8-K
PRA GROUP INC (PRAA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of Earliest Event Reported): | February 28, 2022 |
|---|
PRA Group, Inc.
_________________________________________
(Exact name of registrant as specified in its charter)
| Delaware | 000-50058 | 75-3078675 | |||||
|---|---|---|---|---|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | |||||
| 120 Corporate Boulevard | |||||||
| Norfolk, | Virginia | 23502 | |||||
| (Address of principal executive offices) | (Zip Code) | Registrant’s telephone number, including area code: | (888) | 772-7326 | |||
| --- | --- | --- |
Not Applicable
______________________________________________
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value per share | PRAA | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Item 2.02 Results of Operations and Financial Condition.
On February 28, 2022, PRA Group, Inc. (the “Company”) issued a press release announcing its fourth quarter and full year 2021 results. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K and is incorporated into this Item 2.02 by reference.
Item 7.01 Regulation FD Disclosure.
The slide presentation being used in connection with the Company’s previously announced February 28, 2022 webcast and conference call to discuss its fourth quarter and full year 2021 results is available in the Investor Relations section of the Company’s website at https://ir.pragroup.com/events-and-presentations.
None of the information furnished in Item 2.02, Item 7.01 or Exhibit 99.1 of this Form 8-K shall be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that Section. Unless expressly set forth by specific reference in such filings, none of the information furnished in this Form 8-K shall be incorporated by reference in any filing under the Securities Act of 1933, as amended, whether made before or after the date hereof and regardless of any general incorporation language in such filings.
Item 9.01 Financial Statements and Exhibits
| (d) | Exhibits | |
|---|---|---|
| 99.1 | Press release datedFebruary 28, 2022 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PRA Group, Inc. | ||
|---|---|---|
| Date: February 28, 2022 | By: | /s/ Peter M. Graham |
| Peter M. Graham | ||
| Executive Vice President and Chief Financial Officer |
Document
PRA Group Reports Fourth Quarter 2021 Results
NORFOLK, Va., February 28, 2022 - PRA Group, Inc. (Nasdaq: PRAA), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the fourth quarter and full year of 2021. Net income attributable to PRA Group, Inc. increased $4.5 million, or 15%, to $34.3 million compared to the fourth quarter of 2020. Diluted earnings per share were $0.79 compared to $0.65 in the fourth quarter of 2020. For the year ended December 31, 2021, net income attributable to PRA Group, Inc. increased $33.8 million, or 23%, to $183.2 million, or $4.04 per diluted share, compared to the year ended December 31, 2020.
Fourth Quarter Highlights
•Total cash collections were $473.7 million.
•Total revenues were $256.9 million.
•Cash efficiency ratio1 of 63.5%.
•Diluted earnings per share increased 22% to $0.79.
•Common stock repurchases of $139 million, or 3.0 million shares, at an average price of $45.66 per share.
•Debt to Adjusted EBITDA2 decreased to 1.89x from 1.99x at December 31, 2020.
•$1.4 billion available for portfolio purchases.
•Total portfolio purchases of $201.7 million.
•Estimated remaining collections (ERC) of $6.0 billion.
Full Year Highlights
•Record total cash collections were $2.1 billion.
•Record total revenues were $1.1 billion.
•Record cash efficiency ratio1 of 65.3%.
•Record net income attributable to PRA Group, Inc. of $183.2 million.
•Total portfolio purchases of $972.3 million.
•Common stock repurchases of $212.9 million, or 4.8 million shares, at an average price of $43.97 per share.
“The fourth quarter culminated an excellent year for PRA. We collected record levels of cash globally and had record revenues and net income. In Europe, strong portfolio purchases over the last two years drove robust collections. The increase in cash collections, coupled with efficiencies achieved in our operations, produced a record cash efficiency ratio for the year,” said Kevin Stevenson, president and chief executive officer. “Entering 2022, we had maximum forward flow commitments that were $149 million higher than the commitments we had entering 2021. Despite increased competition and pricing pressure, we believe the European pipeline is strong and economic indicators point to an increasing pipeline in the U.S. by the end of 2022. We believe our strong balance sheet will allow us to capitalize on these opportunities.”
Cash Collections and Revenues
•The following table presents cash collections by quarter and by source on an as reported and constant currency-adjusted basis:
1.Calculated by dividing cash receipts less operating expense by cash receipts.
2.A reconciliation of this non-GAAP financial measure to the most comparable GAAP measure can be found at the end of this press release.
