JCAP

Image source: The Motley Fool. Thursday, Aug. 13, 2026 at 5:00 p.m. ET Founder and Chief Executive Officer - David Burton Chief Financial Officer - Christo Realov Operator: Good afternoon, and welcome to Jefferson Capital's second quarter of 2026 conference call. With us today are David Burton, Founder and Chief Executive Officer; and Christo Realov, Chief Financial Officer. As a reminder, this conference call is being recorded. This call may contain forward-looking statements regarding the company's plans, initiatives and strategies and the anticipated financial performance of the company, including, but not limited to, sales and profitability, anticipated benefits of the debt purchasing market in Mexico, expectations for the market and macroeconomic factors and target performance metrics. Such statements are based upon management's current expectations, projections, estimates and assumptions. Words such as expect, believe, anticipate, think, outlook, hope and variations of such words and similar expressions identify such forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause future results to differ materially from those suggested by the forward-looking statements. Such risks and uncertainties are further disclosed in the company's most recent filings with the Securities and Exchange Commission. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements made herein and are cautioned not to place undue reliance on such forward-looking statements. The company does not undertake to update the forward-looking statements, except as required by law. Also during this conference call, the company will be presenting certain non-GAAP financial measures. Reconciliations of the company's historical non-GAAP financial measures to their most directly comparable GAAP financial measures appear in today's earnings press release. I will now turn the call over to David Burton. David Burton: Thank you, operator, and thanks, everyone, for joining our investor call. Let's dive into our second quarter financial performance highlights. We generated another quarter of excellent results for shareholders. The company delivered strong collections growth with collections up 18% year-over-year to $301 million, and we continue to perform well versus our underwriting expectations. The market backdrop remains attractive, and our deployments for the quarter were $152 million, up 21% versus the prior year period. Our estimated remaining collections grew 18% to $3.4 billion, driven by our continued deployment performance and attractive anticipated returns. We delivered a sector-leading cash efficiency ratio of 72.2%, driven in part by strong collections from the Bluestem and Conn's portfolio purchases. The company also generated strong cash flow for the quarter, which improved our leverage ratio to 1.71x, a level which positions us well for future growth and creates significant strategic optionality. Adjusted EPS for the quarter was $0.77. Next, I'd like to offer a brief market update and cover some of the macroeconomic indicators to provide better context for why we remain confident in the investment opportunity for our business. The fundamental backdrop remains unchanged. Near record consumer credit balances and elevated levels of charge-offs and delinquencies across all asset classes create a long runway for robust portfolio supply. The environment is also underpinned by a low level of unemployment, which supports the expected liquidation rates on our existing portfolio and gives us confidence in underwriting new purchases. I want to focus more closely on auto finance, an asset class which presents a substantial opportunity for our business. This is a large and growing segment of consumer credit, but also one which is highly fragmented and experiencing significant headwinds. Auto finance receivables have grown steadily to a new record of $1.69 trillion. Higher loan amounts for both new and used vehicles have been driven by higher vehicle prices, but also by the need for borrowers to roll over past negative equity balances with nearly 1/3 of used vehicle trade-ins carrying negative equity. As a result, loan payments, also driven by elevated interest rates, have grown significantly and have pressured household budgets. The average monthly new vehicle loan payment is currently $773, up 40% compared to pre-pandemic. And the average used vehicle monthly loan payment has reached $531, up 35% post-pandemic. In addition, 72-month or longer loans account for nearly 1/3 of all financed new vehicle sales. For smaller auto finance originators or dealership networks, deteriorating credit quality is frequently coupled with financing challenges where a portfolio sale could become the value-maximizing option for the business going forward. All of these trends set the stage for increasing portfolio supply for an asset class where significant complexity limits the number of interested buyers. We remain uniquely positioned to offer solutions across the spectrum of performing, charged-off and insolvency auto finance portfolios for both secured and unsecured accounts and to capitalize on this growing opportunity. Moving on, I'd like to review in more detail some key performance trends for the quarter. Our collections were $301 million, up 18% year-over-year, driven by strong deployments in 2024 and 2025. $41 million of collections for the quarter were attributable to the Bluestem portfolio purchase, and $24 million were attributable to the Conn's portfolio purchase. More broadly, our collection performance on the overall portfolio continues to reflect the accuracy of our underwriting models. A key trend in collection performance has been the increase in legal channel collections, which were up 54% year-over-year to $64 million. Jefferson Capital utilizes the legal channel as a means of last resort in instances where we believe the account holder has the ability but not the willingness to engage or pay. We've achieved a number of important process improvements, specifically in the U.S., which have significantly compressed the timing from placement of the account to filing the lawsuit, which, in turn, has accelerated suit volumes. The inventory of suit-eligible accounts has increased given the significant growth in deployments over the past 3 years. So over time, we expect to see continued growth in legal collections. A separate component of the increase is driven by modeling improvements, which have allowed us to identify new portfolio segments from prior purchases where we have uncovered opportunities to profitably increase collections through use of the legal channel. The increased consumer litigation activity will result in incremental court costs, but the resulting collections will profitably support this upfront expense. Our portfolio purchases for the quarter were $152 million, up 21% year-over-year. Returns remain attractive, and we remain confident in the deployment landscape. I am pleased to report that as a result of our strong execution on our asset class-based growth strategy and the favorable market backdrop I described, we were able to generate record deployments in the month of July of $185 million, a significant portion of which was invested in performing and nonperforming auto finance portfolios. This is an important milestone as we have now added auto as a third asset class segment to our performing portfolio purchase capabilities following credit cards with Bluestem and installment loans with Conn's. To further this strong purchasing momentum, we generated robust growth in forward flow commitments. As of June 30, we had $480.7 million of deployments locked in through forward flows, which is a new record for the company and an important building block of our deployment strategy for the coming quarters. Finally, I'm pleased to announce that after significant evaluation, Jefferson Capital has entered the debt purchasing market in Mexico. As in our past efforts to enter a new geography, we deploy relatively low amounts of capital initially as we build our servicing capabilities and validate our forecast model. But we believe this is a large market, which offers attractive U.S. dollar risk-adjusted returns and adds another growth pillar for our Latin American strategy. In addition, our foray is supported by a number of significant competitive advantages, including global relationships with key sellers, more sophisticated modeling and servicer management capabilities and a substantially lower cost of capital compared to local competitors. We are excited to report more on our progress in the coming quarters as we gain more experience in this market. Moving on. Our estimated remaining collections as of June 30 were $3.4 billion, up 18% year-over-year with ERC related to the Bluestem and Conn's portfolios comprising $218 million and $83 million of U.S. distressed. Our ERC is relatively short in duration due in part to the lower average account balances in our portfolio with 46% of our ERC to be collected through 2027. We expect to collect $1.1 billion of our June 30 ERC balance during the next 12 months. Based on the average purchase price multiples recorded in the second quarter, we would need to deploy approximately $565 million globally over the same time frame to replace this runoff and maintain current ERC levels. I would note that as of June 30, we had $312 million of deployments already contracted via forward flows for the next 12 months. Lastly, I'd like to review in more detail another core pillar of our business model and a critical building block of our differentiated return profile, our best-in-class operating efficiency. We seek to own high value-added aspects of the purchasing and collection process, including portfolio and consumer payment performance data, extensive analytical and modeling capabilities, certain proprietary technological capabilities and the collection processes and techniques that we believe create both a competitive advantage for the company as well as a significant barrier to entry. Conversely, we seek to outsource the aspects of the collection value chain that we view as commoditized or operationally intensive and do not produce a competitive advantage, such as running large domestic call centers. We utilize champion-challenger performance measures to allocate portfolio segments to the best servicers and our internal collection platform competes for market share against external collection service providers. Finally, our mostly variable cost structure provides flexibility to scale deployments depending on market conditions. The benefits of our relentless pursuit of operating efficiency are evident in our efficiency metrics relative to the rest of the sector. As mentioned earlier, our cash efficiency ratio for the quarter was 72.2%. It was aided by collections on the Bluestem