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 25, 2021 |
|---|
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 25, 2021, PRA Group, Inc. (the “Company”) issued a press release announcing its fourth quarter and full year 2020 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 25, 2021 webcast and conference call to discuss its fourth quarter and full year 2020 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
| Exhibit No. | Description |
|---|---|
| 99.1<br><br><br>104 | Press release dated February 25, 2021<br><br><br>Cover Page Interactive Date 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 25, 2021 | By: | /s/ Peter M. Graham |
| Peter M. Graham | ||
| Executive Vice President and Chief Financial Officer |
Exhibit 99.1
PRA Group Reports Fourth Quarter 2020 Results
NORFOLK, Va., Feb. 25, 2021 /PRNewswire/ -- 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 2020. Net income attributable to PRA Group, Inc. increased $2.5 million, or 9%, to $29.8 million compared to the fourth quarter of 2019. Diluted earnings per share were $0.65 compared to $0.60 in the fourth quarter of 2019. For the year ended December 31, 2020, net income attributable to PRA Group, Inc. increased $63.2 million, or 73%, to $149.3 million, or $3.26 per diluted share, compared to the year ended December 31, 2019.
Fourth Quarter Highlights (compared to the fourth quarterof 2019)
- Total cash collections increased 6% to $481.9 million on a reported basis and a constant currency adjusted basis.
- Total revenues increased 2% to $273.9 million.
- Income from operations increased 26% to $89.2 million.
- Cash efficiency ratio^1^ of 61.9% during the quarter compared to 59.7% in the fourth quarter of 2019.
- Net income attributable to PRA Group, Inc. increased 9% to $29.8 million.
- Diluted earnings per share increased 8% to $0.65.
- Debt to Adjusted EBITDA^2^ for the last 12 months decreased to 1.99x from 2.53x at December 31, 2019.
- Total portfolio purchases of $289.8 million.
- Estimated Remaining Collections (ERC) of $6.5 billion.
Full Year 2020 Highlights (compared to the full year of 2019)
- Record total cash collections which increased 9% to $2.0 billion.
- Record total revenues which increased 5% to $1.1 billion.
- Record income from operations which increased 41% to $349.7 million.
- Record cash efficiency ratio^1^ of 64.5%.
"Cash collections grew in the quarter driven primarily by increases in nonlegal collections in the U.S. and by Core and Insolvency in Europe. In the U.S., we continue to see customers choosing to voluntarily resolve their debts through the call centers and digital platforms. In Europe, cash collections were driven by record portfolio purchases in 2019, as well as strong investment levels in 2020 at increased underwritten net returns," said Kevin Stevenson, president and chief executive officer. "Looking ahead, we entered 2021 with a similar base of maximum forward flow commitments as 2020, but we expect they will deliver more actual investment volume. We believe that the pipeline for 2021 is strong, particularly in Europe, and we remain optimistic about supply globally."
- Calculated by dividing cash receipts less operating expenses by cash receipts.
- A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP measure can be found at the end of this press release.
Cash Collections and RevenuesThe following table presents cash collections by quarter and by source on an as reported and constant currency adjusted basis:
| Cash Collection Source | 2020 | 2019 | ||
|---|---|---|---|---|
| ($ inthousands) | Q4 | Q2 | Q1 | Q4 |
| Americas Core | 286,524 | $ 343,269 | $ 305,780 | $ 276,639 |
| Americas<br>Insolvency | 36,048 | 38,685 | 43,210 | 40,801 |
| Europe Core | 141,471 | 115,145 | 131,340 | 126,649 |
| Europe Insolvency | 17,830 | 12,841 | 14,243 | 12,520 |
| Total Cash Collections | 481,873 | $ 509,940 | $ 494,573 | $ 456,609 |
| Cash Collection Source | ||||
| Constant Currency Adjusted | 2020 | 2019 | ||
| ($ in thousands) | Q4 | Q4 | ||
| Americas Core | 286,524 | $ 269,231 | ||
| Americas<br>Insolvency | 36,048 | 40,808 | ||
| Europe Core | 141,471 | 132,291 | ||
| Europe Insolvency | 17,830 | 12,960 | ||
| Total Cash Collections | 481,873 | $ 455,290 |
All values are in US Dollars.
- Cash collections in the quarter increased $25.3 million compared to the fourth quarter of 2019. The increase was primarily due to a 22% increase in U.S. call center and other cash collections, a 12% increase in Europe Core cash collections and a 42% increase in Europe Insolvency cash collections. This increase was partially offset by a decrease in U.S. legal and Americas Insolvency cash collections. While cash collections decreased in Other Americas, this was primarily driven by foreign exchange rates. For the full year, cash collections increased $164.5 million compared to the full year of 2019.