| Cash Collection Source | 2021 | 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | Q4 | Q3 | Q2 | Q1 | Q4 | |||||
| Americas and Australia Core | $ | 257,705 | $ | 276,691 | $ | 324,845 | $ | 347,638 | $ | 286,524 |
| Americas Insolvency | 36,851 | 37,464 | 37,768 | 35,253 | 36,048 | |||||
| Europe Core | 155,853 | 151,625 | 157,637 | 149,486 | 141,471 | |||||
| Europe Insolvency | 23,262 | 22,574 | 23,579 | 23,510 | 17,830 | |||||
| Total Cash Collections | $ | 473,671 | $ | 488,354 | $ | 543,829 | $ | 555,887 | $ | 481,873 |
| Cash Collection Source - | ||||||||||
| Constant Currency Adjusted | 2021 | 2020 | ||||||||
| ($ in thousands) | Q4 | Q4 | ||||||||
| Americas and Australia Core | $ | 257,705 | $ | 285,712 | ||||||
| Americas Insolvency | 36,851 | 36,072 | ||||||||
| Europe Core | 155,853 | 140,570 | ||||||||
| Europe Insolvency | 23,262 | 18,022 | ||||||||
| Total Cash Collections | $ | 473,671 | $ | 480,376 |
•Total cash collections in the quarter decreased $8.2 million compared to the fourth quarter of 2020. A 12% increase in Europe cash collections was more than offset by an 11% decrease in U.S. call center and other cash collections and a 29% decrease in Brazil cash collections. For the full year, cash collections increased $55.9 million compared to the full year of 2020.
•Total portfolio revenue in the quarter was $252.0 million compared to $270.4 million in the fourth quarter of 2020. The Company assumed that the majority of the fourth quarter 2021 overperformance was acceleration of future collections, consistent with its assumptions during prior periods. The Company also increased near-term expected collections in certain geographies to reflect recent performance and trends in collections, and made corresponding reductions later in the forecast period. For the full year, total portfolio revenue increased $19.9 million compared to the full year 2020.
Expenses
•Operating expenses in the quarter decreased $10.2 million compared to the fourth quarter of 2020. The decrease was primarily driven by a reduction in legal collection costs due to fewer accounts being placed into the Company's legal channel as a result of a shift in collections from the legal channel to the call centers and digital platforms and lower levels of portfolio acquisitions in the U.S. This decrease was partially offset by an increase in other operating expenses. For the full year, operating expenses increased $5.0 million compared to the same period in 2020.
•Interest expense, net decreased $3.2 million compared to the fourth quarter of 2020 primarily due to the Company's early adoption of the new accounting for convertible debt as well as lower outstanding balances. For the full year, interest expense, net decreased $17.6 million compared to the same period in 2020.
•The effective tax rate for the full year was 21.9% compared to 19.7% in 2020.
Portfolio Acquisitions
•The Company purchased $201.7 million in nonperforming loan portfolios in the fourth quarter of 2021.
•At the end of the fourth quarter, the Company had in place forward flow commitments of up to $650.6 million with $246.7 million in the Americas and Australia and $403.9 million in Europe.
| Portfolio Purchase Source | 2021 | 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | Q4 | Q3 | Q2 | Q1 | Q4 | |||||
| Americas and Australia Core | $ | 90,263 | $ | 162,451 | $ | 98,901 | $ | 88,912 | $ | 67,460 |
| Americas Insolvency | 21,183 | 9,878 | 14,642 | 9,486 | 12,504 | |||||
| Europe Core | 60,430 | 212,194 | 106,134 | 44,095 | 137,647 | |||||
| Europe Insolvency | 29,820 | 7,424 | — | 16,468 | 72,171 | |||||
| Total Portfolio Acquisitions | $ | 201,696 | $ | 391,947 | $ | 219,677 | $ | 158,961 | $ | 289,782 |
Share Repurchases
During 2021, the Company executed the majority of its $230 million share repurchase program:
•During the fourth quarter, the Company purchased 3.0 million shares at an average price of $45.66 per share.
•For the full year of 2021, the Company purchased 4.8 million shares at an average price of $43.97 per share.
•On February 25, 2022, the Company’s board of directors authorized a new $150 million program upon completion of the previous program.
The new share repurchase program has no stated expiration date and repurchases may be made through open market purchases or other available means at the Company’s discretion, subject to applicable regulatory requirements. Repurchases are subject to market conditions and other factors, and the new share repurchase program remains subject to the discretion of the Company’s board of directors.
“Our strong cash and financial performance and conservative capital structure provide considerable flexibility for balanced capital deployment across portfolio acquisitions, share repurchases and other growth initiatives,” said Pete Graham, executive vice president and chief financial officer.
Conference Call Information
PRA Group, Inc. will hold a conference call today at 5:00 p.m. ET to discuss results with institutional investors and stock analysts. To listen to a webcast of the call and view the accompanying slides, visit https://ir.pragroup.com/events-and-presentations. To listen by phone, call 844-835-9982 in the U.S. or 412-317-5267 outside the U.S. and ask for the PRA Group conference call. To listen to a replay of the call, either visit the same website until February 28, 2023, or call 877-344-7529 in the U.S. or 412-317-0088 outside the U.S. and use access code 8916228 until March 7, 2022.
About PRA Group
As a global leader in acquiring and collecting nonperforming loans, PRA Group, Inc. returns capital to banks and other creditors to help expand financial services for consumers in the Americas, Europe and Australia. With thousands of employees worldwide, PRA Group, Inc. companies collaborate with customers to help them resolve their debt. For more information, please visit www.pragroup.com.