and Conn's portfolios, which carry lower cost to collect given the significant portion of paying accounts. Excluding the Bluestem and Conn's portfolio collections and expenses, the cash efficiency ratio would have been 67.8%, which is also materially higher than other public companies in the sector. Our leading operating efficiency is a powerful competitive advantage, and coupled with the strong returns on our differentiated investment strategy, supports consistent, attractive shareholder returns. With that, I would now like to hand the call over to Christo for a more detailed look at our financial results. Christo Realov: Thank you, David. Taking a closer look at the financial details for the second quarter, revenue was $178 million, up 16% year-over-year, driven by continued strong deployments and higher net yields. Changes in recoveries were $9 million for the quarter, reflecting the accuracy of our modeling and strong execution against our underwritten forecast. Operating expenses were $95 million, up 46% year-over-year, with the increase due to 2 key components: an increase in court costs as a result of increased legal channel volumes and noncash stock-based compensation expense resulting from the IPO. Adjusting for stock-based comp and adjusting the prior year quarter for IPO-related items, expense growth would have been 35%. Expenses remain well controlled relative to the growth in collections with our cash efficiency ratio at 72.2% for the quarter. Adjusted pretax income was $59 million for the quarter, resulting in an adjusted pretax ROE of 51.6%. We realized a material level of collections on portfolios purchased in 2024 and 2025, including the Bluestem and Conn's portfolio purchases, which in turn drove our adjusted cash EBITDA to $226 million for the quarter, up 12% year-over-year. Finally, for the second quarter, Jefferson Capital recognized portfolio revenue of $11 million and net operating income of $7.1 million related to the Bluestem portfolio purchase. Separately, we recognized portfolio revenue of $11.1 million, servicing revenue of $0.6 million and net operating income of $8.1 million related to the Conn's portfolio purchase. Our credit profile remains strong and positions us well for future opportunities. As of June 30, our net debt to adjusted cash EBITDA improved to 1.71x, a level which is significantly lower than our publicly traded peers. Over the long term, our target leverage ratio is in the range of 2x to 2.5x on a sustained basis. Our balance sheet is solid with ample liquidity to support growth, create strategic optionality and pay our quarterly dividend. Our senior secured revolving credit facility with aggregate committed capital of $1.15 billion had $226 million drawn at June 30. Today, we drew on the RCF and transferred $300 million to the bond trustee for the repayment of our senior unsecured notes due August 2026. The notes will be discharged on August 17. Our strong liquidity profile is a critical component of our value proposition to sellers who value certainty of close in periods when portfolio activity increases, but the funding markets could be constrained or unavailable. With regard to our capital allocation priorities, our primary focus remains on deploying capital to purchase portfolios at attractive risk-adjusted returns. Our Board has declared a regular quarterly dividend of $0.24 a share, which represents a 4.8% annualized yield as of July month end. The dividend offers an attractive component of shareholder return, which is not available from other public companies in the sector, and it also reinforces long-term discipline around investment returns. In conjunction with the follow-on equity offering in January, we also repurchased 3 million shares or approximately 5% of the total legally issued shares for $59 million. This was a tactical share repurchase where the company used its capital to support the offering and to further reduce the sponsor overhang. We will evaluate open market share repurchases if the share price exhibits significant volatility. Finally, we have a long history of successful M&A, but we intend to remain disciplined and opportunistic. Now we will be happy to answer any questions that you may have. Operator, please open up the lines. Operator: [Operator Instructions] Our first question today is from Mark Hughes with Truist Securities. Mark Hughes: You talked to in the auto segment, it sounds like you're seeing a lot of success in the month of July. How broad is that? How should we think about the opportunity as the rest of the year progresses? Just a little more detail on that auto would be great. David Burton: Sure. I guess as we don't really provide guidance around deployments or really guidance in general, what I can do is characterize that July, in particular, had us deploying capital across the spectrum in auto, both in terms of charge-offs, insolvencies and performing. And so I think that's indicative and it's why we've been talking about the auto market opportunity in particular, is that we have seen a growing opportunity set in that space. And I think we're uniquely positioned to be a beneficiary of the headwinds that are facing that sector. Mark Hughes: Very good. Could you refresh us on any differences in terms of the collections profile or costs associated with the auto channel? David Burton: Sure. So I'll start with insolvency. Insolvency, as a reminder, in general, has a very low cost to collect as most of the interaction takes place with the bankruptcy trustees. However, there are -- with secured loans, there are occasions both in insolvency and outside of insolvency and distressed where the consumer still retains the vehicle. And as part of that, there could be a repossession process that takes place, which is a higher cost undertaking. And so I would think about deployments in insolvencies as largely being similar in aggregate to other insolvency cost to collect. And on the deficiency side or the charge-offs distressed side of the business, that is more in line but has some unique components that are higher cost to collect than insolvency. And finally, on the performing side, the sort of cost to collect for installment loan as in our purchase for -- of the Conn's portfolio is a good template to think about what the cost to collect would be for performing auto. Mark Hughes: Very good. And then, Christo, the change in recoveries is a nice positive number again, maybe starting to look like a trend. How should we think about that line item? Is that something where it sounds like your modeling and legal collections, you're having good success? Is that something that emerges over time? Or is that something we shouldn't anticipate in future quarters? Just how to approach that? Christo Realov: Look, I think probably the best way to answer the question is that historically, we have guided to kind of single digits of millions as a number that should be expected given the size of the portfolio, right? And I think for the quarter, this number was maybe slightly higher than in prior quarters, but it's still a number that we are comfortable with and a number that we can expect to see in the future. And then I'll go back to our comments that we have made on this topic previously, which is that the objective of our modeling of ERC is accuracy and not necessarily conservatism. Operator: And our next question, we will hear from David Scharf with Citizens Capital Markets. David Scharf: I wanted to follow up again on Mark's questions on auto. Dave, you've historically enjoyed some pretty formidable sort of competitive barriers, if you will, in your core kind of low balance accounts. Can you -- I know you referenced -- you believe you're the only 1 who can kind of service the breadth or the mix of performing charge-off and insolvency across auto. But can you talk a little bit more about just, I guess, the competitive landscape there, the breadth of how many sellers you work with? Just trying to get a sense for whether auto as an asset class is from a competitive standpoint, kind of closer to the traditional credit card world or if it's closer to your -- the barriers you enjoy in your core assets? David Burton: Good question, David. And I think it will be helpful to others to understand that distinction. I view auto as an area with more complexities, both in underwriting and engaging consumers. And even though you utilize similar collection channels, whether it be call center or legal, each of those are made more difficult because of the complexities involved in collecting on an auto account. You have, in some cases, the consumer has voluntarily surrendered the car or that's been repossessed and the balance -- to be able to communicate clearly about the composition of the balance is an important criteria to have an effective communication with the consumer. And similarly, should the consumer still have the vehicle, then you're also undertaking a more complex undertaking as it relates to replevin action or repossession. And so operationally, it's more complex. In terms of consumer engagement, it's more complex. And that also applies to the legal channel where the documentation requirements are much more comprehensive and complex as there are state-based regulations, which apply that are different from state to state. And oftentimes, you need to have evidence of those required communications in order to initiate litigation. So it's not -- it's a higher-touch, more complex process and one that we excel at and have built systems and processes to be able to do so effectively. And I don't know that there are many other competitors in the space that are able to do that, and that's especially true as you consider the array of account segments with secured and unsecured insolvency performing and nonperforming. And again, that's why we have expertise and capability across that spectrum, and that makes us an ideal counterparty for an originator that has sale objectives. David Scharf: No, that color is very helpful. And I guess just so we have a flavor for kind of the momentum in the business, I guess, compared to a year ago, would you say that your auto volumes are -- represent mostly deeper penetration of some existing originator relationships? Or have you been adding new relationships over that time? David Burton: It's a mix of both. I think we have cultivated relationships with existing customers where we're doing more. And we -- while at the same time, we've been able to cultivate new clients as well. David Scharf: Got it. And just one last question for Christo. With the legal channel growing, obviously, the returns will be similar. But with more upfront court costs, there's sort of a delayed kind of cash flow dynamic as that channel grows. As we think about second half modeling, I know you're not giving kind of guidance, but