- Portfolio income was $233.5 million compared to $262.8 million in income recognized on finance receivables in the fourth quarter of 2019. For the full year, portfolio income was $984.0 million compared to $998.4 million in income recognized on finance receivables for the same period in 2019.
- Changes in expected recoveries were a net positive of $36.9 million. This amount reflects $66.3 million in recoveries in excess of forecast from overperformance during the quarter, partially offset by a negative $29.4 million adjustment for changes in expected future recoveries. The Company has assumed that a portion of the current quarter overperformance is acceleration of future collections and made cash forecast adjustments deemed appropriate given the current environment.
Expenses
- Operating expenses in the quarter decreased $1.1 million compared to the fourth quarter of 2019. The decrease was primarily driven by a reduction in legal collection costs mainly as a result of a shift in collections from the legal channel to the call centers and digital platforms. This decrease was partially offset by an increase in outside fees and services which was driven by a number of factors, none of which was individually material. For the full year, operating expenses decreased $29.7 million compared to the same period in 2019.
- Interest expense, net decreased $0.7 million compared to the fourth quarter of 2019 primarily due to lower average interest rates. For the full year, interest expense, net was almost flat to the same period in 2019.
- The effective tax rate for the full year was 19.7%.
Portfolio Acquisitions
- The Company purchased $289.8 million in finance receivables in the fourth quarter of 2020.
- At the end of the fourth quarter, the Company had in place forward flow commitments of up to $501.9 million with $324.1 million in the Americas and $177.8 million in Europe.
| Portfolio Acquisition Source | 2020 | 2019 | |||
|---|---|---|---|---|---|
| ($ inthousands) | Q4 | Q3 | Q2 | Q1 | Q4 |
| Americas Core | $ 67,460 | $ 84,139 | $ 110,474 | $ <br>172,697 | $ 118,153 |
| Americas Insolvency | 12,504 | 14,328 | 14,527 | 20,772 | 22,650 |
| Europe Core | 137,647 | 74,930 | 34,247 | 60,990 | 218,919 |
| Europe Insolvency | 72,171 | 4,203 | 5,251 | 18,778 | 42,613 |
| Total Portfolio Acquisitions | $ 289,782 | $ <br>177,600 | $ 164,499 | $ 273,237 | $ 402,335 |
Conference Call InformationPRA 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 until Mar. 4, 2021, call 877-344-7529 in the U.S. or 412-317-0088 outside the U.S. and use access code 10148612.
**About PRA Group, Inc.**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 and Europe. 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 StatementsStatements 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 our 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 but not limited to 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. | |||||||
|---|---|---|---|---|---|---|---|
| Unaudited Consolidated Income Statements | |||||||
| (Amounts in thousands, except per share amounts) | |||||||
| Three Months Ended | Twelve Months Ended | ||||||
| December 31, | December 31, | ||||||
| 2020 | 2019 | 2020 | 2019 | ||||
| Revenues: | |||||||
| Portfolio income | $ 233,480 | $ - | $ 984,036 | $ - | |||
| Changes in expected recoveries | 36,909 | - | 69,297 | - | |||
| Income recognized on finance receivables | - | 262,835 | - | 998,361 | |||
| Fee income | 2,922 | 4,297 | 9,748 | 15,769 | |||
| Other revenue | 545 | 2,001 | 2,333 | 2,951 | |||
| Total revenues | 273,856 | 269,133 | 1,065,414 | 1,017,081 | |||
| Net allowance charges | - | (12,598) | - | (24,025) | |||
| Operating expenses: | |||||||
| Compensation and employee services | 77,533 | 75,671 | 295,150 | 310,441 | |||