About Forward Looking Statements
Statements made herein that are not historical in nature, including PRA Group, Inc.’s or its management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
The forward-looking statements in this press release are based upon management's current beliefs, estimates, assumptions and expectations of PRA Group, Inc.’s future operations and financial and economic performance, taking into account currently available information. These statements are not statements of historical fact or guarantees of future performance, and there can be no assurance that anticipated events will transpire or that the Company's expectations will prove to be correct. Forward-
looking statements involve risks and uncertainties, some of which are not currently known to PRA Group, Inc. Actual events or results may differ materially from those expressed or implied in any such forward-looking statements as a result of various factors, including risk factors and other risks that are described from time to time in PRA Group, Inc.’s filings with the Securities and Exchange Commission, including PRA Group, Inc.’s annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, which are available through PRA Group, Inc.'s website and contain a detailed discussion of PRA Group, Inc.'s business, including risks and uncertainties that may affect future results.
Due to such uncertainties and risks, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of today. Information in this press release may be superseded by more recent information or statements, which may be disclosed in later press releases, subsequent filings with the Securities and Exchange Commission or otherwise. Except as required by law, PRA Group, Inc. assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA Group, Inc.’s expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part.
PRA Group, Inc.
Consolidated Income Statements
(Amounts in thousands, except per share amounts)
| (unaudited) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||
| Revenues: | |||||||||
| Portfolio income | $ | 211,613 | $ | 233,480 | $ | 875,327 | $ | 984,036 | |
| Changes in expected recoveries | 40,400 | 36,909 | 197,904 | 69,297 | |||||
| Total portfolio revenue | 252,013 | 270,389 | 1,073,231 | 1,053,333 | |||||
| Fee income | 3,856 | 2,922 | 14,699 | 9,748 | |||||
| Other revenue | 1,067 | 545 | 7,802 | 2,333 | |||||
| Total revenues | 256,936 | 273,856 | 1,095,732 | 1,065,414 | |||||
| Operating expenses: | |||||||||
| Compensation and employee services | 73,781 | 77,533 | 301,981 | 295,150 | |||||
| Legal collection fees | 10,998 | 11,783 | 47,206 | 53,758 | |||||
| Legal collection costs | 17,099 | 21,638 | 78,330 | 101,635 | |||||
| Agency fees | 15,995 | 17,799 | 63,140 | 56,418 | |||||
| Outside fees and services | 21,448 | 23,291 | 92,615 | 84,087 | |||||
| Communication | 9,716 | 9,099 | 42,755 | 40,801 | |||||
| Rent and occupancy | 4,682 | 4,558 | 18,376 | 17,973 | |||||
| Depreciation and amortization | 3,736 | 5,971 | 15,256 | 18,465 | |||||
| Other operating expenses | 17,032 | 12,969 | 61,077 | 47,426 | |||||
| Total operating expenses | 174,487 | 184,641 | 720,736 | 715,713 | |||||
| Income from operations | 82,449 | 89,215 | 374,996 | 349,701 | |||||
| Other income and (expense): | |||||||||
| Interest expense, net | (32,156) | (35,393) | (124,143) | (141,712) | |||||
| Foreign exchange (loss)/gain | (936) | (1,022) | (809) | 2,005 | |||||
| Other | (12) | 318 | 282 | (1,049) | |||||
| Income before income taxes | 49,345 | 53,118 | 250,326 | 208,945 | |||||
| Income tax expense | 12,947 | 16,469 | 54,817 | 41,203 | |||||
| Net Income | 36,398 | 36,649 | 195,509 | 167,742 | |||||
| Adjustment for net income attributable to noncontrolling interests | 2,122 | 6,851 | 12,351 | 18,403 | |||||
| Net income attributable to PRA Group, Inc. | $ | 34,276 | $ | 29,798 | $ | 183,158 | $ | 149,339 | |
| Net income per common share attributable to PRA Group, Inc.: | |||||||||
| Basic | $ | 0.80 | $ | 0.65 | $ | 4.07 | $ | 3.28 | |
| Diluted | $ | 0.79 | $ | 0.65 | $ | 4.04 | $ | 3.26 | |
| Weighted average number of shares outstanding: | |||||||||
| Basic | 43,056 | 45,583 | 44,960 | 45,540 | |||||
| Diluted | 43,562 | 45,973 | 45,330 | 45,860 |
PRA Group, Inc.