is there any type of step function we should think about in terms of court costs? Or is it going to kind of continue along this typical trajectory? Christo Realov: So I'll make 2 comments. So the first one is the cash efficiency ratio that we put out obviously includes the court cost for the quarter. And we provide that both on a kind of as-reported basis, which is the 72.2% number and on excluding Conn's and Bluestem basis, which is the 68% number. And we've also said that we expect that excluding Conn's and Bluestem to be kind of in the high 60s. Those comments are relevant and that probably is a good way to think about this. As it relates to the actual court cost amounts, I would think of this quarter as a good kind of guide to what to expect for the balance of the year. Operator: And next, we'll hear from Randy Binner with Texas Capital. Randy Binner: I have a couple. On the July deployment number, did I hear that correctly, did you say $185 million, David? David Burton: We did. And we normally wouldn't disclose a monthly deployment number. But as you note, it's more in July than for the entire second quarter. And we thought that was valuable information to share with shareholders. Randy Binner: Yes. And the other 2 analysts, there was some good Q&A about auto, which is helpful to learn about and kind of understand because it's clearly a direction you're moving. But I guess the one -- because $185 million is a big number, what was the -- can you -- was the nature of that? I kind of missed that. Was that like a big lumpy thing or that was just a deployment kind of across. Presumably, it was large in auto, but was there like anything episodic or lumpy there? Or is that -- just trying to figure out how to -- I wouldn't put $185 in the model every month. Let me put it that way. So maybe just trying to understand if there was anything unusually large about it. David Burton: Yes. We certainly wouldn't encourage you to do that. But what we would say is it's a wide distribution of more of like a normal kind of distribution across asset classes. Yes, there was a larger distribution in the month of July for auto. Randy Binner: Got it. Okay. And then I have a question just about -- so the collection activity just continues to be good and kind of ahead of our expectation. Is it -- do you talk about collection performance by vintage, meaning is it -- kind of given the dynamic where there's a larger balance of charge-offs at the same time that people have jobs, are you -- are collections better on kind of more recent vintages and not as good in older vintages? How should we think about that? David Burton: Yes. I don't know that's necessarily the way I would think about it as your underwriting should take into account the consumers' capability of repayment based on history and the volatility around liquidation rates as it relates to things like levels of unemployment are pretty -- are relatively narrow, except in the case where there's an actual recession, where unemployment increases rapidly to levels that exceed 6%, 7%. And so I would say the level of variance in times of nonrecession, the liquidation rates don't have substantial changes given macroeconomic fluctuations. Operator: And next, we'll move to John Hecht with Jefferies LLC. John Hecht: Congrats on another good quarter. First one is maybe, David, can you talk about the pipeline? I mean obviously, you guys have a lot of good organic growth, but both performing portfolio acquisitions as well as buying into other channels has been an important part of your story. Maybe talk about the characteristics of the pipeline and pricing and so forth. David Burton: Yes. I think what I would say is that the level of activity is certainly elevated across all of the kinds of investments that we make. And so when you look at deployment across all of our geographies, for example, you're going to see attractive levels of growth. And I think that's evidence of both an attractive backdrop in terms of supply, but also, it's indicative of increased effectiveness in building our pipeline. John Hecht: Okay. And then Christo, maybe can you -- I mean I guess you have to think about Bluestem and Conn's, but then also just general like Q2 to Q3 seasonality. Just maybe remind us or refresh us how those factors impact the coming quarters relative to Q3. Christo Realov: Yes. I mean, look, I think the seasonality impact is probably a much bigger driver of performance and specifically collections in the first quarter. Going kind of into the rest of the year, that obviously it's kind of -- I think the seasonality impact weakens. We certainly see on deployments a trend of acceleration of activity as we're getting into the second half of the year. And typically, right, the fourth quarter is the largest quarter in terms of deployments as we have discussed before. So I don't think that there's anything out of the ordinary that we're seeing. And the activity that we saw in the month of July is probably indicative more of this broader opportunity that we discussed in the prepared remarks around auto finance and around the broader consumer credit asset class rather than any seasonal impacts. David Burton: And I'll just add to that, John, a reminder of the record-level forward flow commitments that we have which are $480 million, which is a substantial increase. I think if you looked at that on just a year-over-year basis, that's up 80%. And so I think that is 1 component of the future deployment pipeline. John Hecht: Okay. And then final question for me is, I mean, all geographies seem to be doing very well, but LatAm kind of stuck out this quarter in terms of growth and momentum. Maybe anything to point out there that was onetime or maybe just talk about the overall conditions there and opportunities you're seeing? David Burton: Yes. Thank you. Thanks for noticing that we're really proud of the platform that we're continuing to build in Latin America and continuing to be a leader in the Colombian and Peru market as we have expanded our pipeline of opportunities there. And we also have been successful in putting in place, I think the -- some of the first forward flows that, that region has initiated as that market has historically been characterized really just by spot sales. And so that helps us develop sustained growth as we build these longer-term relationships with originators in the region. And of course, we did mention to you that we did an inaugural deployment in Mexico in July. And as all of our initial forays when we're making an organic investment into a new geography, we take a very measured and patient approach to ensure that we validate our underwriting model and that we build a robust servicing capacity before deploying lots of capital in that market. Operator: And our next question, we'll hear from Robert Dodd with Raymond James. Robert Dodd: On the timing of collections on auto, obviously, we look at non-auto, right, where there's legal channel, I mean, obviously, the court costs front run collections to a degree. So we kind of understand what's going on there. On the auto channel, when you do have those higher cost elements, like if it's repo, for example, which is not all of it, obviously. But I would imagine those high costs are incurred kind of essentially in the same or very closely related time period to when the collection occurs as well, i.e., maybe wholesaling the vehicle on an auction. So does the auto -- it does have high collection elements, but are those closely aligned, i.e., they're not as distortive time-wise to cash efficiency ratios as, say, sometimes the regular cost component is, if that makes sense. David Burton: It does make sense. And my answer is not intentionally confusing, but I just want to flag that we purchase across kind of the 3 core businesses, if you will, of charge-off insolvency and now performing in auto and performing has a low cost to collect. And as you -- at least in the context of how closely do the expenses correlate to collections. And I think they're not in any way out of sequence in the performing side of the business, nor are they really in insolvency, at least for secured insolvencies as those are paid out at 100% in the bankruptcy process plus interest in some cases, but it's in the deficiency collections of -- and distressed where you may have a disconnect between some expenses and recoveries. Repossession is one example of that and court cost is another. And because deficiency balances tend to be a low priority obligation for the consumer, a higher percentage of recoveries in the deficiency balance and distressed segment will require the legal channel. So you'll see a greater disconnect between costs and recoveries or collections. So again, because in the quarter, we deployed capital across all 3 of those, I -- the answer is a little complicated, and we're not going to disclose exactly how much was in each. But I think your bigger question is, do you expect some kind of a step function change in the timing of your expenses and your collections? And how would that flow through perhaps to your cash efficiency ratio. And I think Christo sort of guided on that, and it's consistent with what we've really indicated in the past, both with and without the performing side. Without performing, high 60s is what we would expect. And despite larger deployments in auto, we are not anticipating really any change in that because we have more exposure to auto. Christo Realov: Maybe Robert, one additional comment. The return profile of the incremental deployment in July is not substantially different than our historical return targets and what we're seeing on the rest of the portfolio, right? Robert Dodd: Got it. Got it. The follow-up to that kind of, I mean, you said in the prepared remarks, I don't know, if it was you or David, you've got forward flows locked in over the next year at $312 million. You bought $185 million in July. Maybe a tiny part of that was from the forward flows, but I don't imagine very much. That's $497 million. And you also said that you need to deploy over the next year, $565 million to maintain ERC. I mean that looks like you're almost there in July with contracts on forward flows. I mean -- so are there any headwinds you can see where you would not generate substantial, maybe you don't want to use the word substantial, but meaningful ERC growth over the course of the next year given the position you're starting in, in July and the amount that you need to deploy over the next 12 months? David Burton: The clear answer is no. Operator: And next, I'll move to Bose George with KBW. Bose George: Just going back to the auto discussion. It seems like it's hitting kind of an inflection point in that asset class. How much of the change is being driven by just the increased supply that you noted versus