| Legal collection fees | 11,783 | 13,822 | 53,758 | 55,261 | |||
| Legal collection costs | 21,638 | 34,411 | 101,635 | 134,156 | |||
| Agency fees | 17,799 | 15,979 | 56,418 | 55,812 | |||
| Outside fees and services | 23,291 | 15,239 | 84,087 | 63,513 | |||
| Communication | 9,099 | 9,722 | 40,801 | 44,057 | |||
| Rent and occupancy | 4,558 | 4,586 | 17,973 | 17,854 | |||
| Depreciation and amortization | 5,971 | 4,123 | 18,465 | 17,464 | |||
| Other operating expenses | 12,969 | 12,198 | 47,426 | 46,811 | |||
| Total operating expenses | 184,641 | 185,751 | 715,713 | 745,369 | |||
| Income from operations | 89,215 | 70,784 | 349,701 | 247,687 | |||
| Other income and (expense): | |||||||
| Interest expense, net | (35,393) | (36,046) | (141,712) | (141,918) | |||
| Foreign exchange (loss)/gain | (1,022) | 595 | 2,005 | 11,954 | |||
| Other | 318 | (241) | (1,049) | (364) | |||
| Income before income taxes | 53,118 | 35,092 | 208,945 | 117,359 | |||
| Income tax expense | 16,469 | 4,073 | 41,203 | 19,680 | |||
| Net income | 36,649 | 31,019 | 167,742 | 97,679 | |||
| Adjustment for net income attributable to noncontrolling interests | 6,851 | 3,678 | 18,403 | 11,521 | |||
| Net income attributable to PRA Group, Inc. | $ 29,798 | $ 27,341 | $ 149,339 | $ 86,158 | |||
| Net income per common share attributable to PRA Group, Inc.: | |||||||
| Basic | $ 0.65 | $ 0.60 | $ 3.28 | $ 1.90 | |||
| Diluted | $ 0.65 | $ 0.60 | $ 3.26 | $ 1.89 | |||
| Weighted average number of shares outstanding: | |||||||
| Basic | 45,583 | 45,413 | 45,540 | 45,387 | |||
| Diluted | 45,973 | 45,748 | 45,860 | 45,577 | |||
| PRA Group, Inc. | |||||||
| --- | --- | --- | --- | --- | --- | --- | |
| Consolidated Balance Sheets | |||||||
| (Amounts in thousands, except per share amounts) | |||||||
| (unaudited) | |||||||
| December 31, | December 31, | ||||||
| ASSETS | 2020 | 2019 | |||||
| Cash and cash equivalents | $ <br> 108,613 | $ 119,774 | |||||
| Restricted cash | 12,434 | 4,033 | |||||
| Investments | 55,759 | 56,176 | |||||
| Finance receivables, net | 3,514,788 | 3,514,165 | |||||
| Other receivables, net | 13,194 | 10,606 | |||||
| Income taxes receivable | 21,928 | 17,918 | |||||
| Deferred tax assets, net | 83,205 | 63,225 | |||||
| Right-of-use assets | 52,951 | 68,972 | |||||
| Property and equipment, net | 58,356 | 56,501 | |||||
| Goodwill | 492,989 | 480,794 | |||||
| Other assets | 38,844 | 31,727 | |||||
| Total assets | $ 4,453,061 | $ 4,423,891 | |||||
| LIABILITIES AND EQUITY | |||||||
| Liabilities: | |||||||
| Accounts payable | $ <br> 5,294 | $ 4,258 | |||||
| Accrued expenses | 97,320 | 88,925 | |||||
| Income taxes payable | 29,692 | 4,046 | |||||
| Deferred tax liabilities, net | 40,867 | 85,390 | |||||
| Lease liabilities | 57,348 | 73,377 | |||||
| Interest-bearing deposits | 132,739 | 106,246 | |||||
| Borrowings | 2,661,289 | 2,808,425 | |||||
| Other liabilities | 54,986 | 26,211 | |||||
| Total liabilities | 3,079,535 | 3,196,878 | |||||
| Equity: | |||||||
| Preferred stock, 0.01 par value, 2,000 authorized shares, | |||||||
| no shares issued and outstanding shares | - | - | |||||
| Common stock, 0.01 par value, 100,000 shares authorized, 45,585 shares | |||||||
| issued and outstanding at December 31, 2020; 100,000 shares authorized, | |||||||
| 45,416 shares issued and outstanding at December 31, 2019 | 456 | 454 | |||||
| Additional paid-in capital | 75,282 | 67,321 | |||||
| Retained earnings | 1,511,970 | 1,362,631 | |||||
| Accumulated other comprehensive loss | (245,791) | (261,018) | |||||
| 1,341,917 | 1,169,388 | ||||||
| Noncontrolling interests | 31,609 | 57,625 | |||||
| Total equity | 1,373,526 | 1,227,013 | |||||
| Total liabilities and equity | $ <br> 4,453,061 | $ 4,423,891 |
All values are in US Dollars.
