Conference Transcript - PRAA 2026-08-26

Speaker 7

Good morning. Thank you again for attending the 17th annual Midwestern Ideas Conference. My name is John McNamara. I'm with three-part advisors. Our next presentation is PRA Group. PRA is a global leader in acquiring and collecting non-performing loans. Stock trades on the symbol PRAA on the NASDAQ. With us from management are President Martin Sholand and CFO Rakesh Sale. Martin, take it over.

Martin Sjolund, CEO

Thank you. All right. Hi, everyone. Nice to meet you. My name is Martin Sholand. I'm the CEO of PRA Group. I've been in the company for 15 years. So I was running the European business for about eight years. And for the past year, I've been the global CEO of the company. And this is my colleague, Rakesh, who's our global CFO. So we're going to give you kind of a whirlwind tour of the industry and PRA as well. I know some people are probably quite familiar, and just from the meetings earlier, I know some people are very new to the industry. So very high level in terms of what we do. So as you know, all banks that lend money to consumers are trying to lend money to people that are going to pay it back. But one byproduct of the system is that some people are not able to, for whatever reason, or choose not to repay their loans. So that generates these non-performing loans. The banks that then have a choice of how they're going to recover those loans, some of them will do so internally with their own setup with call centers and so on. Some of them will outsource it to third-party debt collection agencies, and some of them sell the loans to people like us. So we consider ourselves debt buyers, and we specialize in buying these loans from banks all across the world. it's very we think it's very we played a very important role in the ecosystem of the financial system actually because we returned capital to banks so that they can focus on lending we work with customers to try to establish you know payment plans and payment solutions that they can afford and our goal is to get the customers out of debt we don't actually put people into debt we try to get them out of debt through a number of ways so how we create value in all of this is really leveraging scale technology and specialist capabilities you know this is all we do so we really focus on this area whereas in in our experience in a lot of the big banks is that the debt collection side is not always the place where they they they concentrate their investments and their resources but for us it's all we do so we become very specialized on it um for pra in particular we have we're celebrating our 30th anniversary this year so we have a long track record, and we're leveraging data and analytics to try to optimize how we create value from these portfolios. So overall, that's kind of how the overall system and the ecosystem works. If you go to the next slide, just to give you a sense of the market. So the U.S., PRA is kind of balanced between Europe and the U.S., and I'll get to that in a minute, but the U.S. market is the world's biggest market for NPLs. You can see on this chart here, it shows the U.S. credit card balances that are outstanding, And we're over a trillion dollars now, and it's at an all-time high. So there's a very large volume of consumer debt in the U.S., as everybody knows. The blue line shows the charge-off rates, and that kind of is the indicator of how many of these loans have fallen delinquent and then get charged off by the banks. That's the part that we would then look to buy. We obviously don't buy all of it. Only certain banks sell, so we're playing in a portion of the market. But it's a very big market with a lot of opportunity, in particular, if something happens and those charge-off rates go up, that could create a significant supply opportunity, and that's the kind of thing that we prepare for. So this also means that it's a cyclical business. There are times when the economy is really strong, when the charge-off rates would be lower, and then there would be less supply coming out, but then we collect well on the back book that we have. So we have tens of millions of customers. We refer to ERC as the estimated remaining collections. It's how much gross cash we expect to collect on the portfolios we already own. So we have a big asset sitting there, and we're collecting on that every day. So in a good economy, we collect well on that, and we buy the loans that come out. Even in a good economy, there's non-performing loans coming out of the system. But if the economy weakens, what tends to happen is you'll see an increase in the charge-off rates. you'll see more non-performing loans flowing out. And that's our opportunity to invest in those. It can also affect our customers, our back book that's sitting there. But over time, we've seen that our customers are fairly resilient. We try to get people onto payment plans that they can afford or go through the legal system if they won't engage. And our data tells us that they are able to pay. And the legal system tends to be quite stable as well. So actually, the resiliency, even in a slowing economy, is quite good, I would say. And we've seen that through different economic cycles in different countries. Of course, there's some impact, but I think the opportunity is bigger than the downside risk.