a shift among lenders, maybe recognizing that the outcomes could be better through selling the receivables? David Burton: So you have a number of drivers in the auto market. Some are permanent and some are sort of episodic to this moment in time. And so the permanent drivers are that a relatively low percentage of autos happen to be sold into the market. And our quest is to cultivate relations with more originators and encourage them to undertake their first sale, which is a profit maximizing option for them. And so there's a large organic opportunity that really has nothing to do with the level of charge-offs or any headwinds that are sort of an episodic component right now. And then turning to the episodic aspect, there happens to be higher balances in auto, a more stressed consumer. That also happens to have depleted the savings that were built up during the pandemic after receiving government stimulus. And the level of delinquency and defaults for some originators has become an important headwind that is driving them to look at asset sales either at levels that are higher than they were before or in some cases, more holistically and potentially exiting the origination business altogether. And so it's a very fragmented industry, and so there's lots going on. And it's hard for me to like characterize how much of our deployments were derived from either the episodic trends or the broader trend of more auto originators choosing to optimize their profitability by beginning to sell their charge-offs to us or to the sector. Bose George: Okay. Great. That's helpful. And then just on the forward flow numbers, can you just remind us, is there kind of a sweet spot for purchase forward flow commitments as a percentage of your total acquisitions? David Burton: Historically, that percentage has ran in the 50% range, plus or minus 10%. And so we're not really trying to optimize around a specific percentage of our deployments. Our goal is to deploy capital at attractive risk-adjusted returns, and we seek to have as many forward flows in place that reflect those levels of attractive risk-adjusted returns. They certainly help in terms of having certainty and allow us to have a base to be able to jump off of as we attempt to grow in the aggregate. So I would -- forward flows is not a specific like target. It hopefully is a byproduct of a good relationship with originators where we can add value and we turn that value into something that's more long term in a forward flow agreement. Operator: And that will conclude today's question-and-answer session. I would now like to turn the floor back to David Burton for closing remarks. David Burton: Thanks, operator. Looking forward, we're excited about the growth prospects for our business for the remainder of this year and beyond. We've built an outstanding platform over the past 23 years, and we're in a great position to capitalize on opportunities as the market continues to evolve. Thank you all very much for joining us in today's call, and we look forward to providing another update on our third quarter earnings call. Operator: Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time. Before you buy stock in Jefferson Capital, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Jefferson Capital wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $432,621!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,314!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 20, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Jefferson Capital (JCAP) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by strong collections growth of 18% year-over-year, supported by the Bluestem and Conn's portfolio purchases which contributed $65 million in the quarter. Management attributes the record $185 million deployment in July to a strategic expansion into the auto finance sector, which is now established as the company's third major asset class. The auto finance opportunity is characterized by record consumer credit balances of $1.69 trillion and significant headwinds for originators, including negative equity in nearly one-third of used vehicle trade-ins. Operational efficiency reached a sector-leading 72.2% cash efficiency ratio, aided by the high proportion of paying accounts in recently acquired performing portfolios. Legal channel collections increased 54% year-over-year due to process improvements that compressed the timeline from account placement to lawsuit filing. Strategic entry into the Mexican debt purchasing market was initiated to build a new growth pillar for the Latin American strategy, leveraging a lower cost of capital than local competitors. The company maintains a mostly variable cost structure by outsourcing commoditized call center operations while retaining proprietary analytical and modeling capabilities in-house. Forward flow commitments reached a record $480.7 million, providing a significant building block for deployment strategy in the coming quarters. Management expects to collect $1.1 billion of the current $3.4 billion ERC balance over the next 12 months, requiring approximately $565 million in new deployments to maintain current levels. The company plans a measured and patient approach to the Mexican market, initially deploying low amounts of capital to validate underwriting models and build servicing capacity. Legal collections are expected to continue growing as the inventory of suit-eligible accounts has increased following three years of significant deployment growth. Target leverage ratio is set between 2.0x and 2.5x on a sustained basis, providing significant strategic optionality for future opportunistic M&A or portfolio purchases. Increased consumer litigation activity will result in higher upfront incremental court costs, though management expects these to be profitably offset by resulting collections. The auto finance segment involves higher operational complexity than credit cards, requiring specialized capabilities for vehicle repossession and state-specific legal documentation. A tactical share repurchase of 3 million shares was executed to reduce sponsor overhang following the follow-on equity offering in January. The company successfully discharged $300 million in senior unsecured notes due August 2026 using its revolving credit facility to optimize the balance sheet. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that auto finance is more complex than traditional credit cards due to the need to manage repossessions, replevin actions, and diverse state-based regulations. The company believes its ability to service the full spectrum of performing, charge-off, and insolvency accounts across secured and unsecured segments is a unique competitive advantage. Management clarified that while the $185 million July deployment was unusually high, the combination of $312 million in contracted forward flows and a robust pipeline makes them confident in meaningful ERC growth. The July activity was not episodic but rather a wide distribution across asset classes with a larger concentration in the growing auto sector. Management expects the cash efficiency ratio to remain in the high 60s when excluding the performing Bluestem and Conn's portfolios, even with increased court costs. Court costs for the second quarter are considered a good guide for what to expect for the remainder of the year as the legal strategy matures.

This article first appeared on GuruFocus. Collections: $301 million, up 18% year-over-year. Portfolio Purchases (Deployments): $152 million, up 21% year-over-year. Estimated Remaining Collections (ERC): $3.4 billion, up 18% year-over-year. Cash Efficiency Ratio: 72.2% for the quarter; 67.8% excluding Bluestem and Conn's portfolio collections and expenses. Adjusted EPS: $0.77 for the quarter. Revenue: $178 million, up 16% year-over-year. Operating Expenses: $95 million, up 46% year-over-year; adjusted for stock-based comp and IPO-related items, expense growth would have been 35%. Adjusted Pre-Tax Income: $59 million, with an adjusted pre-tax margin of 51.6%. Adjusted Cash EBITDA: $226 million, up 12% year-over-year. Net Debt to Adjusted Cash EBITDA: Improved to 1.71 times as of June 30. Legal Channel Collections: $64 million, up 54% year-over-year. Forward Flow Commitments: $480.7 million as of June 30, a new record. Dividend: Declared a regular quarterly dividend of $0.24 per share, representing a 4.8% annualized yield as of July 19. Share Repurchase: Repurchased 3 million shares (approximately 5% of total issued shares) for $59 million in conjunction with the January follow-on equity offering. Bluestem Portfolio: Portfolio revenue of $11 million and net operating income of $7.1 million for the quarter. Conn's Portfolio: Portfolio revenue of $11.1 million, servicing revenue of $0.6 million, and net operating income of $8.1 million for the quarter. Warning! GuruFocus has detected 3 Warning Signs with XBP. Is JCAP fairly valued? Test your thesis with our free DCF calculator. Release Date: August 13, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Collections grew 18% year-over-year to $301 million, driven by strong deployments in 2024 and 2025. Deployments increased 21% year-over-year to $152 million, with record July deployments of $185 million, including significant auto finance investments. Estimated remaining collections (ERC) grew 18% to $3.4 billion, supported by strong performance from Bluestem and Conn's portfolio purchases. Cash efficiency ratio improved to 72.2%, a sector-leading figure, aided by lower-cost collections from Bluestem and Conn's portfolios. Leverage ratio improved to 1.71 times, providing strategic optionality and positioning the company for future growth. Record forward flow commitments of $480.7 million provide visibility into future deployments and support sustained growth. Entered the Mexican debt purchasing market, adding a new growth pillar with attractive US dollar risk-adjusted returns. Legal channel collections increased 54% year-over-year to $64 million, driven by process improvements and modeling enhancements. Adjusted EPS was $0.77, reflecting strong profitability and operational execution. Strong liquidity profile, with $1.15 billion in committed capital, supports certainty of closing for sellers and strategic flexibility. Operating expenses increased 46% year-over-year, driven by higher court costs from increased legal channel volumes and non-cash stock-based compensation from the IPO. Adjusted expense growth was 35% year-over-year, indicating significant cost pressure despite revenue growth. Legal channel collections, while growing, incur incremental court costs that could pressure margins if not offset by collections. The company needs to deploy approximately $565 million over the next 12 months to maintain current ERC levels, which may be challenging if market