.S. federal jurisdiction, after December 31, 2021 for U.S state jurisdictions, and after December 31, 2020 in major foreign jurisdictions. F-27 Table of Contents The Company’s management regularly assesses the likelihood of adverse outcomes resulting from examinations, if any, to determine the adequacy of the Company’s provision for income taxes. 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 federal $ 38,100 US state and local 12,741 Foreign Ireland ( 3,202 ) India 4,823 Other 2,304 Cash paid for income taxes, net of refunds received $ 54,766 Note 12: Leases The majority of the Company’s leases are for corporate offices, various facilities, and information technology equipment. The components of lease expense were as follows during the periods presented (in thousands) : Year Ended December 31, 2025 2024 2023 Operating lease costs (1) $ 15,986 $ 15,287 $ 15,102 Finance lease costs Amortization of ROU assets 888 1,855 2,804 Interest on lease liabilities 52 79 168 Total lease costs $ 16,926 $ 17,221 $ 18,074 ________________________ (1) Operating lease expenses are included in general and administrative expenses in the Company’s consolidated statements of operations. Costs include short-term and variable lease components which were not material for the periods presented. The following table provides supplemental consolidated statement of financial condition information related to leases as of the dates presented (in thousands) : Classification December 31, 2025 December 31, 2024 Assets Operating lease ROU assets, net Other assets $ 56,629 $ 58,089 Finance lease ROU assets, net Property and equipment, net 572 1,023 Total lease ROU assets $ 57,201 $ 59,112 Liabilities Operating lease liabilities Other liabilities $ 65,438 $ 69,748 Finance lease liabilities Borrowings 596 1,065 Total lease liabilities $ 66,034 $ 70,813 F-28 Table of Contents Supplemental lease information is summarized below (in thousands) : Year Ended December 31, 2025 2024 2023 ROU assets obtained in exchange for new operating lease obligations $ 12,361 $ 3,957 $ 12,772 ROU assets obtained in exchange for new finance lease obligations 438 203 234 Cash paid for amounts included in the measurement of lease liabilities Operating leases - operating cash flows 18,865 18,212 17,195 Finance leases - operating cash flows 52 79 165 Finance leases - financing cash flows 906 1,953 3,032 Lease term and discount rate were as follows: December 31, 2025 December 31, 2024 December 31, 2023 Weighted-average remaining lease term ( in years ) Operating leases 4.6 5.4 5.7 Finance leases 2.1 1.4 1.6 Weighted-average discount rate Operating leases 5.2 % 5.3 % 5.4 % Finance leases 7.5 % 4.8 % 4.1 % Maturities of lease liabilities under non-cancelable leases as of December 31, 2025 are summarized as follows (in thousands) : Finance Leases Operating Leases Total 2026 $ 321 $ 18,391 $ 18,712 2027 262 16,585 16,847 2028 63 14,398 14,461 2029 — 12,140 12,140 2030 — 7,448 7,448 Thereafter — 4,799 4,799 Total undiscounted lease payments 646 73,761 74,407 Less: imputed interest ( 50 ) ( 8,323 ) ( 8,373 ) Total lease liabilities $ 596 $ 65,438 $ 66,034 Note 13: Commitments and Contingencies Litigation and Regulatory The Company is involved in disputes, legal actions, regulatory investigations, inquiries, and other actions from time to time in the ordinary course of business. The Company, along with others in its industry, is routinely subject to legal actions asserting various claims, including those based on the Fair Debt Collection Practices Act (“FDCPA”), the Fair Credit Reporting Act (“FCRA”), the Telephone Consumer Protection Act (“TCPA”), comparable state statutes, state and federal unfair competition statutes, and common law causes of action. The violations of law investigated or alleged in these actions often include claims that the Company lacks specified licenses to conduct its business, attempts to collect debts on which the statute of limitations has run, has made inaccurate or unsupported assertions of fact in support of its collection actions and/or has acted improperly in connection with its efforts to contact consumers. Such litigation and regulatory actions could involve potential compensatory or punitive damage claims, fines, sanctions, injunctive relief, or changes in business practices. 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. 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 F-29 Table of Contents 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. If the Company is unable to resolve its differences with the state attorneys general, it is possible that they may file claims against the Company. In certain legal proceedings, the Company may have recourse to insurance or third-party contractual indemnities to cover all or portions of its litigation expenses, judgments, or settlements. The Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum estimated liability. The Company continuously assesses the potential liability related to its pending litigation and regulatory matters and revises its estimates when additional information becomes available. The Company’s legal costs are recorded to expense as incurred. As of December 31, 2025, the Company has no material reserves for legal matters. Purchase Commitments In the normal course of business, the Company enters into forward flow purchase agreements. A forward flow purchase agreement is a commitment to purchase receivables over a duration that is typically three to twelve months, but can be longer, generally with a specifically defined volume range, frequency, and pricing. Typically, these forward flow contracts have provisions that allow for early termination or price re-negotiation should the underlying quality of the portfolio deteriorate over time or if any particular month’s delivery is materially different than the original portfolio used to price the forward flow contract. 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, 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. Employee Savings and Retirement Plan The Company has a 401(k) Savings Plan in the U.S. that qualifies as deferred salary arrangements under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, matching contributions are based upon the amount of the employees’ contributions subject to certain limitations. The Company also has defined contribution plans for eligible employees in other countries. 