Speaker 5

If you go to the next slide, just in terms of PRA.

Martin Sjolund, CEO

So as I said before, we're celebrating our 30th anniversary. We've got a very tenured team. I've been in the company 15 years. our executive chairman he started the company 30 years ago the people running the various countries are very experienced so we've been doing this a long time we're in 18 markets across the world so we're one of the most globally diversified companies in this industry and I think that gives us an advantage because we can deploy capital in different places we don't have we're not concentrated and reliant just on one market because the markets can go up and down a little bit. You know, the banks may choose to sell more or less, but the competitive intensity can also vary. So we have the opportunity to deploy capital across different geographies, which can move in different cycles. Right now, the market dynamics are attractive in the industry. There's a good supply environment. It's competitive. I always say it's competitive, but the intensity of the competition is fairly stable. And I'll talk later about our strategy that we have for improving the business. In terms of numbers, you know, in the second quarter, we invested $297 million in portfolios. So that gives you an idea. Last year, we did $1.2 billion. So that's kind of the scale of the capital we're putting out. You know, we collected $559 million last quarter. Our ERC is $8.9 billion. Our net income was $58 million. Our trailing adjusted EBITDA was $1.4 billion, so that's approaching an all-time high. And our net leverage was $2.67, and that's been ticking down. So we've had seven consecutive quarters of reducing leverage, and that's one of the pieces of our strategy that we've been working towards is reducing that leverage. If you go to the next slide. Just to talk about the different markets, broadly speaking, you can think of the US and Europe as the two main regions where we operate. So the US is about 40% of our ERC. We see a really strong supply environment. It has a very complex regulatory environment. So down on a state level and even on a municipal and county level, when you're going to do legal collections, there can be differences. Not regulatory differences necessarily, but just different operational requirements for how you file court proceedings and so on. So this regulatory complexity has actually created a moat for the industry. So if you look at the industry, there's the same four or five big players have been the big players for a long time. Even though there's plenty of people with capital, you can't just come in to a bank and buy a portfolio. The banks are very selective about who they sell to. They audit us, and they come in and listen to our calls. They look at our filings. They really check what we're doing to make sure that we're compliant because they hold us responsible for how their customers are handled. And that creates an environment that's difficult for new players to get into. You also need enormous scale to operate in the U.S. because of all these differences in the different states and so on. Over on the European side, we have a really strong track record. So I ran the European business for seven, eight years. I became global CEO about a year ago. And, you know, I'm proud of the track record that we've had there. We had 26 quarters in a row of cash over performance. Just last quarter, we took a significant write-up on our European portfolio of over $349 million. So I think that's a sign of the confidence and the track record that we've had. We've also invested a lot in technology in the European business. And some of those kind of technology initiatives we're now bringing over to the U.S. to help us improve our performance in the U.S. market, too. Very high level on the industry. Fifteen years ago, the industry was kind of like you would buy these portfolios, and then you'd set up call centers in the cheapest place you could find, hire lowest-cost people you could find, and then just call as much as you could. And that was kind of how the model worked. But it's really shifted, and it's continuing to shift. So it's becoming much more about data and analytics. So much more sophisticated underwriting, much more use of scoring and analytics to optimize the value of the portfolios we have. It's not economical for us to chase people who are never going to pay anything. It's not economical to send an account to legal if they're not going to pay. So we have to use very sophisticated analytics to figure out how exactly to contact customers, how we create value. And it's not just about the gross cash. It's obviously about the net cash after cost. Technology is playing an increasingly important role. We've just implemented a global omni-channel contact platform, so that's how we contact customers through all different methods, calling, SMS, email, et cetera. And we also think that technology, sorry, AI is a big opportunity. So because we have massive amounts of data, we have 50 million customers just in the U.S., we have, you know, billions of documents, we have transcripts of called recordings. There's a lot of opportunity to mine