| Select Expenses (Income) | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands, pre-tax) | Three MonthsEnded | |||||||
| December 31,2020 | September 30,2020 | June 30,2020 | March 31,2020 | December 31,2019 | September 30,2019 | June 30,2019 | March 31,2019 | |
| Acquisition/divestiture-related expenses | - | - | - | - | - | - | 227 | 223 |
| Legal costs not associated with normal<br>operations | - | - | - | - | - | - | - | - |
| Noncash interest expense - amortization of debt discount | 1,959 | 2,388 | 3,247 | 3,217 | 3,157 | 3,128 | 3,071 | 3,042 |
| Noncash interest expense - amortization of<br>debt<br><br>issuance costs | 2,393 | 2,476 | 2,743 | 2,640 | 2,649 | 2,649 | 2,655 | 2,636 |
| Change in fair value on derivatives | 3,875 | 3,701 | 3,284 | 2,039 | 1,247 | 1,126 | 1,645 | 349 |
| Amortization of<br>intangibles | 1,792 | 360 | 351 | 349 | 407 | 400 | 418 | 347 |
| Share-based compensation expense | 5,370 | 3,097 | 3,063 | 2,857 | 2,809 | 2,974 | 2,620 | 2,314 |
| Purchase Price Multiples | ||||||||
| --- | --- | --- | --- | --- | ||||
| as of December 31, 2020 | ||||||||
| Amounts in thousands | ||||||||
| Purchase Period | Purchase Price<br>^(1)(2)^ | Total Estimated<br><br>Collections ^(3)^ | Estimated<br>Remaining<br>Collections (4) | Original<br><br>Estimated<br><br>Purchase Price<br><br>Multiple ^(5)^ | ||||
| Americas Core | ||||||||
| 1996-2010 | $ 1,078,219 | $ 3,398,610 | 28,969 | 240% | ||||
| 2011 | 209,602 | 720,510 | 19,048 | 245% | ||||
| 2012 | 254,076 | 653,102 | 21,655 | 226% | ||||
| 2013 | 390,826 | 896,381 | 36,759 | 211% | ||||
| 2014 | 404,117 | 866,597 | 58,983 | 204% | ||||
| 2015 | 443,114 | 927,497 | 132,263 | 205% | ||||
| 2016 | 455,767 | 1,092,218 | 230,039 | 201% | ||||
| 2017 | 532,851 | 1,210,475 | 367,123 | 193% | ||||
| 2018 | 653,975 | 1,362,777 | 521,466 | 202% | ||||
| 2019 | 581,476 | 1,240,122 | 717,793 | 206% | ||||
| 2020 | 435,668 | 929,706 | 796,502 | 213% | ||||
| Subtotal | 5,439,691 | 13,297,995 | 2,930,600 | |||||
| Americas Insolvency | ||||||||
| 1996-2010 | 606,395 | 1,382,682 | 1,105 | 180% | ||||
| 2011 | 180,432 | 370,180 | 567 | 155% | ||||
| 2012 | 251,395 | 392,605 | 256 | 136% | ||||
| 2013 | 227,834 | 354,923 | 832 | 133% | ||||
| 2014 | 148,420 | 218,485 | 2,045 | 124% | ||||
| 2015 | 63,170 | 87,254 | 1,489 | 125% | ||||
| 2016 | 91,442 | 116,918 | 9,209 | 123% | ||||
| 2017 | 275,257 | 348,732 | 62,593 | 125% | ||||
| 2018 | 97,879 | 130,683 | 66,033 | 127% | ||||
| 2019 | 123,077 | 160,804 | 116,037 | 128% | ||||
| 2020 | 62,130 | 84,622 | 78,098 | 136% | ||||
| Subtotal | 2,127,431 | 3,647,888 | 338,264 | |||||
| Total Americas | 7,567,122 | 16,945,883 | 3,268,864 | |||||
| Europe Core | ||||||||
| 2012 | 20,409 | 41,210 | - | 187% | ||||
| 2013 | 20,334 | 25,448 | - | 119% | ||||
| 2014 | 773,811 | 2,229,255 | 630,934 | 208% | ||||
| 2015 | 411,340 | 734,276 | 274,714 | 160% | ||||
| 2016 | 333,090 | 556,493 | 295,560 | 167% | ||||
| 2017 | 252,174 | 353,557 | 194,165 | 144% | ||||
| 2018 | 341,775 | 524,117 | 361,355 | 148% | ||||
| 2019 | 518,610 | 778,422 | 630,040 | 152% | ||||
| 2020 | 324,119 | 557,289 | 523,089 | 172% | ||||
| Subtotal | 2,995,662 | 5,800,067 | 2,909,857 | |||||
| Europe Insolvency | ||||||||
| 2014 | 10,876 | 18,223 | 213 | 129% | ||||
| 2015 | 18,973 | 29,023 | 2,512 | 139% | ||||
| 2016 | 39,338 | 56,801 | 10,424 | 130% | ||||
| 2017 | 39,235 | 49,142 | 20,019 | 128% | ||||
| 2018 | 44,908 | 52,955 | 36,032 | 123% | ||||
| 2019 | 77,218 | 101,891 | 77,854 | 130% | ||||
| 2020 | 105,440 | 135,890 | 129,591 | 129% | ||||
| Subtotal | 335,988 | 443,925 | 276,645 | |||||
| Total Europe | 3,331,650 | 6,243,992 | 3,186,502 | |||||
| Total PRA Group | $ 10,898,772 | $ 23,189,875 | 6,455,366 |
All values are in US Dollars.