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. Guarantees 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. The Company has also agreed to indemnify certain third parties under certain circumstances pursuant to the terms of certain underwriting agreements, registration rights agreements, credit facilities, portfolio purchase and sale agreements, and other agreements entered into by the Company in the ordinary course of business. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. The Company believes the estimated fair value of these indemnification agreements is minimal and, as of December 31, 2025, has no liabilities recorded for these agreements. Note 14: Segment and Geographic Information The Company conducts business through several operating segments. The accounting policies applied to the segments are the same as those described in the summary of significant accounting policies. 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, 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. F-30 Table of Contents 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) : Year Ended December 31, 2025 Debt purchasing and recovery segment Corporate and other unallocated Consolidated Total revenues $ 1,768,802 $ — $ 1,768,802 Total operating expenses (1) ( 1,074,580 ) ( 67,575 ) ( 1,142,155 ) Operating income 694,222 626,647 Other segment items (2) 3,422 3,422 Interest expenses (3) ( 293,910 ) ( 293,910 ) Provision for income taxes ( 79,325 ) ( 79,325 ) Net income $ 256,834 _______________________ (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, 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. (3) The Company manages its available capital resources at the corporate level. Interest expenses are not allocated to operating segments. Year Ended December 31, 2024 Debt purchasing and recovery segment Corporate and other unallocated Consolidated Total revenue $ 1,316,361 $ — $ 1,316,361 Total operating expenses (1) ( 1,101,055 ) ( 57,976 ) ( 1,159,031 ) Operating income 215,306 157,330 Other segment items (2) ( 1,000 ) ( 1,000 ) Interest expenses (3) ( 252,545 ) ( 252,545 ) Provision for income taxes ( 43,029 ) ( 43,029 ) Net loss $ ( 139,244 ) ________________________ (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 $ 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. Interest expenses are not allocated to operating segments. Year Ended December 31, 2023 Debt purchasing and recovery segment Corporate and other unallocated Consolidated Total revenue $ 1,222,680 $ — $ 1,222,680 Total operating expenses (1) ( 1,148,161 ) ( 57,984 ) ( 1,206,145 ) Operating income 74,519 16,535 Other segment items (2) 5,078 5,078 Interest expenses (3) ( 201,877 ) ( 201,877 ) Provision for income taxes ( 26,228 ) ( 26,228 ) Net loss $ ( 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, 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. (3) The Company manages its available capital resources at the corporate level. Interest expenses are not allocated to operating segments. F-31 Table of Contents The following tables present information about geographic areas in which the Company operates (in thousands) : Year Ended December 31, 2025 2024 2023 Total revenues: United States $ 1,268,303 $ 991,949 $ 792,443 Europe United Kingdom 354,473 232,557 295,566 Other European countries (1) 141,019 89,615 134,301 Total Europe 495,492 322,172 429,867 Other geographies (1) 5,007 2,240 370 Total $ 1,768,802 $ 1,316,361 $ 1,222,680 ________________________ (1) None of these countries comprise greater than 10% of the Company’s consolidated revenues. December 31, 2025 December 31, 2024 Long-lived assets (1) : United States $ 53,982 $ 60,050 International United Kingdom 49,461 44,726 India 18,295 20,801 Other foreign countries (2) 16,971 13,109 84,727 78,636 Total $ 138,709 $ 138,686 ________________________ (1) Long-lived assets consist of property and equipment, net and right of use assets. (2) None of these countries comprise greater than 10% of the Company’s consolidated long-lived assets. Note 15: Goodwill 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, 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. Under the income approach, the Company uses a discounted cash flow method, or DCF, to estimate the fair value of a reporting unit. In applying the DCF method, an identified level of future cash flow is estimated. 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 F-32 Table of Contents collections. 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. The Company bases the discount rate on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit’s ability to execute on the projected cash flows. Because DCF analyses are based on management’s long-term financial projections and require significant estimates and judgments, the market approach is conducted in addition to the income approach in estimating the fair value of a reporting unit. Under the market approach, the Company uses a Guideline Public Company Method and, when data is available, a Guideline Merged & Acquired Company method to estimate the fair value of equity and the business enterprise value of a reporting unit. The Guideline Public Company approach uses financial metrics from similar publicly traded companies to estimate fair value. The Guideline Merged and Acquired Company method calculates fair value by analyzing the actual prices paid for recent mergers and acquisitions in the industry. The fair value estimate of the Company’s reporting units was derived primarily from the income approach, and to a lesser extent, the market approach as described above. The Company believes that the current methodology used in determining the fair value at its reporting units represent its best estimates. 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 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. Adverse changes in the Company’s actual or expected operating results, market capitalization, business climate, economic factors or other negative events that may be outside the control of management could result in a material non-cash impairment charge in the future. The following table summarizes the activity in the Company’s goodwill balance (in thousands): Total Company Balance as of December 31, 2022 $ 821,214 Goodwill impairment ( 238,200 ) Effect of foreign currency translation 23,461 Balance as of December 31, 2023 606,475 Goodwill acquired (1) 11,268 Goodwill impairment ( 100,600 ) Effect of foreign currency translation ( 9,335 ) Balance as of December 31, 2024 507,808 Effect of foreign currency translation 28,483 Balance as of December 31, 2025 $ 536,291 ________________________ (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. F-33