that. And I think there's a lot of opportunity through standardized repetitive processes to leverage AI to help us create more efficiency in the business. So we're working on that. And the final piece is just operational efficiencies. So having the right mix, in particular here in the US of offshore, onshore, and even using third party agencies in some cases. So that's kind of the backdrop of the industry. If you go to the next slide, you can see the strategy that we've laid out. So when I became CEO, I worked with the team, and we came up with a strategy we call PRA 3.0. So there's three parts of it. The first is capital and investing. So we need to be really disciplined about investing. It's actually pretty easy to buy a portfolio. You're in an auction, and if you pay more than the others, you're going to win it. So that's not that hard. But what's hard is to do that in a way where you're going to hit your targets, you're going to generate your returns consistently over time. So we have a lot of focus on being disciplined, creating a strong financial profile, diversifying our funding, which Rakesh is going to talk about, is really important, and then having a prudent capital allocation strategy. On the second one, it's about operations, technology, and data. That's really the engine that's collecting the cash. So we're really focused on becoming leaner. So we've had a lot of focus on cost. Our European business is one of the most cost-efficient in the industry, and we've implemented a number of cost-reduction programs in the U.S. just in the past year to take out significant costs. So in the second quarter, we announced additional cost savings that we've been able to achieve. At this point, we have reduced our corporate overhead staff in the U.S. by a quarter, and we've also reduced our call center staffing significantly. We'll talk more about that in a little while. But we're also in the process of transforming our operations through deploying different technologies. So some of this we've already implemented, like this contact platform I talked about, but there's also some elements that are going to take several years before they're fully implemented. And the final part is around people and culture. So it is a people business at the end of the day. So making sure that we build a winning culture, we have incentives that are aligned with shareholder interests is very important. You know, short-term incentives for management, I think, is a challenge in a business like ours. So we want to try to do what we can to make sure that our teams are incentivized to create value over the long term, which is what I think our shareholders expect. The last thing just to mention is that governance and values are an important part of what we do as well. for 30 years we've been operating having strong governance from the board to our audit teams to compliance are really critical to what we do and it's a big part of what we do both in the U.S. but also internationally so some people today during the meetings earlier have been asking how we're doing against this strategy that we laid out so we did want to share some of the evidence of the execution that we've had since we laid this out so Rakesh will talk a little bit about the financial metrics on the funding side in a minute as well as our share buybacks that we've done. We've been opportunistic about that, but when we see that when we believe the share price is undervalued, you know, we've been opportunistic about buying back shares. On the platform side, you know, we took out over 200 corporate and overhead roles, 575 call center roles, and we shifted more of our calling to offshore, that's going to create $35 million of annualized net savings. And those are savings that are really being realized by reductions we've made. So those aren't like future projections based on AI. Those are real savings. We do, of course, always work on additional efficiencies as we go forward, but those aren't in these numbers yet. We closed two U.S. call centers and one offshore site in the second quarter. So we've now gone from having seven sites in the U.S. down to one. So we've offset some of that through different types of efficiencies, but also by moving it to offshore. So that gives us a cost savings. We launched this contact platform and we've also developed a talent hub in Charlotte. So our headquarters is in Norfolk Virginia which is a super nice place but it's not the deepest talent pool in particular in financial services so we decided to set up an office in Charlotte and we're finding that we can access a lot of the kind of talent that we need for the new technologies and the new analytics that we need to do and the final part is just around the people and culture so we've been working to de-layer the organization to become more efficient strengthening our performance based culture, setting up this talent hub, and working to tweak our incentive structure so that we line up the incentives with the long term goals of the company. So that gives you a sense of where we are on the strategy. Rakesh will talk a little bit about the financials and then I'll come back and sum it up. So Rakesh.

