What Jernigan Capital (JCAP) Said on Its Q3 Earnings Call

Key Points

• Collections rose 35% to $319 million in Q3 2026, while portfolio purchases more than doubled to a record $318 million. Revenue increased 23% to $186 million, and estimated remaining collections grew 23% year over year to $3.6 billion.
• Deployment growth spanned the U.S., U.K. and Latin America, with auto finance a key U.S. opportunity. Management expects auto deployments to grow over the medium term but cautioned that quarterly purchases may be uneven.
• Quarter-end net debt to adjusted cash EBITDA was 1.73 times, below the company’s 2-to-2.5-times target range, and there were no debt maturities until 2029. The company declared a $0.24-per-share dividend and acquired bankruptcy-data provider Phin Solutions after quarter-end.

Jefferson Capital reported a 35% increase in third-quarter collections and record quarterly portfolio purchases, as opportunities in U.S. auto finance and growth across its geographic markets supported its deployment activity.

Collections rose to $319 million in the third quarter of 2026, while portfolio purchases increased 111% from a year earlier to $318 million, Founder and Chief Executive Officer David Burton said on the company’s earnings call. Revenue rose 23% to $186 million, and adjusted earnings per share were $0.83.

The company’s estimated remaining collections, or ERC, increased 23% year over year to $3.6 billion as of September 30. Burton said the increase reflected continued portfolio purchases and anticipated returns.

Auto finance drives opportunities

Burton said Jefferson Capital’s deployment growth extended across its markets, with purchases up 123% in the United States, 127% in the United Kingdom and 312% in Latin America. The U.S. increase benefited from auto finance opportunities spanning performing, charged-off and insolvency portfolios.

Auto lenders face rising delinquencies and charge-offs, while Jefferson Capital has expanded its offerings and client base in the sector, Burton said. He expects more opportunities to translate into higher auto deployments over the medium term, although he cautioned that individual quarters can fluctuate.

Most auto purchases are static pool transactions rather than purchases under forward-flow agreements, giving the company less visibility into their timing, Burton said. Chief Financial Officer Christo Realov added that performing portfolios tend to involve larger dollar purchases, creating potential lumpiness in deployment activity.

Realov clarified during the question-and-answer session that a previously discussed $185 million deployment occurred in July and was included in the third-quarter total. He said the company had not disclosed deployment figures for October. A substantial portion of the July activity involved auto finance, but Jefferson Capital does not disclose purchases by asset class, he said.

In Mexico, Jefferson Capital made a second portfolio purchase in August after entering the market earlier. Burton said the company plans to commit limited capital while it develops its operating capabilities and validates its underwriting models. He does not expect Mexico to contribute significantly to growth in the near term.

Collections and operating performance

Realov said operating expenses rose 23% to $98 million, compared with the 35% increase in collections. Adjusted pretax income was $63 million, and adjusted cash EBITDA rose 34% to $241 million.

The company’s cash efficiency ratio was 72.9%, helped by collections from performing portfolios, which generally cost less to collect because a significant share of accounts are paying. Excluding performing portfolio collections and expenses, the ratio was 68%.

Burton said the overall ratio could eventually move toward that lower level if the company does not purchase additional performing portfolios, although management expects to make further purchases. He described the difference as a matter of portfolio mix rather than a fundamental change in efficiency.

The Bluestem portfolio contributed $32 million in collections during the quarter, along with $13.4 million in portfolio revenue and $10.3 million in net operating income, Realov said. He expects most of the portfolio’s financial impact to occur in 2026, with a smaller contribution in 2027.

Funding and acquisition

Jefferson Capital expects to collect $1.1 billion of its September 30 ERC over the following 12 months. Based on purchase price multiples, management estimated it would need to deploy approximately $642 million over that period to replace the expected collections and maintain ERC. As of September 30, $267.5 million was already contracted under forward flows for the next 12 months.

Total forward-flow commitments stood at $384 million at quarter-end, up about 20% from a year earlier, Burton said. He attributed a decline from the prior quarter to the timing of renewals and new agreements rather than a change in market conditions.

Net debt to adjusted cash EBITDA was 1.73 times at quarter-end, below the company’s long-term target range of 2 to 2.5 times, Realov said. Jefferson Capital had drawn $554 million of its $1.15 billion revolving credit facility and had no debt maturities until 2029. Its board declared a quarterly dividend of $0.24 per share.

After the quarter ended, Jefferson Capital acquired Phin Solutions, a provider of bankruptcy data and technology services. Burton said the financially immaterial acquisition would complement the company’s servicing and debt-purchasing capabilities and could create more opportunities in bankruptcy and insolvency. Realov said the purchase price was 4.6 times Phin’s trailing 12-month earnings.

About Jernigan Capital (NASDAQ:JCAP)

Jernigan Capital, Inc. was a real estate investment trust focused on the U.S. self-storage industry. The company provided financing and investment capital for the development of self-storage properties, partnering with developers and operators on projects across the country. Founded by self-storage industry executive Dean Jernigan, the company made debt and equity investments in development-stage facilities and, in some cases, retained ownership interests as projects were completed. Jernigan served as the company's chairman and chief executive officer.

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