Consolidated Balance Sheets
(Amounts in thousands)
| December 31, 2021 | December 31, 2020 | |||||||
|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||
| Cash and cash equivalents | $ | 87,584 | $ | 108,613 | ||||
| Investments | 92,977 | 55,759 | ||||||
| Finance receivables, net | 3,428,285 | 3,514,788 | ||||||
| Income taxes receivable | 41,146 | 21,928 | ||||||
| Deferred tax assets, net | 67,760 | 83,205 | ||||||
| Right-of-use assets | 56,713 | 52,951 | ||||||
| Property and equipment, net | 54,513 | 58,356 | ||||||
| Goodwill | 480,263 | 492,989 | ||||||
| Other assets | 57,002 | 64,472 | ||||||
| Total assets | $ | 4,366,243 | $ | 4,453,061 | ||||
| Liabilities and Equity | ||||||||
| Liabilities: | ||||||||
| Accounts payable | $ | 3,821 | $ | 5,294 | ||||
| Accrued expenses | 127,802 | 97,320 | ||||||
| Income taxes payable | 19,276 | 29,692 | ||||||
| Deferred tax liabilities, net | 36,630 | 40,867 | ||||||
| Lease liabilities | 61,188 | 57,348 | ||||||
| Interest-bearing deposits | 124,623 | 132,739 | ||||||
| Borrowings | 2,608,714 | 2,661,289 | ||||||
| Other liabilities | 59,352 | 54,986 | ||||||
| Total liabilities | 3,041,406 | 3,079,535 | ||||||
| Equity: | ||||||||
| Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued and outstanding | — | — | ||||||
| Common stock, $0.01 par value, 100,000 shares authorized, 41,008 shares issued and outstanding at December 31, 2021; 100,000 shares authorized, 45,585 shares issued and outstanding at December 31, 2020 | 410 | 456 | ||||||
| Additional paid-in capital | — | 75,282 | ||||||
| Retained earnings | 1,552,845 | 1,511,970 | ||||||
| Accumulated other comprehensive loss | (266,909) | (245,791) | ||||||
| Total stockholders' equity - PRA Group, Inc. | 1,286,346 | 1,341,917 | ||||||
| Noncontrolling interest | 38,491 | 31,609 | ||||||
| Total equity | 1,324,837 | 1,373,526 | ||||||
| Total liabilities and equity | $ | 4,366,243 | $ | 4,453,061 | ||||
| Select Expenses (Income)<br><br>Amounts in thousands, pre-tax | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended | ||||||||
| December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | |
| Noncash interest expense - amortization of debt discount | — | — | — | — | 1,959 | 2,388 | 3,247 | 3,217 |
| Noncash interest expense - amortization of debt issuance costs | 2,455 | 2,406 | 2,391 | 2,256 | 2,393 | 2,476 | 2,743 | 2,640 |
| Change in fair value of derivatives | 3,115 | 2,982 | 2,911 | 3,102 | 3,875 | 3,701 | 3,284 | 2,039 |
| Amortization of intangibles | (269) | 104 | 105 | 181 | 1,792 | 360 | 351 | 349 |
| Stock-based compensation expense | 3,470 | 4,317 | 4,040 | 4,113 | 5,370 | 3,097 | 3,063 | 2,857 |
| Purchase Price Multiples<br><br>as of December 31, 2021<br><br>Amounts in thousands | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Purchase Period | Purchase Price (1)(2) | Total Estimated Collections (3) | Estimated Remaining Collections (4) | Current Purchase Price Multiple | Original Purchase Price Multiple (5) | |||
| Americas and Australia Core | ||||||||
| 1996-2011 | $ | 1,287,821 | $ | 4,119,794 | $ | 27,874 | 320% | 240% |
| 2012 | 254,076 | 652,359 | 11,867 | 257% | 226% | |||
| 2013 | 390,826 | 894,234 | 17,955 | 229% | 211% | |||
| 2014 | 404,117 | 859,555 | 29,634 | 213% | 204% | |||
| 2015 | 443,114 | 910,077 | 79,134 | 205% | 205% | |||
| 2016 | 455,767 | 1,117,255 | 163,295 | 245% | 201% | |||
| 2017 | 532,851 | 1,215,524 | 240,172 | 228% | 193% | |||
| 2018 | 653,975 | 1,394,839 | 301,952 | 213% | 202% | |||
| 2019 | 581,476 | 1,257,641 | 434,423 | 216% | 206% | |||
| 2020 | 435,668 | 940,982 | 522,918 | 216% | 213% | |||
| 2021 | 435,846 | 833,624 | 748,852 | 191% | 191% | |||
| Subtotal | 5,875,537 | 14,195,884 | 2,578,076 | |||||
| Americas Insolvency | ||||||||
| 1996-2011 | 786,827 | 1,752,771 | 790 | 223% | 174% | |||