Rakesh Sehgal, CFO

Thanks, Martin. I want to provide you a historical perspective on our financials. In summary, we've had positive momentum over the last couple of years going back to 2023. So on the top left, you can see portfolio purchasing. We've been benefiting from a healthy portfolio supply environment globally. 2024 was a record year for us, where we purchased 1.4 billion of portfolios. In 2025, we purchased 1.2 billion, which was the third highest year in our company history. Our global diversification that Martin talked about, us being present in 18 countries, really gives us the flexibility to allocate capital with the highest returning opportunities. And we have seen healthy portfolio purchases across our markets. And as you look into the rest of 2026, in line with the PRA 3.0 strategy we laid out earlier this year, we intend to continue to be disciplined in our portfolio purchases with a big focus on net returns, not growth for growth sake, but ultimately net returns that will continue to drive enhanced profitability of the company. On the top right, you can see cash collections from our portfolios. So cash has continued to be strong and is up 32% since 2023. And this is on the heels of the strong buying that I just mentioned, as well as improvements we've been making in our business over the last couple of years. And what you will see is cash efficiency, which is the inverse of the OPEX to cash ratio. It's up 200 plus basis points since 2023. And this is despite the increase in court costs as we have continued to invest in the legal channel. Legal is not where we start and that we lead with. But if our model suggests that customers have the ability to pay but do not want to engage with us voluntarily, whether it's through the calling, texting, chat, we will ultimately then pursue the legal channel. Legal channel always has to be economical for us. It does have an upfront court costs with cash coming in over an extended period of time. So it does have a negative bias to our financial profile in the short term because we have to expense that upfront court costs. However, we always ensure and our model's ensuring that it is economical for us over the long term with future cash coming in, and that is the right strategy for us to pursue. On the bottom left is adjusted EBITDA. It's really a proxy for cash EBITDA, and that is up 35% since 2023. It's outpacing our cash collections, which was up 32%, as I mentioned, and it's really demonstrating our operating leverage. And this is, again, despite the significant increase in our legal upfront court costs. When you look at our leverage, which is really defined as debt to cash Shibita, that has declined seven quarters in a row today. As of Q2, it is sitting at 2.7 times versus 2.9 times at the peak in Q3 2024. The bottom right is ultimately our net income. We have delivered in the low 70 million area in both 2024 and 2025, and this was after a footfall loss in 2023, but a backdrop of 100 plus million in 2022. We continue to take actions as aligned with our PRA 3.0 strategy to increase that profitability by increasing both top line cash and revenue, as well as being very focused on our cost and being very disciplined and ensuring that we are creating a business that is very cost-efficient so if we go to the next slide which is around funding we have a strong and well diversified funding profile we fund ourselves through a combination of bank debt bonds and we also have a small deposit base in Europe we have relationships with over 15 banks and total committed capital is over 3 billion from those banks and some of those relationships go back decades. Just recently in the second quarter, we refinanced our European credit facility, which is a $730 million facility with our relationship banks that have been with us for over a decade. We have ample liquidity of approximately $1 billion, and our maturities are staggered with no maturities until 2028. On the right side, as it relates to our capital allocation strategy, we have a three-prong strategy. Number one, continue to be disciplined on our portfolio purchases with a focus on net returns after taking into account the timing of cash flows, the cost to collect, funding cost, contract risk. Number two, as Martin said, it's about investing in the business, that is investing in the legal channel, digital channel, and importantly, modernizing our technology platform, in particular in the U.S., which is well underway. And number three is to opportunistically pursue share repurchases to drive shareholder value, depending on our valuation, as well as our financial profile. Since Q2 2025, we have undertaken in 40 million of share repurchases. And then recently, our board increased our authorization for stock buyback to 150 million. And that really gives us the flexibility with respect to our capital allocation priorities. So with that, I turn it back to Martin.