conditions deteriorate. Auto finance collections involve higher costs, particularly for repossession and legal processes, which could impact cash efficiency ratios. The company's entry into Mexico involves initial low capital deployment and validation of underwriting models, which may take time to generate meaningful returns. The company's ERC is relatively short in duration, with 46% expected to be collected through 2027, requiring continuous deployment to sustain growth. The company's dividend yield of 4.8% may be less attractive compared to other investment opportunities, potentially limiting shareholder returns. The company's reliance on forward flows and market conditions could be impacted by macroeconomic factors such as unemployment and interest rates. The company's share repurchase program was tactical and may not be sustained, limiting potential shareholder value enhancement. Q: Can you provide more detail on the auto finance opportunity, particularly the breadth of the opportunity and how we should think about it for the rest of the year? A: David Burton (CEO) stated that while the company does not provide guidance, the record deployments in July of $185 million were spread across the spectrum in auto, including charge-offs, insolvencies, and performing portfolios. This indicates a growing opportunity set in the auto space, and the company believes it is uniquely positioned to benefit from the headwinds facing that sector. Q: What are the differences in the collections profile and costs associated with the auto channel compared to other asset classes? A: David Burton (CEO) explained that insolvency generally has a very low cost to collect, but secured loans may involve a higher-cost repossession process. The deficiency and distressed side is more in line with other costs but has unique, higher-cost components. For performing auto, the cost to collect is similar to installment lending, using the Conn's portfolio purchase as a good template. Q: The change in recoveries was a positive number again. Is this a trend we should anticipate in future quarters? A: Christo Realov (CFO) stated that historically, they have guided to single-digit millions as an expected number given the portfolio's size. While the second quarter number was slightly higher than in prior quarters, it is still within what they expect to see in the future. He reiterated that the objective of their ERC modeling is accuracy, not necessarily conservatism. Q: Can you talk about the competitive landscape in the auto asset class and the barriers to entry compared to your core assets? A: David Burton (CEO) noted that auto is an area with more complexities in both underwriting and consumer engagement. The process is operationally more complex, involving replevin actions or repossessions, and the legal channel has much more comprehensive and state-specific documentation requirements. He believes there are not many other competitors able to handle this complexity across the full spectrum of secured and unsecured, performing and non-performing accounts, making the company an ideal counterparty for originators. Q: Regarding the momentum in the auto business, is the growth from deeper penetration of existing relationships or new relationships? A: David Burton (CEO) confirmed it is a mix of both. The company has cultivated relationships with existing customers where they are doing more, while also cultivating new clients. Q: With the legal channel growing, should we expect a step function in court costs in the second half of the year? A: Christo Realov (CFO) suggested that the second quarter's cash efficiency ratio, both as reported (72.2%) and excluding Conn's and Bluestem (68%), is a good guide for the balance of the year. He considers the second quarter's court cost amounts as a good indicator of what to expect going forward. Q: The July deployment number of $185 million is very large. Was there anything episodic or lumpy about it? A: David Burton (CEO) clarified that while they wouldn't encourage modeling $185 million every month, the deployment was a wide, normal distribution across asset classes, with a larger distribution in auto for the month of July. Q: Are collections better on more recent vintages versus older ones given the current macroeconomic backdrop? A: David Burton (CEO) explained that underwriting should account for repayment capability based on history. He noted that liquidation rate volatility is relatively narrow in non-recessionary times, and substantial changes in macroeconomic fluctuations are not expected unless unemployment rapidly exceeds 6% or 7%. Q: Can you talk about the characteristics of the pipeline and pricing across your different investment channels? A: David Burton (CEO) stated that the level of activity is elevated across all types of investments, with attractive levels of growth in deployments across all geographies. This is evidence of both an attractive supply backdrop and increased effectiveness in building their pipeline. Q: How should we think about Q2 to Q3 seasonality, especially with the Bluestem and Conn's portfolios? A: Christo Realov (CFO) noted that seasonality is a bigger driver of performance in the first quarter, with its impact weakening for the rest of the year. Deployments typically accelerate in the second half, with the fourth quarter being the largest. The July activity is more indicative of the broader opportunity in auto finance rather than seasonal impacts. David Burton (CEO) added that record forward flow commitments of $480.7 million, up 80% year-over-year, are a key component of the future deployment pipeline. Q: Can you provide more color on the strong growth and momentum in Latin America? A: David Burton (CEO) expressed pride in the Latin American platform, noting their leadership in the Colombian and Peruvian markets. They have expanded their pipeline and established some of the first forward flows in the region, which has historically been characterized by spot sales. They also made an inaugural deployment in Mexico in July, taking a measured and patient approach to validate their underwriting model before deploying significant capital. Q: In the auto channel, are the higher costs like repossession closely aligned with the timing of collections, or are they distortive to cash efficiency ratios? A: David Burton (CEO) explained that in performing and insolvency, expenses correlate closely with collections. However, in deficiency collections and distressed, there can be a disconnect between expenses and recoveries, as a higher percentage of recoveries require the legal channel. Despite larger deployments in auto, the company does not anticipate a change in its cash efficiency ratio, which is expected to remain in the high 60s excluding the performing portfolios. Q: Given the $185 million deployed in July and $312 million in forward flows, do you see any headwinds to generating meaningful ERC growth over the next year? A: David Burton (CEO) gave a clear and direct answer: "The clear answer is no." Q: How much of the change in the auto market is driven by increased supply versus a shift among lenders to recognize better outcomes through selling receivables? A: David Burton (CEO) identified both permanent and episodic drivers. The permanent driver is that a low percentage of autos are sold into the market, and the For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Jernigan Capital, Inc.? Here are five stocks we like better. Second-quarter performance improved: Collections rose 18% year over year to $301 million, revenue increased 16% to $178 million, and adjusted EPS was $0.77. Estimated remaining collections also grew 18% to $3.4 billion. Auto finance and international expansion are key growth areas: Record July deployments of $185 million included significant auto-finance investments, while the company began purchasing debt in Mexico and continues expanding in Colombia and Peru. Deployment and capital metrics strengthened: Portfolio purchases rose 21% to $152 million, forward-flow commitments reached a record $480.7 million, and net leverage improved to 1.71 times adjusted cash EBITDA. The company also declared a $0.24 quarterly dividend and repurchased $59 million of shares. Jefferson Capital reported higher second-quarter collections, revenue and portfolio purchases, while highlighting expanding opportunities in auto finance and its entry into Mexico’s debt-purchasing market. Founder and Chief Executive Officer David Burton said collections increased 18% from a year earlier to $301 million, supported by deployment activity in 2024 and 2025 and contributions from the company’s Bluestem and Conn’s portfolio purchases. Bluestem contributed $41 million in quarterly collections, while Conn’s contributed $24 million. → AST SpaceMobile Earnings Just Reminded Investors How Risky Space Can Be Adjusted earnings per share totaled $0.77 for the quarter. The company’s estimated remaining collections, or ERC, rose 18% year over year to $3.4 billion as of June 30. Chief Financial Officer Christo Realov said second-quarter revenue increased 16% year over year to $178 million, driven by continued deployment growth and higher net yields. Changes in recoveries were $9 million, which Realov said reflected the accuracy of the company’s modeling and execution against underwriting forecasts. → Nebius’ Q2 Beat Shows the AI Bottleneck Is Capacity, Not Demand Operating expenses rose 46% year over year to $95 million. The increase reflected higher court costs associated with greater legal-channel collection activity as well as non-cash stock-based compensation expense related to the company’s initial public offering. Excluding stock-based compensation and adjusting the prior-year period for IPO-related items, expense growth would have been 35%, according to Realov. Jefferson Capital reported adjusted pre-tax income of $59 million and an adjusted pre-tax return on equity of 51.6%. Adjusted cash EBITDA increased 12% year over year to $226 million. → On Holding's Price Stumble May Be an Opening for a Company Built to Run The company’s cash efficiency ratio was 72.2% during the quarter, aided by the Bluestem and Conn’s portfolios, which have lower collection costs because of their significant base of paying accounts. Excluding those portfolio collections and expenses, the cash efficiency ratio would have been 67.8%. Legal-channel collections rose 54% year over year to $64 million. Burton said the legal channel is used as a last resort when the company believes an account holder has the ability but not the willingness to pay. Process improvements in the U.S. have reduced the time between account placement and lawsuit filing, accelerating suit volumes, he said. The company also identified additional portfolio segments from prior purchases that it believes can be collected profitably