| (1) | Includes the acquisition date finance receivables portfolios that were<br>acquired through our business acquisitions. | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (2) | For our non-US<br>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 our non-US amounts, TEC is presented at the year-end exchange rate for the respective year of purchase. | |||||||||||||||
| (4) | For our non-U.S. amounts, ERC is presented at the December 31, 2020 exchange rate. | |||||||||||||||
| (5) | The Original Estimated Purchase Price Multiple represents the purchase price multiple at the end of the year of acquisition. | |||||||||||||||
| Portfolio Financial Information | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | |||||||||||
| For the Year Ended December 31, 2020 | ||||||||||||||||
| Amounts in thousands | ||||||||||||||||
| Purchase Period | Cash<br>Collections^(1)^ | Portfolio<br><br>Income ^(1)^ | Changes in<br><br>Expected<br><br>Recoveries^(1)^ | Total Portfolio<br><br>Revenue ^(1) (2)^ | Net Finance<br><br>Receivables as of<br><br>December 31,2020 ^(3)^ | |||||||||||
| Americas Core | ||||||||||||||||
| 1996-2010 | $ 18,838 | $ 15,419 | $ <br> (3,156) | $ 12,263 | $ 6,140 | |||||||||||
| 2011 | 10,855 | 10,016 | (3,722) | 6,294 | 3,142 | |||||||||||
| 2012 | 11,805 | 10,055 | (7,485) | 2,570 | 6,761 | |||||||||||
| 2013 | 23,161 | 16,709 | (10,833) | 5,876 | 16,290 | |||||||||||
| 2014 | 31,921 | 23,563 | (21,081) | 2,482 | 25,525 | |||||||||||
| 2015 | 57,223 | 34,339 | (14,111) | 20,228 | 56,170 | |||||||||||
| 2016 | 105,905 | 59,388 | 796 | 60,184 | 93,024 | |||||||||||
| 2017 | 192,524 | 91,632 | 25,085 | 116,717 | 165,492 | |||||||||||
| 2018 | 337,697 | 135,689 | 32,123 | 167,812 | 286,204 | |||||||||||
| 2019 | 349,021 | 175,258 | 36,325 | 211,583 | 380,756 | |||||||||||
| 2020 | 132,945 | 78,573 | 18,114 | 96,687 | 398,271 | |||||||||||
| Subtotal | 1,271,895 | 650,641 | 52,055 | 702,696 | 1,437,775 | |||||||||||
| Americas Insolvency | ||||||||||||||||
| 1996-2010 | 844 | $ 992 | (128) | 864 | - | |||||||||||
| 2011 | 483 | 406 | 79 | 485 | - | |||||||||||
| 2012 | 925 | 697 | 509 | 1,206 | - | |||||||||||
| 2013 | 1,311 | 1,310 | 11 | 1,321 | - | |||||||||||
| 2014 | 2,229 | 2,500 | (734) | 1,766 | 224 | |||||||||||
| 2015 | 7,909 | 4,036 | (1,002) | 3,034 | 898 | |||||||||||
| 2016 | 14,362 | 3,402 | 970 | 4,372 | 7,423 | |||||||||||
| 2017 | 58,826 | 15,607 | (428) | 15,179 | 51,771 | |||||||||||
| 2018 | 30,513 | 8,762 | 2,960 | 11,722 | 55,653 | |||||||||||
| 2019 | 31,360 | 11,293 | 3,480 | 14,773 | 97,250 | |||||||||||
| 2020 | 6,525 | 4,064 | (869) | 3,195 | 57,929 | |||||||||||
| Subtotal | 155,287 | 53,069 | 4,848 | 57,917 | 271,148 | |||||||||||
| Total Americas | 1,427,182 | 703,710 | 56,903 | 760,613 | 1,708,923 | |||||||||||
| Europe Core | ||||||||||||||||