Martin Sjolund, CEO

Thanks, Rakesh. So just to sum it up, what we think are the catalysts for our shareholders. So we have a scaled global platform with a 30-year track record. We're one of the leading debt buyers in the U.S. market, so we've got relationships with all the key sellers and over 50 million customer accounts. We've got a really strong European business. We have 26-plus quarters of cash over performance, and we recently took this significant write-up, which shows our confidence in that business. As Rakesh mentioned, we have strong liquidity and funding profile, and right now the industry dynamics are quite attractive. The supply environment is pretty good. And while it's competitive, it's at a reasonable level. We've laid out a clear strategy for how we're going to improve our business on the three vectors that I talked about, capital and investing, operations, tech and data, and people and culture. And I think we've really shown in the past year that we're executing. We've taken significant costs out. We've implemented the new contact platform. We've opened a new office in Charlotte. We've reorganized our U.S. business. We've consolidated our site footprint, and we're continuing to push towards offshoring of our call centers. In addition to this, as this technology transformation moves on, we think there's further opportunities to improve as well. And we are starting to see this in the financial metrics. Our ERC is at a record level of $8.9 billion. Our cash is continuing to grow. Our adjusted EBITDA has been growing faster than cash, and it's approaching an all-time high. Our leverage has declined seven quarters in a row, and it's now trending towards the mid two times target area, which is our longer-term target. Our cash efficiency ratio has improved by over 200 bps, and that's despite significant investments in legal that Rakesh and I both talked about. And those legal investments we expect to pay off in the years to come. So our earnings are also trending in the right direction. It's not going to happen in a quarter. You've got to look across the quarters, in particular with the way our accounting works. But we think we've got a good plan and we're heading in the right direction. So that's PRA. I don't know how much time we have, but happy to take some questions.

Speaker 5

In August 7th, we saw a student application rate in a couple of the previous micro-reviews. Is that engaging you guys that there might be an increased supply of those sort of, like, distressed debt situations that things might offer you?

Martin Sjolund, CEO

Yeah, good question. You know, we watch those numbers very carefully, you know, things like unemployment rate, the, you know, gas prices, all of those things that could affect our customers. There tends to be a lag from the time that the economic factors hit because there's typically a 180-day period after the charge-off before the accounts start to get sold. So there is a little bit of a lag there. We also obviously watch because of our own customers. But there's definitely, I think, a supply dynamic right now that there's a large credit card stock out there that we talked about. And you only need small variances in those charge-off rates for that supply to ramp up. So as Rakesh talked about, we have a strong funding profile. So, you know, our main plan is to continue to deliver. But if the market dynamics were to change, you know, we have access to the capital to take advantage of that. And if you look at history, at times like the global financial crisis, et cetera, you know, for debt buyers like us, those can be good opportunities. Okay, great.

Speaker 4

How do you understand your financials? What causes the big debt losses?

Martin Sjolund, CEO

I'm going to take that.

Rakesh Sehgal, CFO

Yeah, so in 2023, we had some write-downs on our portfolio. So we are required to basically do a mock-to-market in simple terms. And we are predicting where our cash flows are going to be. We're using sophisticated underwriting models. Now, this was during the COVID era.

Speaker 4

There were obviously some issues on our end with respect to our underwriting in the U.S.

Rakesh Sehgal, CFO

And as a result, we had to take some write-downs. no so as i mentioned to you earlier we had 73 million of net income in 24 and 25 in the ltm period it's 140 million so the 83 million was the loss in 2023 yeah go ahead Yeah, so, you know, I would distinguish between the U.S. and Europe generally.

Martin Sjolund, CEO

The U.S. tends to be more credit cards. We buy from a number of, well, there's quite a broad universe of potential sellers, but there's a handful that are very large sellers. So we have a lot of historical reference data from buying from these people before. And in the U.S., there's a lot of forward flows. So we'll enter into an arrangement where we'll agree a price for a particular segment with quite a lot of granularity in terms of the product type and the branding of the cards, how old they are, the face value ranges, et cetera. We'll agree a price, and then those are the portfolios that we tend to buy. In recent times, we've expanded, and for us, there's more to go after, in particular, as the fintech industry is growing. We do sometimes buy from more non-traditional banks and credit card providers, but it tends to focus there. But it is one of our growth initiatives is to expand into new segments. But when we do, we'll do it carefully. We wouldn't go big bang into something new. We would start by buying limited portfolios, gather data, tune our underwriting models and our operation. And then once we've proven that, we'd go bigger. On the European side, it tends to be more mixed. It's still all, most essentially all consumer unsecured debt. In Europe, there tends to be more of a mix of different types of loans as well in addition to credit cards. The face values tend to be a bit higher in the European markets, and the cash flow recovery curves look a bit different. That's one of the reasons why we have lower multiples on what we buy in Europe, even though the returns we're solving for are pretty similar.