through legal action. Burton said the increase in litigation activity will bring incremental court costs, but that the collections should profitably support those upfront expenses. Auto finance was a central focus of the call. Burton cited record U.S. auto finance receivables of $1.69 trillion, rising vehicle prices, larger loan balances and elevated payment burdens as factors that could increase the supply of portfolios available for sale. He said Jefferson Capital sees opportunities across performing, charged-off and insolvency auto portfolios, including both secured and unsecured accounts. The company made record deployments of $185 million in July, with a significant portion invested in performing and non-performing auto finance portfolios. Burton said auto collections can involve more complexity than other consumer-credit categories, including repossessions, vehicle-related documentation and state-specific legal requirements. He said Jefferson Capital has built systems and processes to manage those complexities and has expanded both existing lender relationships and new client relationships in the sector. Second-quarter portfolio purchases totaled $152 million, up 21% from a year earlier. As of June 30, Jefferson Capital had $480.7 million of deployment commitments locked in through forward-flow agreements, a record for the company. Of that total, $312 million was contracted for deployment over the next 12 months. Burton said Jefferson Capital expects to collect $1.1 billion of its June 30 ERC balance during the next 12 months. Based on average second-quarter purchase-price multiples, the company would need to deploy about $565 million globally during that period to replace the expected runoff and maintain ERC at current levels. The company also announced its entry into Mexico’s debt-purchasing market. Burton said Jefferson Capital will initially deploy relatively low amounts of capital while it builds servicing capabilities and validates its forecasting model. He characterized Mexico as a large market offering potentially attractive U.S.-dollar risk-adjusted returns and another growth pillar for the company’s Latin American strategy. Jefferson Capital continues to operate in Colombia and Peru, where Burton said the company has expanded its opportunity pipeline and established some of the region’s first forward-flow arrangements. The Mexican deployment occurred in July. Net debt to adjusted cash EBITDA improved to 1.71 times as of June 30. Realov said the company’s long-term target is to maintain leverage in a range of 2 to 2.5 times on a sustained basis. The company’s senior secured revolving credit facility had aggregate commitments of $1.15 billion and $226 million drawn as of June 30. Jefferson Capital subsequently drew on the facility and transferred $300 million to a bond trustee to repay its senior unsecured notes due in August 2026. The notes are expected to be discharged on Aug. 17. The board declared a regular quarterly dividend of $0.24 per share, representing a 4.8% annualized yield as of the end of July, according to Realov. The company also repurchased 3 million shares for $59 million in connection with its January follow-on equity offering. Realov said Jefferson Capital may evaluate open-market repurchases if its share price experiences significant volatility. Jernigan Capital is a New York Stock Exchange-listed real estate investment trust (NYSE: JCAP) that provides debt and equity capital to private developers, owners and operators of self-storage facilities with a view to eventual outright ownership of facilities the Company finances. The Company's mission is to maximize shareholder value by accumulating a multi-billion dollar investment portfolio consisting of the newest, most attractive and best located self-storage facilities in the United States through a talented and experienced team demonstrating the highest levels of integrity, dedication, excellence and community. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Jernigan Capital Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Jefferson Capital, Inc. (JCAP) came out with quarterly earnings of $0.67 per share, beating the Zacks Consensus Estimate of $0.63 per share. This compares to earnings of $0.81 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +6.35%. A quarter ago, it was expected that this company would post earnings of $0.8 per share when it actually produced earnings of $0.61, delivering a surprise of -23.75%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Jefferson Capital, Inc., which belongs to the Zacks Financial - Miscellaneous Services industry, posted revenues of $177.54 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 2.27%. This compares to year-ago revenues of $152.71 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Jefferson Capital, Inc. shares have lost about 5.6% since the beginning of the year versus the S&P 500's gain of 13.2%. While Jefferson Capital, Inc. has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Jefferson Capital, Inc. was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.63 on $175.1 million in revenues for the coming quarter and $2.53 on $703.73 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial - Miscellaneous Services is currently in the bottom 38% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Solana Company (HSDT), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 14. This company is expected to post quarterly loss of $0.02 per share in its upcoming report, which represents a year-over-year change of +100%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Solana Company's revenues are expected to be $3.8 million, up 9400% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Jefferson Capital, Inc. (JCAP) : Free Stock Analysis Report Solana Company (HSDT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Collections Grow 18% to $300.9 Million and Deployments grow 21% to $152.2 MillionEstimated Remaining Collections (“ERC”) up 18% to $3.4 BillionPre-tax Income of $53.3 Million with Net Income of $41.3 Million and EPS of $0.67Adjusted Pre-tax Income of $59.3 Million with Adjusted Net Income of $47.3 Million and Adjusted EPS of $0.77Board of Directors Declares Quarterly Cash Dividend of $0.24 per Share MINNEAPOLIS, Aug. 13, 2026 (GLOBE NEWSWIRE) -- Jefferson Capital, Inc. (“Jefferson Capital”), a leading analytically driven purchaser and manager of charged-off, insolvency and active consumer accounts, today announced its second quarter 2026 financial results. “Jefferson Capital delivered excellent performance for the quarter with consistent momentum across all key aspects of the business,” said David Burton, Chairman and Chief Executive Officer. “We continue to execute well on our differentiated strategy and remain well positioned to drive shareholder value in the near and long term. ” “The investment environment remains favorable. We are particularly focused on auto finance where record high balances and credit quality headwinds continue to drive growing portfolio supply. We are one of the very few industry participants which can offer solutions across the spectrum of performing, charged-off and insolvency auto finance portfolios for both secured and unsecured accounts.” Second Quarter 2026 Highlights (vs. Second Quarter 2025) Collections grew 18% to $300.9 million Deployments up 21% to $152.2 million ERC rose 18% to $3.4 billion Strong revenue growth of 16% to a record $177.5 million Sector-leading Cash Efficiency Ratio of 72.2% Leverage ratio* improved to 1.71x as compared to 1.76x Pre-tax Income of $53.3 million with Net Income of $41.3 million and EPS of $0.67 Adjusted Pre-tax Income* of $59.3 million with Adjusted Net Income* of $47.3 million and Adjusted EPS of $0.77 CollectionsThe following table summarizes total collections by geographic area: Collections from purchased receivables increased 17.7% or $45.2 million to $300.9 million during the second quarter of 2026 versus $255.7 million during the same quarter in 2025 Collections in the United States included $41.0 million from the Bluestem portfolio purchase which closed in the fourth quarter of 2025 Estimated Remaining Collections The following table summarizes total ERC by geographic area: ERC in the United States included $218.2 million from the Bluestem portfolio purchase which closed in the fourth quarter 2025 DeploymentsThe following table summarizes the total deployments by geographic area: The Company invested $152.2 million during the quarter to acquire receivable portfolios, up 21.5% compared to $125.3 million in the second quarter 2025 As of June 30, 2026, the Company had $480.7 million in committed forward flows Revenues Total revenues increased $24.8 million for the quarter, or 16.2%, to $177.5 million compared to $152.7 million for the second quarter 2025. The growth was primarily the result of strong deployments in prior periods Operating Expenses Total operating expenses increased $29.9 million, or 45.6% to $95.4 million compared to $65.5 million for the second quarter 2025. The increase was primarily due to a $21.3 million rise in servicing expenses driven by increased collections, including $9.3 million in higher court costs from increased legal channel volume, and $3.9 million related to the Bluestem portfolio purchase as well as $8.3 million in non-cash stock-based compensation expense For the second quarter 2026, the Company recognized portfolio revenue of $11.0 million and net operating income of $7.1 million related to the Bluestem portfolio purchase Leverage Ratio, Liquidity and Capital Resources Leverage ratio* improved to 1.71x at June 30, 2026 compared to 1.76x at June 30, 2025 as a result of strong growth in portfolio cashflow On April 22, 2026 Jefferson Capital completed an upsize of its Revolving Credit Facility (“RCF”) increasing aggregate commitments to $1.15 billion. At June 30, 2026, the Company had $226 million drawn under the RCF On August 13, 2026, the Company deposited $300 million with the bond trustee for the repayment of the 2026 notes expected to be repaid on August 17, 2026 Dividend The Board of Directors declared a quarterly cash dividend of $0.24 per share on its outstanding common stock, payable on September 3, 2026, to shareholders of record as of the close of business on August 24, 2026. *Leverage Ratio, Adjusted Pre-Tax Income, Adjusted Net Income and Adjusted EPS are non-GAAP financial measures. For a reconciliation of historical Leverage, Adjusted Pre-Tax Income and Adjusted Net Income, to the most directly comparable U.S. GAAP financial measures, please refer to the “Non-GAAP Financial Measures” section of this press-release. WebcastA webcast to discuss the Company’s second quarter 2026 financial results is scheduled for today, August 13, 2026 at 5:00 p.m. ET. The live webcast and archived replay can