| 2012 | 1,218 | 687 | 531 | 1,218 | - | |||||||||||
| 2013 | 685 | 333 | 353 | 686 | - | |||||||||||
| 2014 | 149,782 | 106,875 | 11,173 | 118,048 | 168,604 | |||||||||||
| 2015 | 54,252 | 30,917 | (575) | 30,342 | 144,112 | |||||||||||
| 2016 | 48,333 | 26,722 | (2,260) | 24,462 | 172,697 | |||||||||||
| 2017 | 36,084 | 13,521 | (5,500) | 8,021 | 135,149 | |||||||||||
| 2018 | 71,253 | 26,261 | 3,519 | 29,780 | 235,099 | |||||||||||
| 2019 | 125,712 | 43,091 | (2,837) | 40,254 | 416,812 | |||||||||||
| 2020 | 32,339 | 12,507 | 6,199 | 18,706 | 309,229 | |||||||||||
| Subtotal | 519,658 | 260,914 | 10,603 | 271,517 | 1,581,702 | |||||||||||
| Europe Insolvency | ||||||||||||||||
| 2014 | 802 | 511 | 69 | 580 | 90 | |||||||||||
| 2015 | 2,871 | 1,367 | 49 | 1,416 | 1,627 | |||||||||||
| 2016 | 7,950 | 3,047 | (204) | 2,843 | 7,583 | |||||||||||
| 2017 | 9,819 | 1,960 | 568 | 2,528 | 17,602 | |||||||||||
| 2018 | 10,315 | 2,935 | (2,229) | 706 | 31,143 | |||||||||||
| 2019 | 21,082 | 6,637 | 1,933 | 8,570 | 63,230 | |||||||||||
| 2020 | 6,046 | 2,955 | 1,605 | 4,560 | 102,888 | |||||||||||
| Subtotal | 58,885 | 19,412 | 1,791 | 21,203 | 224,163 | |||||||||||
| Total Europe | 578,543 | 280,326 | 12,394 | 292,720 | 1,805,865 | |||||||||||
| Total PRA Group | $ 2,005,725 | $ 984,036 | $ 69,297 | $ 1,053,333 | $ 3,514,788 | (1) | For our non-U.S., amounts are presented using the average exchange rates during the current<br>reporting period. | |||||||||
| --- | --- | |||||||||||||||
| (2) | Total Portfolio Revenue refers to Portfolio Income and Changes in<br>Expected Recoveries combined. | |||||||||||||||
| (3) | For our non-U.S. amounts, Net Finance Receivables are<br>presented at the December 31, 2020 exchange rate. | |||||||||||||||
| Cash Collections by Year, By Year of Purchase^(1)^ | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| as of December 31, 2020 | ||||||||||||||||
| Amounts in millions | ||||||||||||||||
| Purchase Period^(2)^ | Purchase Price<br>^(2)(3)^ | Cash Collections | ||||||||||||||
| 1996-2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | Total | |||||
| Americas Core | ||||||||||||||||
| 1996-2010 | $ <br> 1,078.2 | $ 1,990.5 | $ 367.1 | $ 311.5 | $ 228.4 | $ 157.7 | $ 109.3 | $ 70.2 | $ 46.0 | $ 34.4 | $ 28.4 | $ <br> 18.8 | $ 3,362.3 | |||
| 2011 | 209.6 | — | 62.0 | 174.5 | 152.9 | 108.5 | 73.8 | 48.7 | 32.0 | 21.6 | 16.6 | 10.9 | 701.5 | |||
| 2012 | 254.1 | — | — | 56.9 | 173.6 | 146.2 | 97.3 | 60.0 | 40.0 | 27.8 | 17.9 | 11.8 | 631.5 | |||
| 2013 | 390.8 | — | — | — | 101.6 | 247.8 | 194.0 | 120.8 | 78.9 | 56.4 | 36.9 | 23.2 | 859.6 | |||
| 2014 | 404.1 | — | — | — | — | 92.7 | 253.4 | 170.3 | 114.2 | 82.2 | 55.3 | 31.9 | 800.0 | |||
| 2015 | 443.1 | — | — | — | — | — | 117.0 | 228.4 | 185.9 | 126.6 | 83.6 | 57.2 | 798.7 | |||