| 2012 | 251,395 | 393,018 | 67 | 156% | 136% | |||
| 2013 | 227,834 | 355,274 | 373 | 156% | 133% | |||
| 2014 | 148,420 | 219,141 | 1,583 | 148% | 124% | |||
| 2015 | 63,170 | 87,377 | 361 | 138% | 125% | |||
| 2016 | 91,442 | 116,498 | 1,468 | 127% | 123% | |||
| 2017 | 275,257 | 353,296 | 23,180 | 128% | 125% | |||
| 2018 | 97,879 | 134,417 | 38,130 | 137% | 127% | |||
| 2019 | 123,077 | 163,200 | 79,392 | 133% | 128% | |||
| 2020 | 62,130 | 86,107 | 63,473 | 139% | 136% | |||
| 2021 | 55,187 | 74,931 | 70,317 | 136% | 136% | |||
| Subtotal | 2,182,618 | 3,736,030 | 279,134 | |||||
| Total Americas and Australia | 8,058,155 | 17,931,914 | 2,857,210 | |||||
| Europe Core | ||||||||
| 2012 | 20,409 | 42,579 | — | 209% | 187% | |||
| 2013 | 20,334 | 26,267 | — | 129% | 119% | |||
| 2014 | 773,811 | 2,239,932 | 460,391 | 289% | 208% | |||
| 2015 | 411,340 | 720,559 | 203,212 | 175% | 160% | |||
| 2016 | 333,090 | 561,569 | 243,437 | 169% | 167% | |||
| 2017 | 252,174 | 353,450 | 154,560 | 140% | 144% | |||
| 2018 | 341,775 | 527,012 | 287,725 | 154% | 148% | |||
| 2019 | 518,610 | 775,332 | 485,171 | 150% | 152% | |||
| 2020 | 324,119 | 553,951 | 410,322 | 171% | 172% | |||
| 2021 | 412,411 | 699,959 | 652,200 | 170% | 170% | |||
| Subtotal | 3,408,073 | 6,500,610 | 2,897,018 | |||||
| Europe Insolvency | ||||||||
| 2014 | 10,876 | 18,370 | 28 | 169% | 129% | |||
| 2015 | 18,973 | 29,002 | 892 | 153% | 139% | |||
| 2016 | 39,338 | 56,831 | 4,398 | 144% | 130% | |||
| 2017 | 39,235 | 49,287 | 10,641 | 126% | 128% | |||
| 2018 | 44,908 | 51,499 | 22,265 | 115% | 123% | |||
| 2019 | 77,218 | 102,095 | 53,796 | 132% | 130% | |||
| 2020 | 105,440 | 135,907 | 94,242 | 129% | 129% | |||
| 2021 | 53,230 | 71,526 | 66,095 | 134% | 134% | |||
| Subtotal | 389,218 | 514,517 | 252,357 | |||||
| Total Europe | 3,797,291 | 7,015,127 | 3,149,375 | |||||
| Total PRA Group | $ | 11,855,446 | $ | 24,947,041 | $ | 6,006,585 |
(1)Includes the acquisition date finance receivables portfolios that were acquired through the Company's business acquisitions.
(2)For the Company's non-U.S. amounts, purchase price is presented at the exchange rate at the end of the year in which the portfolio was purchased. In addition, any purchase price adjustments that occur throughout the life of the portfolio are presented at the year-end exchange rate for the respective year of purchase.
(3)For the Company's non-U.S. amounts, TEC is presented at the year-end exchange rate for the respective year of purchase.
(4)For the Company's non-U.S. amounts, ERC is presented at the December 31, 2021 exchange rate.
(5)The Original Purchase Price Multiple represents the purchase price multiple at the end of the year of acquisition.
| Portfolio Financial Information<br><br>For the Year Ended December 31, 2021<br><br>Amounts in thousands | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Purchase Period | Cash<br><br>Collections (1) | Portfolio Income (1) | Change in Expected Recoveries (1) | Total Portfolio Revenue (1) | Net Finance Receivables as of December 31, 2021 (2) | |||||
| Americas and Australia Core | ||||||||||
| 1996-2011 | $ | 20,819 | $ | 12,632 | $ | 5,346 | $ | 17,978 | $ | 6,433 |
| 2012 | 9,046 | 4,123 | 2,610 | 6,733 | 4,446 | |||||
| 2013 | 16,657 | 7,520 | 1,613 | 9,133 | 8,763 | |||||
| 2014 | 22,323 | 10,040 | (742) | 9,298 | 12,225 | |||||
| 2015 | 34,938 | 19,582 | (9,082) | 10,500 | 31,412 | |||||
| 2016 | 74,206 | 40,717 | (1,395) | 39,322 | 58,086 | |||||
| 2017 | 129,962 | 61,776 | 11,275 | 73,051 | 108,433 | |||||
| 2018 | 239,862 | 83,566 | 38,960 | 122,526 | 167,343 | |||||
| 2019 | 289,779 | 117,189 | 34,744 | 151,933 | 240,112 | |||||
| 2020 | 284,284 | 125,173 | 46,195 | 171,368 | 299,290 | |||||
| 2021 | 85,003 | 61,842 | (4,866) | 56,976 | 408,212 | |||||
| Subtotal | 1,206,879 | 544,160 | 124,658 | 668,818 | 1,344,755 | |||||