be accessed in the investor relations section of the Company's website at https://investors.jcap.com/news-events/events. Use of Non-GAAP Financial Measures This press release contains references to non-GAAP financial measures, including Leverage, Adjusted Pre-Tax Income, Adjusted Net Income, Cash Efficiency Ratio, Adjusted Operating Expenses and Adjusted EPS, which are financial measures that are not prepared in conformity with United States generally accepted accounting principles (U.S. GAAP). These non-GAAP measures are used by management as a supplemental measure, have certain limitations, and should not be construed as alternatives to financial measures determined in accordance with GAAP. Our management believes Leverage, Adjusted Pre-Tax Income, Adjusted Net Income and Adjusted EPS help us provide enhanced period-to-period comparability of operations and financial performance and are useful to investors as other companies in our industry report similar financial measures. The non-GAAP measures as defined by us may not be comparable to similar non-GAAP financial measures presented by other companies, which could limit such measures’ usefulness as comparative measures. Our presentation of such measures, which may include adjustments to exclude unusual or non-recurring items, should not be construed as an inference that our future results will be unaffected by other unusual or non-recurring items. Detailed reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial tables following this release. About Jefferson Capital, Inc.Founded in 2002, Jefferson Capital is an analytically driven purchaser and manager of charged-off, insolvency and active consumer accounts with operations in the United States, Canada, the United Kingdom and Latin America. It purchases and services both secured and unsecured assets, and its growing client base includes Fortune 500 creditors, banks, fintech origination platforms, telecommunications providers, credit card issuers and auto finance companies. Jefferson Capital is headquartered in Minneapolis, Minnesota with additional offices and operations located in Sartell, Minnesota, Denver, Colorado and San Antonio, Texas (United States); Basingstoke, England; London, England and Paisley, Scotland (United Kingdom); London, Ontario and Toronto, Ontario (Canada); as well as Bogota (Colombia). Contacts:Investor [email protected] Media [email protected] Disclosure Regarding Forward Looking Statements This press release may contain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and in the U.S. Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements concerning our anticipated financial performance, execution of our business strategies and strength of our business model, the favorability of the investment environment, [use of our share repurchase program,] and our ability to continue paying quarterly cash dividends. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: a deterioration in the economic or inflationary environment in the United States, Canada, the United Kingdom or Latin America, including the interest rate environment; our ability to replace our portfolios of nonperforming loans with additional portfolios sufficient to operate efficiently and profitably; our ability to collect sufficient amounts on our nonperforming loans to fund our operations; the possibility that third parties we rely on to conduct collection and other activities fail to perform their services; the possibility that we could recognize significant decreases in our estimate of future recoveries on nonperforming loans; changes in, or interpretations of, federal, state, local, or international laws, including bankruptcy and collection laws, or changes in the administrative practices of various bankruptcy courts, which could negatively impact our business or our ability to collect on nonperforming loans; goodwill impairment charges that could negatively impact our net income and stockholders’ equity; our ability to comply with existing and new regulations of the collection industry, the failure of which could result in penalties, fines, litigation, damage to our reputation, or the suspension or termination of or required modification to our ability to conduct our business; adverse outcomes in pending or future litigation or administrative proceedings; the possibility that class action suits and other litigation could divert management’s attention and increase our expenses; investigations, reviews, or enforcement actions by governmental authorities, including the Consumer Financial Protection Bureau, which could result in changes to our business practices, negatively impact our deployment volume, make collection of account balances more difficult, or expose us to the risk of fines, penalties, restitution payments, and litigation; the possibility that compliance with complex and evolving international and United States laws and regulations that apply to our international operations could increase our cost of doing business in international jurisdictions; our ability to comply with data privacy regulations such as the General Data Protection Regulation; our ability to retain, expand, renegotiate or replace our credit facility and our ability to comply with the covenants under our financing arrangements; our ability to refinance our indebtedness; our ability to service our outstanding indebtedness; changes in interest or exchange rates, which could reduce our net income, and the possibility that future hedging strategies may not be successful; and the possibility that we could incur business or technology disruptions or cybersecurity incidents. These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC, and our other filings with the SEC, could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. FINANCIAL TABLES FOLLOW

This article first appeared on GuruFocus. Revenue: $176 million, up 14% year-over-year. Collections: $310 million, up 19% year-over-year. Estimated Remaining Collections (ERC): $3.4 billion, up 18% year-over-year. Cash Efficiency Ratio: 73% for the quarter. Adjusted EPS: $0.73 for the quarter. Operating Expenses: $96 million, up 47% year-over-year. Adjusted Pre-Tax Income: $58 million, with an adjusted pre-tax IOE of 50.8%. Adjusted Cash EBITDA: $235 million, up 12% year-over-year. Net Debt to Adjusted Cash EBITDA: Improved to 1.79 times. Quarterly Dividend: $0.24 per share, representing a 4.6% annualized yield. Portfolio Purchases: $150 million for the quarter. Warning! GuruFocus has detected 2 Warning Signs with KLC. Is JCAP fairly valued? Test your thesis with our free DCF calculator. Release Date: May 14, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Jefferson Capital Inc (NASDAQ:JCAP) reported record collections of $310 million, a 19% increase compared to the prior-year period. Revenue for the quarter reached a record $176 million, up 14% year-over-year. The company achieved a sector-leading cash efficiency ratio of 73%, driven by strong collections from recent portfolio purchases. Estimated remaining collections grew 18% to $3.4 billion, indicating strong future cash flow potential. The company's leverage improved to 1.79 times, positioning it well for future growth and strategic opportunities. Operating expenses increased by 47% year-over-year, primarily due to growth in collections. Court costs rose significantly by 86% year-over-year, reflecting increased legal channel volumes. The company's portfolio purchases for the quarter were $150 million, down from $175 million in the first quarter of 2025. The level of personal savings among consumers is substantially lower than pre-pandemic averages, potentially impacting future consumer liquidity. There is a pronounced increase in insolvencies in both the United States and Canada, which could pose challenges despite presenting opportunities. Q: Can you provide commentary on the visibility of future forward flow arrangements and whether you're seeing an expansion of sellers entering into flow deals? A: David Burton, CEO, explained that forward flow commitments increased by 28% from December 31 to March 31, reflecting deeper client relationships and convincing spot sale-oriented markets to adopt programmatic selling. He noted that in rising price environments, sellers prefer shorter-term flows, while in decreasing price environments, they opt for longer-term flows. Currently, there is no significant change in sellers' appetite for forward flow versus spot sales. Q: How should we think about the cash efficiency ratio, excluding Conn's and Bluestem, given the growth in legal collections? A: Christo Realov, CFO, stated that the company has a history of improving cost efficiency through various initiatives. The current cash efficiency ratio of 68.1% already includes core costs, and these are expected to remain stable throughout the year. The mix of legal collections is not expected to materially impact this ratio. Q: Are the elevated court costs expected to persist beyond this year due to the increase in legal-eligible accounts? A: David Burton, CEO, mentioned that while it's challenging to predict beyond the current horizon, the costs are embedded in their pricing and net IRRs. The timing of court costs impacts the P&L, but the focus remains on generating attractive cash returns determined at the time of purchase. Q: Was there anything unusual about the US purchase volumes this quarter, given the softer-than-expected results? A: David Burton, CEO, assured that there is no concern regarding US deployment opportunities. The company is well-positioned with more clients, asset classes, and capabilities, and the consumer pressure backdrop is favorable for future deployments. Q: Are there larger potential deals in the market, particularly in auto finance, given the current trends? A: David Burton, CEO, indicated that the level of indebtedness and delinquency trends in auto finance are favorable for opportunities of all sizes. However, the timing and size of specific transactions are hard to predict, and the company focuses on building client relationships to be ready for any opportunity. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Record Quarterly Collections Grow 19% to $309.9 Million Estimated Remaining Collections (“ERC”) up 18% to $3.4 Billion Pre-tax Income of $51.1 Million with Net Income of $37.6 Million and EPS of $0.61 Adjusted Pre-tax Income of $58.4 Million with Adjusted Net Income of $44.9 Million and Adjusted EPS of $0.73 Board of Directors Declares Quarterly Cash Dividend of $0.24 per Share MINNEAPOLIS, May 14, 2026 (GLOBE NEWSWIRE) -- Jefferson Capital, Inc. (“Jefferson Capital”), a leading analytically driven purchaser and manager of charged-off, insolvency and active consumer accounts, today announced its first quarter 2026 financial results. “Jefferson Capital delivered excellent performance for the quarter with record collections and record revenue,” said David Burton, Chairman and Chief Executive Officer. “The strength of our business model with a differentiated investment strategy, disciplined underwriting and best-in-class efficiency positions us well to drive shareholder value now and in the future.” “The investment environment remains favorable: consumer credit is at near record levels across all asset classes with elevated delinquencies and charge-offs, which create a long runway for portfolio supply. At the same time, the unemployment rate remains low which supports collection performance on our existing book and allows us to confidently deploy capital. We have never been better positioned to take advantage of the opportunities ahead with low leverage and ample capital resources.” First Quarter 2026 Highlights (vs. First Quarter 2025) Record collections grew 19% to $309.9 million ERC rose 18% to $3.4 billion Record revenue up 14% to $176.4 million Sector-leading Cash Efficiency Ratio of 73.0% Leverage ratio* improved to 1.79x as compared to 2.17x Pre-tax Income of $51.1 million with Net Income of $37.6 million and EPS of $0.61 Adjusted Pre-tax Income* of $58.4 million with Adjusted Net Income* of $44.9 million and Adjusted EPS of $0.73 Collections The following table summarizes total collections by geographic area: Collections from purchased receivables increased 18.8% or $49.0 million to $309.9 million during the first quarter of 2026 versus $260.9 million during the same quarter in 2025 Collections in the United States included $54.5 million from the Bluestem portfolio purchase which closed in the fourth quarter of 2025 Estimated Remaining Collections The following table summarizes total ERC by geographic area: ERC in the United States included $237.7 million from the Bluestem portfolio purchase which closed in the fourth quarter 2025 Deployments The following table summarizes the total deployments by geographic area: The Company invested $149.7 million during the quarter to acquire receivable portfolios, down 14.6% compared to $175.2 million in the first quarter 2025 As of March 31, 2026, the Company had $353.2 million in committed forward flows Revenues Total revenues increased $21.5 million for the quarter, or 13.9%, to $176.4 million compared to $154.9 million for the first quarter 2025. The growth was primarily the result of strong deployments in prior periods Operating Expenses Total operating expenses increased $30.5 million, or 46.8% to $95.6 million compared to $65.1 million for the first quarter 2025. The increase was primarily due to a $22.8 million rise in servicing expenses driven by increased collections, including $8.0 million in higher court costs from increased legal channel volume, and $7.4 million related to the Bluestem portfolio purchase and collection growth as well as $8.5 million in non-cash stock-based compensation expense For the first quarter 2026, the Company recognized portfolio revenue of $15.3 million and net operating income of $7.9 million related to the Bluestem portfolio purchase Leverage Ratio, Liquidity and Capital Resources Leverage ratio* improved to 1.79x at March 31, 2026 compared to 2.17x at March 31, 2025 as a result of strong growth in portfolio cashflow On April 22, 2026 Jefferson Capital completed an upsize of its Revolving Credit Facility (“RCF”) increasing aggregate commitments to $1.15 billion. At March 31, 2026, the Company had $254 million drawn under the RCF The $300 million 2026 maturity was pre-funded with a $500 million unsecured debt offering in May 2025, which paid down the RCF. The Company has segregated $300 million of RCF capacity to repay the $300 million maturity Dividend The Board of Directors declared a quarterly cash dividend of $0.24 per share on its outstanding common stock, payable on June 4, 2026, to shareholders of record as of the close of business on May 26, 2026. Recent Developments On April 22, 2026, the Company entered into an amendment to its Credit Agreement dated May 21, 2021 (“The Amendment”). The Amendment increased the aggregate revolving credit commitments under the Credit Agreement by $150 million bringing the total to $1.150 billion. In addition, the Amendment increased the maximum cap on the aggregate amount to which the revolving credit commitments may be increased in the future pursuant to the incremental provisions of the Credit Agreement to $1.425 billion, allowing for future increases of up to an aggregate of $275 million. Except as described above, the Amendment did not include any other material changes. *Leverage Ratio, Adjusted Pre-Tax Income, Adjusted Net Income and Adjusted EPS are non-GAAP financial measures. For a reconciliation of historical Leverage, Adjusted Pre-Tax Income and Adjusted Net Income, to the most directly comparable U.S. GAAP financial measures, please refer to the “Non-GAAP Financial Measures” section of this press-release. Webcast A webcast to discuss the Company’s first quarter 2026 financial results is scheduled for today, May 14, 2026 at 5:00 p.m. ET. The live webcast and archived replay can be accessed in the investor relations section of the Company's website at https://investors.jcap.com/news-events/events. Use of Non-GAAP Financial Measures This press release contains references to non-GAAP financial measures, including Leverage, Adjusted Pre-Tax Income, Adjusted Net Income, and Adjusted EPS, which are financial measures that are not prepared in conformity with United States generally accepted accounting principles (U.S. GAAP). These non-GAAP measures are used by management as a supplemental measure, have certain limitations, and should not be construed as alternatives to financial measures determined in accordance with GAAP. Our management believes Leverage, Adjusted Pre-Tax Income, Adjusted Net Income and Adjusted EPS help us provide enhanced period-to-period comparability of operations and financial performance and are useful to investors as other companies in our industry report similar financial measures. The non-GAAP measures as defined by us may not be comparable to similar non-GAAP financial measures presented by other companies, which could limit such measures’ usefulness as comparative measures. Our presentation of such measures, which may include adjustments to exclude unusual or non-recurring items, should not be construed as an inference that our future results will be unaffected by other unusual or non-recurring items. Detailed reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial tables following this release. About Jefferson Capital, Inc. Founded in 2002, Jefferson Capital is an analytically driven purchaser and manager of charged-off, insolvency and active consumer accounts with operations in the United States, Canada, the United Kingdom and Latin America. It purchases and services both secured and unsecured assets, and its growing client base includes Fortune 500 creditors, banks, fintech origination platforms, telecommunications providers, credit card issuers and auto finance companies. Jefferson Capital is headquartered in Minneapolis, Minnesota with additional offices and operations located in Sartell, Minnesota, Denver, Colorado and San Antonio, Texas (United States); Basingstoke, England; London, England and Paisley, Scotland (United Kingdom); London, Ontario and Toronto, Ontario (Canada); as well as Bogota (Colombia). Contacts: Investor Relations [email protected] Media Relations [email protected] Disclosure Regarding Forward Looking Statements This press release may contain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and in the U.S. Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements concerning our anticipated financial performance, execution of our business strategies and strength of our business model, the favorability of the investment environment, and our ability to continue paying quarterly cash dividends. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: a deterioration in the economic or inflationary environment in the United States, Canada, the United Kingdom or Latin America, including the interest rate environment; our ability to replace our portfolios of nonperforming loans with additional portfolios sufficient to operate efficiently and profitably; our ability to collect sufficient amounts on our nonperforming loans to fund our operations; the possibility that third parties we rely on to conduct collection and other activities fail to perform their services; the possibility that we could recognize significant decreases in our estimate of future recoveries on nonperforming loans; changes in, or interpretations of, federal, state, local, or international laws, including bankruptcy and collection laws, or changes in the administrative practices of various bankruptcy courts, which could negatively impact our business or our ability to collect on nonperforming loans; goodwill impairment charges that could negatively impact our net income and stockholders’ equity; our ability to comply with existing and new regulations of the collection industry, the failure of which could result in penalties, fines, litigation, damage to our reputation, or the suspension or termination of or required modification to our ability to conduct our business; adverse outcomes in pending or future litigation or administrative proceedings; the possibility that class action suits and other litigation could divert management’s attention and increase our expenses; investigations, reviews, or enforcement actions by governmental authorities, including the Consumer Financial Protection Bureau, which could result in changes to our business practices, negatively impact our deployment volume, make collection of account balances more difficult, or expose us to the risk of fines, penalties, restitution payments, and litigation; the possibility that compliance with complex and evolving international and United States laws and regulations that apply to our international operations could increase our cost of doing business in international jurisdictions; our ability to comply with data privacy regulations such as the General Data Protection Regulation; our ability to retain, expand, renegotiate or replace our credit facility and our ability to comply with the covenants under our financing arrangements; our ability to refinance our indebtedness; our ability to service our outstanding indebtedness; changes in interest or exchange rates, which could reduce our net income, and the possibility that future hedging strategies may not be successful; and the possibility that we could incur business or technology disruptions or cybersecurity incidents. These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC, and our other filings with the SEC, could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. FINANCIAL TABLES FOLLOW