Speaker 4

I think you just had a month plus your stock.

Martin Sjolund, CEO

Well, I mean, as we said, And commenting on the stock movement is difficult, you know, because there's a lot, obviously, a lot going on there. I don't know if I would generalize that necessarily. But I think we have a very interesting proposition, given that there's, you know, a downturn in the economy creates a potential supply opportunity if you have the funding available for that. But also, even in a decent economy, you know, obviously, interest rates matter, given how we fund ourself and also the collectability of the back book. But if you look over time, I mean, you know, as Rakesh said, we've been opportunistic about buying back shares ourselves. When we see the share trading at a discount to book value, you know, for us, that means that we think it makes sense for shareholders to occasionally buy the shares ourselves if we think it's not fully valued.

Speaker 4

Do you think it's cheaper?

Martin Sjolund, CEO

Yeah, that's a good question. We discussed that. I mean, as Rakesh said there, our priority is to buy portfolios. We need, you know, where we have good returns, we have the data, we have the relationship with those sellers. That's what the core business is about. But it's not about growth for growth's sake, is what we say. It's just, you know, I don't want to put targets out there and have to feel pressured just to win portfolios for the sake of winning them. We're going to be disciplined about that. And, you know, we have the benefit of this international diversification. So we can deploy the capital where we see the best returns. And that can ebb and flow a little bit as the quarters go.

Speaker 5

You referenced the European portfolio a couple of times, and I actually did not hear it. Did you say you wrote it up or wrote it down? Okay. How does that flow through the financials, particularly given that you've seen roughly a doubling of net income since 2012?

Martin Sjolund, CEO

Yeah. And it relates a little bit to the question the gentleman behind you was asking. The accounting can be a little bit difficult at first. So the way it works is that we have a very structured methodology and it's audited as well. But we have a projection based on what we expect to collect from a portfolio. So in the case of Europe, after having 20 plus quarters in a row of overperformance, we did a deep dive analysis and had our underwriting teams review the portfolio. They determined that the expectations on those portfolios was $349 million more than what we had it on the books for. So we took that write-up. When we take that write-up, the present value of the write-up runs through the P&L. And so that creates a significant portion. It's under something called changes in expected recovery. and changes in expected recoveries has two components. One is the future expectations, which is that write-up, the present value of that write-up. But the other one is in every quarter, there's also a cash overperformance. So the curves will have a target. And if we collect more than what was in the target, that flows through changes in expected recoveries in the form of overperformance. So we do distinguish between the one thing is collecting the actual cash greater than the target. That's still cash that we now have. That's a little bit different from the future expectations on the portfolio. And both of those things run through the P&L. So in our earnings materials, we always break that out to show how our revenue is composed of the portfolio income, which is a calculated number. And then we have the cash overperformance that's linked to the actual cash. So, you know, we always say it's very important to look at the cash metrics in this business. The accounting is important, too, obviously, but you also need to look at the cash. So we're very focused on that, the cash EBITDA, the cost, and so on. Yeah, I mean, I think AI has the potential to really transform this. So we're obviously doing our own initiatives on that. We have seen there's a lot of startups, in particular, trying to do third-party debt collections. So they'll come to us and they're going to use AI bots and things like that to collect the debt. We haven't seen so much on the debt buying side. You know, the banks, like I said, they're very selective about who they sell to. We have like an obligation to treat those customers. We're responsible for doing that. And so I think that's harder. The other thing is that you need data to do the underwriting. Even if you're using AI, you need data to do that. So the combination of the capital required, the data for the underwriting, and just the general regulatory complexity of this, I think makes it difficult for people to just come in. But I definitely think we're going to see third-party debt collection agencies that are increasingly using AI. The banks that sell the debt are going to be using AI more. So it's really going to affect the industry in a lot of ways. Our focus is to make sure that we're taking advantage of it. And I always say, we have a big asset on our balance sheet, which is the ERC of the portfolios we already own. We underwrote those portfolios with the historical technology, historical data, and our historical efficiency model. So if we can liquidate that in a more efficient way in the future, that's an opportunity for us. So that's where AI, and that would only benefit us. And then meanwhile, we have to work out how do we leverage AI to be as efficient as we can. And I always say it's not going to happen in a quarter, but I think there's real opportunity there.

