Encore Capital Group (ECPG) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01Financial, economic and other conditions affect the ability of consumers to pay their obligations, which could harm our financial results
2. 02We may not be able to purchase receivables at favorable prices, which could limit our growth or profitability
3. 03A significant portion of our portfolio purchases during any period may be concentrated with a small number of sellers, which could adversely affect our volume and timing of purchases
4. 04A significant decrease in the volume of portfolio available from any of our principal sellers would force us to seek alternative sources of charged-off receivables
5. 05We face intense competition that could impair our ability to maintain or grow our purchasing volumes
6. 06We may purchase receivable portfolios that are unprofitable or we may not be able to collect sufficient amounts to recover our costs and to fund our operations
7. 07We may experience losses on portfolios consisting of new types of receivables or receivables in new geographies due to our lack of collection experience with these receivables, which could harm our business, financial condition and operating results
8. 08The statistical models we use to project remaining cash flows from our receivable portfolios may prove to be inaccurate and, if so, our financial results may be adversely affected
9. 09A significant portion of our collections relies upon our success in individual lawsuits brought against consumers and our ability to collect on judgments in our favor
10. 10Increases in costs associated with our collections through collection litigation can raise our costs associated with our collection strategies and the individual lawsuits brought against consumers to collect on judgments in our favor
11. 11Our business, financial condition and operating results may be adversely affected if consumer bankruptcy filings increase or if bankruptcy laws change
12. 12We are dependent on our data gathering systems and proprietary consumer profiles, and if access to such data was lost or became public, our business could be materially and adversely affected
13. 13If our technology platforms were to fail, become ineffective, or if we are not able to successfully anticipate, invest in, or adopt technological advances within our industry, it could have an adverse effect on our operations
14. 14Our business results and operations could be adversely affected by a cybersecurity event, breach, business interruption or similar incident relating to our information technology systems
15. 15As cyber attacks continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities. In addition, our remediation efforts may not be successful
16. 16We have significant international operations, which exposes us to additional risks and uncertainties
17. 17We may not be able to adequately protect the intellectual property rights upon which we rely and, as a result, any lack of protection may diminish our competitive advantage
18. 18Exchange rate fluctuations could adversely affect our business, financial condition and operating results
19. 19An outbreak of a contagious disease or other public health emergency could materially impact our business and results of operations

Risks Related to Government Regulation and Litigation

1. 20Our business is subject to extensive laws and regulations, which have increased and may continue to increase
2. 21Failure to comply with government regulation could result in the suspension, termination or impairment of our ability to conduct business, may require the payment of significant fines and penalties, or require other significant expenditures
3. 22In addition, new federal, state or local laws or regulations, or changes in the ways these rules or laws are interpreted or enforced, could limit our activities in the future and/or significantly increase the cost of regulatory compliance
4. 23Compliance with this extensive regulatory framework is expensive and labor-intensive. Any of the foregoing could have an adverse effect on our business, financial condition and operating results
5. 24Negative publicity associated with litigation, governmental investigations, regulatory actions, cybersecurity breaches and other public statements could damage our reputation

Risks Related to Our Indebtedness and Common Stock

1. 25Our significant indebtedness could adversely affect our financial health and could harm our ability to react to changes to our business
2. 26Servicing our indebtedness requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial indebtedness
3. 27Despite our current indebtedness levels, we may still incur substantially more indebtedness or take other actions which would intensify the risks discussed above
4. 28We may not be able to continue to satisfy the covenants in our debt agreements
5. 29Increases in interest rates could adversely affect our business, financial condition and operating results
6. 30Our common stock price may be subject to significant fluctuations and volatility
7. 31The price of our common stock could also be affected by possible sales of our common stock by investors who view our convertible notes as a more attractive means of equity participation in us and by hedging or arbitrage trading activity that we expect to develop involving our common stock
8. 32Future sales of our common stock or the issuance of other equity securities may adversely affect the market price of our common stock
9. 33We may not have the ability to raise the funds necessary to repurchase our notes upon a fundamental change or change of control or to settle conversions in cash, and our future indebtedness may contain limitations on our ability to pay cash upon conversion of our convertible notes
10. 34Provisions in our charter documents and Delaware law may delay or prevent acquisition of us, which could decrease the value of shares of our common stock
11. 35We are dependent on our management team for the adoption and implementation of our strategies and the loss of its services could have an adverse effect on our business
12. 36We may not be able to recruit and retain key employees and workers in a competitive labor market
13. 37We may make acquisitions that prove unsuccessful and any mergers, acquisitions, dispositions or joint venture activities may change our business and financial results and introduce new risks
14. 38An impairment of goodwill could negatively impact our financial results32% rewritten
15. 39We may consume resources in pursuing business opportunities, financings or other transactions that are not consummated, which may strain or divert our resources
16. 40Failure to establish and maintain effective internal controls could have a material adverse effect on the accuracy and timing of our financial reporting in future periods