| 2016 | 455.8 | — | — | — | — | — | — | 138.7 | 256.5 | 194.6 | 140.6 | 105.9 | 836.3 | |||
| 2017 | 532.9 | — | — | — | — | — | — | — | 107.3 | 278.7 | 256.5 | 192.5 | 835.0 | |||
| 2018 | 654.0 | — | — | — | — | — | — | — | — | 122.7 | 361.9 | 337.7 | 822.3 | |||
| 2019 | 581.5 | — | — | — | — | — | — | — | — | — | 143.8 | 349.0 | 492.8 | |||
| 2020 | 435.7 | — | — | — | — | — | — | — | — | — | - | 133.0 | 133.0 | |||
| Subtotal | 5,439.8 | 1,990.5 | 429.1 | 542.9 | 656.5 | 752.9 | 844.8 | 837.1 | 860.8 | 945.0 | 1,141.5 | 1,271.9 | $ 10,273.0 | |||
| Americas Insolvency | ||||||||||||||||
| 1996-2010 | 606.4 | 390.9 | 261.2 | 270.4 | 231.0 | 158.9 | 51.2 | 8.6 | 4.6 | 2.5 | 1.4 | 0.8 | 1,381.5 | |||
| 2011 | 180.4 | — | 15.2 | 66.4 | 82.8 | 85.8 | 76.9 | 36.0 | 3.7 | 1.6 | 0.7 | 0.5 | 369.6 | |||
| 2012 | 251.4 | — | — | 17.4 | 103.6 | 94.1 | 80.1 | 60.7 | 29.3 | 4.3 | 1.9 | 0.9 | 392.3 | |||
| 2013 | 227.8 | — | — | — | 52.5 | 82.6 | 81.7 | 63.4 | 47.8 | 21.9 | 2.9 | 1.3 | 354.1 | |||
| 2014 | 148.4 | — | — | — | — | 37.0 | 50.9 | 44.3 | 37.4 | 28.8 | 15.8 | 2.2 | 216.4 | |||
| 2015 | 63.2 | — | — | — | — | — | 3.4 | 17.9 | 20.1 | 19.8 | 16.7 | 7.9 | 85.8 | |||
| 2016 | 91.4 | — | — | — | — | — | — | 18.9 | 30.4 | 25.0 | 19.9 | 14.4 | 108.6 | |||
| 2017 | 275.3 | — | — | — | — | — | — | — | 49.1 | 97.3 | 80.9 | 58.8 | 286.1 | |||
| 2018 | 97.9 | — | — | — | — | — | — | — | — | 6.7 | 27.4 | 30.5 | 64.6 | |||
| 2019 | 123.1 | — | — | — | — | — | — | — | — | — | 13.3 | 31.4 | 44.7 | |||
| 2020 | 62.1 | — | — | — | — | — | — | — | — | — | — | 6.6 | 6.6 | |||
| Subtotal | 2,127.4 | 390.9 | 276.4 | 354.2 | 469.9 | 458.4 | 344.2 | 249.8 | 222.4 | 207.9 | 180.9 | 155.3 | 3,310.3 | |||
| Total Americas | 7,567.2 | 2,381.4 | 705.5 | 897.1 | 1,126.4 | 1,211.3 | 1,189.0 | 1,086.9 | 1,083.2 | 1,152.9 | 1,322.4 | 1,427.2 | 13,583.3 | |||
| Europe Core | ||||||||||||||||
| 2012 | 20.4 | — | — | 11.6 | 9.0 | 5.6 | 3.2 | 2.2 | 2.0 | 2.0 | 1.5 | 1.2 | 38.3 | |||
| 2013 | 20.3 | — | — | — | 7.1 | 8.5 | 2.3 | 1.3 | 1.2 | 1.3 | 0.9 | 0.7 | 23.3 | |||
| 2014 | 773.8 | — | — | — | — | 153.2 | 292.0 | 246.4 | 220.8 | 206.3 | 172.9 | 149.8 | 1,441.4 | |||
| 2015 | 411.3 | — | — | — | — | — | 45.8 | 100.3 | 86.2 | 80.9 | 66.1 | 54.3 | 433.6 | |||
| 2016 | 333.1 | — | — | — | — | — | — | 40.4 | 78.9 | 72.6 | 58.0 | 48.3 | 298.2 | |||
| 2017 | 252.2 | — | — | — | — | — | — | — | 17.9 | 56.0 | 44.1 | 36.1 | 154.1 | |||
| 2018 | 341.8 | — | — | — | — | — | — | — | — | 24.3 | 88.7 | 71.2 | 184.2 | |||
| 2019 | 518.6 | — | — | — | — | — | — | — | — | — | 47.9 | 125.7 | 173.6 | |||
| 2020 | 324.1 | — | — | — | — | — | — | — | — | — | — | 32.4 | 32.4 | |||
| Subtotal | 2,995.6 | - | - | 11.6 | 16.1 | 167.3 | 343.3 | 390.6 | 407.0 | 443.4 | 480.1 | 519.7 | 2,779.1 | |||
| Europe Insolvency | ||||||||||||||||
| 2014 | 10.9 | — | — | — | — | - | 4.3 | 3.9 | 3.2 | 2.6 | 1.5 | 0.8 | 16.3 | |||