Operator

Is there any risk?

Martin Sjolund, CEO

It could be. Yeah, there could be. I mean, if they become able to liquidate it more efficiently, maybe they decide to pursue it in-house or so on.

Operator

It could be more just the underwriting and is there a screen in that?

Martin Sjolund, CEO

It could do. I mean, all of that will eventually work its way into the price. So, you know, the one thing to think about is, like, if I look across all these different countries, there are countries where we might pay five cents on the dollar to buy NPLs. But there's other countries where we might pay 50 cents on the dollar, just depending on the characteristics of what we're buying. So it's not like it's good or bad, necessarily. It's all about correctly pricing it. I mean, we hear about initiatives that they're all doing and, you know, we consider ourselves partners with them. So we share information and we share best practice with a lot of those guys. So everyone's doing initiatives and seeing it. I think it's more on the efficiency side, though. I mean, that's kind of like the first thing to go after, but I'm sure it's going to work its way in over time. I wouldn't say so, really. I haven't seen that. In some European countries, we have seen some players who were very aggressive four or five years ago run into trouble. They got over-levered. And we have seen, you know, large funds with very deep pockets coming in and helping to restructure those companies and buying up their back books, basically, and helping them restructure. So that's been a bit of a trend. But I wouldn't say anything beyond it. Not so much. I mean, there was a time, especially in Europe, where the market was very, I would say, overheated. And, you know, that's why I talk so much about discipline, because, you know, it was easy to go in and buy portfolios at the time. But, you know, we had markets where we didn't buy anything for over a year, in one case, two years. So that just shows the – and in retrospect, I'm glad we didn't. I never looked back and wished we bought more. So having that discipline, certain markets seem to be able to overheat at different times. But right now, it's competitive, but I would say it's fairly stable. I think people are rational, professional, experienced companies who have good data, and, you know, we compete on where we may have an edge on data, or we may have an edge on certain operational capabilities, and so on.

Speaker 5

Can I explain the three avenues where either to give up on collecting it, to get the money to do the legal action, is that not easier or harder, Yeah, I mean, as Rakesh said, we never start with legal.

Martin Sjolund, CEO

You know, we always try to contact people and work out a voluntary arrangement initially. We offer discounts. We try to come up with a payment plan that people can afford. That's always, you know, the first plan. But if our data tells us that they should be able to pay but they're not engaging with us, then we will consider legal. What we'll do is score the accounts. we'll have a financial assessment and that can vary from state to state um it does change a lot i mean everything from even if if some if some county changes their form you know everything has to change so we're constantly trying to automate these things uh but also keep up with the changes that are happening out there um and and in fact it you know it's very interesting with the regulatory situation because if the the more the more that the regulation makes it difficult to contact people or to work with them, then where they shorten the time from when accounts become statute barred, it actually drives people to use the legal system more. So there has been that dynamic. We've invested significantly in legal in the recent time period, and we probably had underinvested in it prior to that. So we're kind of in a catch-up period now. I think I can tell you from operating in all these countries around the world, legal is an important part of collections in every single country that I know of. That ranges from Australia to South America to Scandinavia to the US. So it's a normal part of recovering debt in all these places. And we try to avoid it. We try to work out a voluntary arrangement if we can, but otherwise we will use that legal system. And then those legal systems, how efficient they are varies. I mean, the Polish system has a very advanced electronic, you know, it's completely electronic. You know, the bailiff system in the Nordics, those are like 100-year institutions operated by the government. Here, it's very fragmented in the States. So it's a very specialized thing that varies from country to country. But I think that's one of the core capabilities, and it's something we're investing in, not just investing in the cord cost, but also investing in our technology capability to be more efficient at using that.

John McNamara, Host

Great, thank you.