ENCORE CAPITAL GROUP INCECPG

ENCORE CAPITAL GROUP INC Leases Disclosure

10-KFiled Feb 25, 20262 min read
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,
202520242023
Operating lease costs(1)
$15,986 $15,287 $15,102 
Finance lease costs
Amortization of ROU assets888 1,855 2,804 
Interest on lease liabilities52 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):
ClassificationDecember 31, 2025December 31, 2024
Assets
Operating lease ROU assets, net
Other assets$56,629 $58,089 
Finance lease ROU assets, net
Property and equipment, net572 1,023 
Total lease ROU assets$57,201 $59,112 
Liabilities
Operating lease liabilitiesOther liabilities$65,438 $69,748 
Finance lease liabilitiesBorrowings596 1,065 
Total lease liabilities$66,034 $70,813 
Supplemental lease information is summarized below (in thousands):
Year Ended December 31,
202520242023
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 obligations438 203 234 
Cash paid for amounts included in the measurement of lease liabilities
Operating leases - operating cash flows18,865 18,212 17,195 
Finance leases - operating cash flows52 79 165 
Finance leases - financing cash flows906 1,953 3,032 
Lease term and discount rate were as follows:
December 31, 2025December 31, 2024December 31, 2023
Weighted-average remaining lease term (in years)
Operating leases4.65.45.7
Finance leases2.11.41.6
Weighted-average discount rate
Operating leases5.2 %5.3 %5.4 %
Finance leases7.5 %4.8 %4.1 %
Maturities of lease liabilities under non-cancelable leases as of December 31, 2025 are summarized as follows (in thousands):
Finance LeasesOperating LeasesTotal
2026$321 $18,391 $18,712 
2027262 16,585 16,847 
202863 14,398 14,461 
2029— 12,140 12,140 
2030— 7,448 7,448 
Thereafter— 4,799 4,799 
Total undiscounted lease payments646 73,761 74,407 
Less: imputed interest(50)(8,323)(8,373)
Total lease liabilities$596 $65,438 $66,034 

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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