| 2015 | 19.0 | — | — | — | — | — | 3.0 | 4.4 | 5.0 | 4.8 | 3.9 | 2.9 | 24.0 | |||
| 2016 | 39.3 | — | — | — | — | — | — | 6.2 | 12.7 | 12.9 | 10.7 | 7.9 | 50.4 | |||
| 2017 | 39.2 | — | — | — | — | — | — | — | 1.2 | 7.9 | 9.2 | 9.8 | 28.1 | |||
| 2018 | 44.9 | — | — | — | — | — | — | — | — | 0.6 | 8.4 | 10.3 | 19.3 | |||
| 2019 | 77.2 | — | — | — | — | — | — | — | — | — | 5.1 | 21.1 | 26.2 | |||
| 2020 | 105.4 | — | — | — | — | — | — | — | — | — | — | 6.1 | 6.1 | |||
| Subtotal | 335.9 | - | - | - | - | - | 7.3 | 14.5 | 22.1 | 28.8 | 38.8 | 58.9 | 170.4 | |||
| Total Europe | 3,331.5 | - | - | 11.6 | 16.1 | 167.3 | 350.6 | 405.1 | 429.1 | 472.2 | 518.9 | 578.6 | 2,949.5 | |||
| Total PRA Group | $ <br> 10,898.7 | $ 2,381.4 | $ 705.5 | $ 908.7 | $ 1,142.5 | $ 1,378.6 | $ 1,539.6 | $ 1,492.0 | $ 1,512.3 | $ 1,625.1 | $ 1,841.3 | $ 2,005.8 | $ 16,532.8 | (1) | For our non-U.S. amounts, cash collections are<br>presented using the average exchange rates during the cash collection period. | |
| --- | --- | |||||||||||||||
| (2) | Includes the finance receivables portfolios that were acquired through our business acquisitions. | |||||||||||||||
| (3) | For our non-US 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 MeasuresPRA Group, Inc. reports 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 interest expense, net and other; plus income tax expense (or less income tax benefit); plus depreciation and amortization; plus recoveries applied to negative allowance; less gain on sale of subsidiaries; less foreign exchange gain (or plus foreign exchange loss); and plus net income attributable to noncontrolling interests. 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 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.
| LTM Adjusted EBITDA for PRA Group ($ in millions) | 12/31/2020 | 12/31/2019 |
|---|---|---|
| Net income attributable to PRA Group, Inc. | $ 149 | $ 86 |
| Income tax expense (benefit) | 41 | 20 |
| Foreign exchange (gain) loss | (2) | (12) |
| Interest expense, net and other | 143 | 142 |
| Depreciation and amortization | 18 | 17 |
| Adjustment for net income attributable to noncontrolling interests | 18 | 12 |
| Gain on sale of subsidiaries | - | - |
| Recoveries applied to negative allowance less changes in expected in recoveries* | 968 | 843 |
| LTM Adjusted EBITDA | $ 1,337 | $ 1,108 |
| *Prior to Q1 2020, this included collections applied to principal on finance receivables | ||
| Borrowings | $ 2,661 | $ 2,808 |
| LTM Adjusted EBITDA | 1,337 | 1,108 |
| Debt to LTM Adjusted EBITDA | 1.99 | 2.53 |
**Investor Contact:**Darby Schoenfeld, CPA
Vice President, Investor Relations
(757) 431-7913
Darby.Schoenfeld@PRAGroup.com
**News Media Contact:**Elizabeth Kersey
Vice President, Communications and Public Policy
(757) 431-3398
Elizabeth.Kersey@PRAGroup.com