| Americas Insolvency | ||||||||||
| 1996-2011 | 792 | 882 | (73) | 809 | — | |||||
| 2012 | 601 | 188 | 425 | 613 | — | |||||
| 2013 | 811 | 459 | 363 | 822 | — | |||||
| 2014 | 1,118 | 1,108 | (44) | 1,064 | 148 | |||||
| 2015 | 1,250 | 538 | 32 | 570 | 218 | |||||
| 2016 | 7,352 | 1,321 | (332) | 989 | 1,060 | |||||
| 2017 | 43,978 | 7,795 | 4,718 | 12,513 | 20,304 | |||||
| 2018 | 31,637 | 5,944 | 3,757 | 9,701 | 33,715 | |||||
| 2019 | 39,073 | 8,739 | 2,590 | 11,329 | 69,514 | |||||
| 2020 | 16,108 | 7,220 | 1,885 | 9,105 | 50,482 | |||||
| 2021 | 4,616 | 2,799 | 804 | 3,603 | 53,837 | |||||
| Subtotal | 147,336 | 36,993 | 14,125 | 51,118 | 229,278 | |||||
| Total Americas and Australia | 1,354,215 | 581,153 | 138,783 | 719,936 | 1,574,033 | |||||
| Europe Core | ||||||||||
| 2012 | 1,160 | — | 1,160 | 1,160 | — | |||||
| 2013 | 680 | — | 681 | 681 | — | |||||
| 2014 | 149,246 | 94,750 | 25,771 | 120,521 | 131,950 | |||||
| 2015 | 51,397 | 26,474 | (7,320) | 19,154 | 107,415 | |||||
| 2016 | 46,702 | 23,859 | (1,569) | 22,290 | 141,981 | |||||
| 2017 | 34,800 | 11,718 | (2,815) | 8,903 | 106,026 | |||||
| 2018 | 69,106 | 23,502 | 5,352 | 28,854 | 189,813 | |||||
| 2019 | 121,385 | 37,266 | 12,333 | 49,599 | 328,709 | |||||
| 2020 | 91,672 | 35,697 | 13,610 | 49,307 | 250,434 | |||||
| 2021 | 48,453 | 18,809 | 6,159 | 24,968 | 388,850 | |||||
| Subtotal | 614,601 | 272,075 | 53,362 | 325,437 | 1,645,178 | |||||
| Europe Insolvency | ||||||||||
| 2014 | 328 | 109 | 144 | 253 | 14 | |||||
| 2015 | 1,605 | 647 | 3 | 650 | 653 | |||||
| 2016 | 5,951 | 1,685 | 208 | 1,893 | 3,398 | |||||
| 2017 | 9,366 | 1,301 | 379 | 1,680 | 9,673 | |||||
| 2018 | 11,678 | 2,212 | (1,153) | 1,059 | 19,877 | |||||
| 2019 | 23,867 | 5,552 | 1,307 | 6,859 | 45,649 | |||||
| 2020 | 34,647 | 8,791 | 3,067 | 11,858 | 79,363 | |||||
| 2021 | 5,483 | 1,802 | 1,804 | 3,606 | 50,447 | |||||
| Subtotal | 92,925 | 22,099 | 5,759 | 27,858 | 209,074 | |||||
| Total Europe | 707,526 | 294,174 | 59,121 | 353,295 | 1,854,252 | |||||
| Total PRA Group | $ | 2,061,741 | $ | 875,327 | $ | 197,904 | $ | 1,073,231 | $ | 3,428,285 |
(1)Non-U.S. amounts are presented using the average exchange rates during the reporting period.
(2)For non-U.S. amounts, net finance receivables are presented at the December 31, 2021 exchange rate.
| Cash Collections by Year, By Year of Purchase (1)<br><br>as of December 31, 2021<br><br>Amounts in millions | ||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash Collections | ||||||||||||||||||||||||||
| Purchase Period | Purchase Price (2)(3) | 1996-2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Total | |||||||||||||
| Americas and Australia Core | ||||||||||||||||||||||||||
| 1996-2011 | $ | 1,287.8 | $ | 2,419.5 | $ | 486.0 | $ | 381.3 | $ | 266.3 | $ | 183.1 | $ | 119.0 | $ | 78.0 | $ | 56.0 | $ | 45.0 | $ | 29.7 | $ | 20.8 | $ | 4,084.7 |
| 2012 | 254.1 | — | 56.9 | 173.6 | 146.2 | 97.3 | 60.0 | 40.0 | 27.8 | 17.9 | 11.8 | 9.0 | 640.5 | |||||||||||||
| 2013 | 390.8 | — | — | 101.6 | 247.8 | 194.0 | 120.8 | 78.9 | 56.4 | 36.9 | 23.2 | 16.7 | 876.3 | |||||||||||||
| 2014 | 404.1 | — | — | — | 92.7 | 253.4 | 170.3 | 114.2 | 82.2 | 55.3 | 31.9 | 22.3 | 822.3 | |||||||||||||
| 2015 | 443.1 | — | — | — | — | 117.0 | 228.4 | 185.9 | 126.6 | 83.6 | 57.2 | 34.9 | 833.6 | |||||||||||||
| 2016 | 455.8 | — | — | — | — | 138.7 | 256.5 | 194.6 | 140.6 | 105.9 | 74.2 | 910.5 | ||||||||||||||
| 2017 | 532.9 | — | — | — | — | — | — | 107.3 | 278.7 | 256.5 | 192.5 | 130.0 | 965.0 | |||||||||||||
| 2018 | 654.0 | — | — | — | — | — | — | — | 122.7 | 361.9 | 337.7 | 239.9 | 1062.2 | |||||||||||||
| 2019 | 581.5 | — | — | — | — | — | — | — | — | 143.8 | 349.0 | 289.8 | 782.6 | |||||||||||||
| 2020 | 435.7 | — | — | — | — | — | — | — | — | — | 133.0 | 284.3 | 417.3 | |||||||||||||
| 2021 | 435.8 | — | — | — | — | — | — | — | — | — | — | 85.0 | 85.0 | |||||||||||||
| Subtotal | 5,875.6 | 2,419.5 | 542.9 | 656.5 | 753.0 | 844.8 | 837.2 | 860.8 | 945.0 | 1,141.5 | 1,271.9 | 1,206.9 | 11,480.0 | |||||||||||||
| Americas Insolvency | ||||||||||||||||||||||||||
| 1996-2011 | 786.8 | 667.4 | 336.8 | 313.7 | 244.7 | 128.2 | 44.6 | 8.4 | 4.0 | 2.1 | 1.3 | 0.8 | 1,752.0 | |||||||||||||
| 2012 | 251.4 | — | 17.4 | 103.6 | 94.1 | 80.1 | 60.7 | 29.3 | 4.3 | 1.9 | 0.9 | 0.6 | 392.9 | |||||||||||||
| 2013 | 227.8 | — | — | 52.5 | 82.6 | 81.7 | 63.4 | 47.8 | 21.9 | 2.9 | 1.3 | 0.8 | 354.9 | |||||||||||||
| 2014 | 148.4 | — | — | — | 37.0 | 50.9 | 44.3 | 37.4 | 28.8 | 15.8 | 2.2 | 1.1 | 217.5 | |||||||||||||
| 2015 | 63.2 | — | — | — | — | 3.4 | 17.9 | 20.1 | 19.8 | 16.7 | 7.9 | 1.3 | 87.1 | |||||||||||||
| 2016 | 91.4 | — | — | — | — | — | 18.9 | 30.4 | 25.0 | 19.9 | 14.4 | 7.4 | 116.0 | |||||||||||||
| 2017 | 275.3 | — | — | — | — | — | — | 49.1 | 97.3 | 80.9 | 58.8 | 44.0 | 330.1 | |||||||||||||
| 2018 | 97.9 | — | — | — | — | — | — | — | 6.7 | 27.4 | 30.5 | 31.6 | 96.2 | |||||||||||||
| 2019 | 123.1 | — | — | — | — | — | — | — | — | 13.4 | 31.4 | 39.1 | 83.9 | |||||||||||||
| 2020 | 62.1 | — | — | — | — | — | — | — | — | — | 6.5 | 16.1 | 22.6 | |||||||||||||
| 2021 | 55.2 | — | — | — | — | — | — | — | — | — | — | 4.5 | 4.5 | |||||||||||||
| Subtotal | 2,182.6 | 667.4 | 354.2 | 469.8 | 458.4 | 344.3 | 249.8 | 222.5 | 207.8 | 181.0 | 155.2 | 147.3 | 3,457.7 | |||||||||||||
| Total Americas and Australia | 8,058.2 | 3,086.9 | 897.1 | 1,126.3 | 1,211.4 | 1,189.1 | 1,087.0 | 1,083.3 | 1,152.8 | 1,322.5 | 1,427.1 | 1,354.2 | 14,937.7 | |||||||||||||
| Europe Core | ||||||||||||||||||||||||||
| 2012 | 20.4 | — | 11.6 | 9.0 | 5.6 | 3.2 | 2.2 | 2.0 | 2.0 | 1.5 | 1.2 | 1.2 | 39.5 | |||||||||||||
| 2013 | 20.3 | — | — | 7.1 | 8.5 | 2.3 | 1.3 | 1.2 | 1.3 | 0.9 | 0.7 | 0.7 | 24.0 | |||||||||||||
| 2014 | 773.8 | — | — | — | 153.2 | 292.0 | 246.4 | 220.8 | 206.3 | 172.9 | 149.8 | 149.2 | 1,590.6 | |||||||||||||
| 2015 | 411.3 | — | — | — | — | 45.8 | 100.3 | 86.2 | 80.9 | 66.1 | 54.3 | 51.4 | 485.0 | |||||||||||||
| 2016 | 333.1 | — | — | — | — | — | 40.4 | 78.9 | 72.6 | 58.0 | 48.3 | 46.7 | 344.9 | |||||||||||||
| 2017 | 252.2 | — | — | — | — | — | — | 17.9 | 56.0 | 44.1 | 36.1 | 34.8 | 188.9 | |||||||||||||
| 2018 | 341.8 | — | — | — | — | — | — | — | 24.3 | 88.7 | 71.2 | 69.1 | 253.3 | |||||||||||||
| 2019 | 518.6 | — | — | — | — | — | — | — | — | 47.9 | 125.7 | 121.4 | 295.0 | |||||||||||||
| 2020 | 324.1 | — | — | — | — | — | — | — | — | — | 32.4 | 91.7 | 124.1 | |||||||||||||
| 2021 | 412.4 | — | — | — | — | — | — | — | — | — | — | 48.4 | 48.4 | |||||||||||||
| Subtotal | 3,408.0 | — | 11.6 | 16.1 | 167.3 | 343.3 | 390.6 | 407.0 | 443.4 | 480.1 | 519.7 | 614.6 | 3,393.7 | |||||||||||||
| Europe Insolvency | ||||||||||||||||||||||||||
| 2014 | 10.9 | — | — | — | — | 4.3 | 3.9 | 3.2 | 2.6 | 1.5 | 0.8 | 0.3 | 16.6 | |||||||||||||
| 2015 | 19.0 | — | — | — | — | 3.0 | 4.4 | 5.0 | 4.8 | 3.9 | 2.9 | 1.6 | 25.6 | |||||||||||||
| 2016 | 39.3 | — | — | — | — | — | 6.2 | 12.7 | 12.9 | 10.7 | 7.9 | 6.0 | 56.4 | |||||||||||||
| 2017 | 39.2 | — | — | — | — | — | — | 1.2 | 7.9 | 9.2 | 9.8 | 9.4 | 37.5 | |||||||||||||
| 2018 | 44.9 | — | — | — | — | — | — | — | 0.6 | 8.4 | 10.3 | 11.7 | 31.0 | |||||||||||||
| 2019 | 77.2 | — | — | — | — | — | — | — | — | 5.1 | 21.1 | 23.9 | 50.1 | |||||||||||||
| 2020 | 105.4 | — | — | — | — | — | — | — | — | — | 6.1 | 34.6 | 40.7 | |||||||||||||
| 2021 | 53.3 | — | — | — | — | — | — | — | — | — | — | 5.4 | 5.4 | |||||||||||||
| Subtotal | 389.2 | — | — | — | — | 7.3 | 14.5 | 22.1 | 28.8 | 38.8 | 58.9 | 92.9 | 263.3 | |||||||||||||
| Total Europe | 3,797.2 | — | 11.6 | 16.1 | 167.3 | 350.6 | 405.1 | 429.1 | 472.2 | 518.9 | 578.6 | 707.5 | 3,657.0 | |||||||||||||
| Total PRA Group | $ | 11,855.4 | $ | 3,086.9 | $ | 908.7 | $ | 1,142.4 | $ | 1,378.7 | $ | 1,539.7 | $ | 1,492.1 | $ | 1,512.4 | $ | 1,625.0 | $ | 1,841.4 | $ | 2,005.7 | $ | 2,061.7 | $ | 18,594.7 |
(1)For the Company's non-U.S. amounts, cash collections are presented using the average exchange rates during the cash collection period.
(2)Includes the nonperforming loan portfolios that were acquired through the Company's business acquisitions.
(3)For the Company's non-U.S. amounts, purchase price is presented at the exchange rate at the end of the year in which the portfolio was purchased. In addition, any purchase price adjustments that occur throughout the life of the pool are presented at the year-end exchange rate for the respective year of purchase.
Use of Non-GAAP Financial Measures
PRA Group, Inc. reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management uses certain non-GAAP financial measures, including Adjusted EBITDA, internally to evaluate the Company’s performance and to set performance goals. Adjusted EBITDA is calculated as net income attributable to PRA Group, Inc. plus income tax expense; less foreign exchange gain (or plus foreign exchange loss); plus interest expense, net; plus other expense (or less other income); plus depreciation and amortization; plus adjustment for net income attributable to noncontrolling interests; and plus recoveries applied to negative allowance less changes in expected recoveries. Adjusted EBITDA is a supplemental measure of performance that is not required by, or presented in accordance with, GAAP. PRA Group, Inc. presents Adjusted EBITDA because the Company considers it an important supplemental measure of operations and financial performance. Management believes Adjusted EBITDA helps provide enhanced period-to-period comparability of operations and financial performance and is useful to investors as other companies in the industry report similar financial measures. Adjusted EBITDA should not be considered as an alternative to net income determined in accordance with GAAP. Set forth below is a reconciliation of Adjusted EBITDA for the years ended December 31, 2021 and 2020, to net income, the most directly comparable financial measure calculated and reported in accordance with GAAP. The calculation of Adjusted EBITDA below may not be comparable to the calculation of similarly titled measures reported by other companies.
| Reconciliation of Non-GAAP Financial Measures | ||||
|---|---|---|---|---|
| LTM Adjusted EBITDA for PRA Group ($ in millions) | December 31, 2021 | December 31, 2020 | ||
| Net income attributable to PRA Group, Inc. | $ | 183 | $ | 149 |
| Adjustments: | ||||
| Income tax expense | 55 | 41 | ||
| Foreign exchange (gains)/losses | 1 | (2) | ||
| Interest expense, net | 124 | 142 | ||
| Other (income)/expense | — | 1 | ||
| Depreciation and amortization | 15 | 18 | ||
| Adjustment for net income attributable to noncontrolling interests | 12 | 18 | ||
| Recoveries applied to negative allowance less Changes in expected recoveries | 988 | 968 | ||
| LTM Adjusted EBITDA | $ | 1,378 | $ | 1,337 |
Additionally, the Company evaluates its business using certain ratios that use Adjusted EBITDA. Debt to Adjusted EBITDA is calculated by dividing borrowings by Adjusted EBITDA. The following table reflects the Company's Debt to Adjusted EBITDA for the years ended December 31, 2021 and 2020 (amounts in millions):
| Debt to Adjusted EBITDA | ||||
|---|---|---|---|---|
| December 31, 2021 | December 31, 2020 | |||
| Borrowings | $ | 2,609 | $ | 2,661 |
| LTM Adjusted EBITDA | 1,378 | 1,337 | ||
| Debt to LTM Adjusted EBITDA | 1.89 | 1.99 |
Investor Contact:
Pete Graham
Executive Vice President and Chief Financial Officer
(757) 431-7913
IR@PRAGroup.com
News Media Contact:
Elizabeth Kersey
Senior Vice President, Communications and Public Policy
(757) 431-3398
Elizabeth.Kersey@PRAGroup.com