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): | November 3, 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 November 3, 2022, PRA Group, Inc. (the “Company”) issued a press release announcing its third quarter 2022 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 November 3, 2022 webcast and conference call to discuss its third quarter 2022 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 datedNovember 3, 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: November 3, 2022 | By: | /s/ Peter M. Graham |
| Peter M. Graham | ||
| Executive Vice President and Chief Financial Officer |
Document
PRA Group Reports Third Quarter 2022 Results
NORFOLK, Va., November 3, 2022 - PRA Group, Inc. (Nasdaq: PRAA) (the "Company"), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the third quarter of 2022 ("Q3 2022").
Q3 2022 Highlights
•Total portfolio purchases of $183.1 million.
•Total cash collections were $412.3 million.
•Estimated remaining collections (ERC)1 of $5.3 billion (or $5.9 billion on a constant currency-adjusted basis).
•Cash efficiency ratio2 of 58.4%.
•Diluted earnings per share were $0.63.
•Common stock repurchases3 of $25.0 million, or 0.7 million shares.
•Debt to Adjusted EBITDA4 for the 12 months ended September 30, 2022 was 2.04x.
•Available capacity under the Company's credit facilities of $1.7 billion; $454.6 million after considering borrowing base restrictions.
| Three Months Ended Sept 30, | Nine Months Ended Sept 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| ($ in thousands, except per share amounts) | 2022 | 2021 | 2022 | 2021 | ||||
| Net income attributable to PRA Group, Inc. | $ | 24,732 | $ | 34,480 | $ | 101,188 | $ | 148,882 |
| Diluted earnings per share | $ | 0.63 | $ | 0.76 | $ | 2.52 | $ | 3.24 |
“The third quarter was another solid quarter for PRA Group, driven once again by the performance of our European operations” said Kevin Stevenson, president and chief executive officer. “We continued to outperform our expectations. According to the Federal Reserve, U.S. credit card balances now exceed 2019 levels, while delinquency and charge-off rates are continuing to tick up, especially for card issuers that cater to non-prime consumers. This strengthens our conviction that more supply will enter the U.S. market in the coming months. As more of these economic signs point to meaningful supply increases in the near future, we intend to remain disciplined in our underwriting and portfolio purchases, leveraging our deep experience, strong balance sheet and geographic diversity to generate the best possible risk-adjusted returns."
1.Refers to the sum of all future projected cash collections on the Company's nonperforming loan portfolios. Constant currency-adjusted results are calculated based on foreign exchange rates at September 30, 2021 and at September 30, 2022.
2.Calculated by dividing cash receipts less operating expenses by cash receipts.
3.Share repurchases are subject to market conditions and other factors, and the share repurchase program remains subject to the discretion of the Company's board of directors.
4.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 Collections and Revenues
The following table presents cash collections by quarter and by source on an as reported and constant currency-adjusted basis:
| Cash Collection Source | 2022 | 2021 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | Q3 | Q2 | Q1 | Q4 | Q3 | |||||
| Americas and Australia Core | $ | 225,775 | $ | 244,377 | $ | 270,284 | $ | 257,705 | $ | 276,691 |
| Americas Insolvency | 31,911 | 34,278 | 35,209 | 36,851 | 37,464 | |||||
| Europe Core | 132,072 | 142,470 | 151,162 | 155,853 | 151,625 | |||||
| Europe Insolvency | 22,586 | 22,935 | 24,325 | 23,262 | 22,574 | |||||
| Total Cash Collections | $ | 412,344 | $ | 444,060 | $ | 480,980 | $ | 473,671 | $ | 488,354 |
| Cash Collection Source - | ||||||||||
| Constant Currency-Adjusted | 2022 | 2021 | ||||||||
| ($ in thousands) | Q3 | Q3 | ||||||||
| Americas and Australia Core | $ | 225,775 | $ | 276,069 | ||||||
| Americas Insolvency | 31,911 | 37,445 | ||||||||
| Europe Core | 132,072 | 129,268 | ||||||||
| Europe Insolvency | 22,586 | 19,219 | ||||||||
| Total Cash Collections | $ | 412,344 | $ | 462,001 |
•Total cash collections in Q3 2022 decreased 15.6%, or 10.7% on a constant currency-adjusted basis, to $412.3 million compared to $488.4 million in the third quarter of 2021 ("Q3 2021"). The decrease was driven primarily by a 29.3% decrease in U.S. call center and other collections, which was due to lower levels of portfolio purchases. Europe cash collections decreased by 11.2%; however, on a currency adjusted basis, they increased by 4.2%. For the nine months ended September 30, 2022, total cash collections decreased $250.7 million compared to the same period last year.
•Total portfolio revenue in Q3 2022 was $234.2 million compared to $256.7 million in Q3 2021.
Expenses
•Operating expenses in Q3 2022 decreased by $12.1 million, or 6.5%, compared to Q3 2021. The decrease was primarily driven by:
◦a 16.4% decrease in outside fees and services; and
◦a 5.6% decrease in compensation and employee services expenses primarily due to the level and timing of compensation accruals in the prior year and lower collector compensation expenses in the U.S. call centers.
•For the nine months ended September 30, 2022, operating expenses decreased $29.1 million to $517.2 million compared to $546.2 million in the same period last year.
•The effective tax rate for the nine months ended September 30, 2022 was 22.8%.
Portfolio Acquisitions
•The Company purchased $183.1 million in portfolios of nonperforming loans in Q3 2022.
•At the end of Q3 2022, the Company had in place maximum forward flow commitments1 of up to $1.0 billion, comprised of $427.4 million in the Americas and Australia and $607.2 million in Europe.
1.Contractual agreements with sellers of nonperforming loans that allow for the purchase of nonperforming portfolios at pre-established prices.
| Portfolio Purchase Source | 2022 | 2021 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | Q3 | Q2 | Q1 | Q4 | Q3 | |||||
| Americas and Australia Core | $ | 100,780 | $ | 99,962 | $ | 90,639 | $ | 90,263 | $ | 162,451 |
| Americas Insolvency | 8,988 | 6,369 | 9,118 | 21,183 | 9,878 | |||||
| Europe Core | 59,426 | 123,814 | 38,764 | 60,430 | 212,194 | |||||
| Europe Insolvency | 13,910 | 1,202 | 8,929 | 29,820 | 7,424 | |||||
| Total Portfolio Acquisitions | $ | 183,104 | $ | 231,347 | $ | 147,450 | $ | 201,696 | $ | 391,947 |
Share Repurchases
•The Company repurchased $25.0 million, or 0.7 million shares, with $67.7 million remaining under its current share repurchase plan as of September 30, 2022.
•At September 30, 2022, the Company has repurchased 16% of its common stock since it began its share repurchases in 2021.
Conference Call Information
PRA Group, Inc. will hold a conference call today at 5:00 p.m. Eastern time to discuss its financial and operational results.
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 the operator for the PRA Group conference call. To listen to a replay of the call, either visit the same website until November 3, 2023, or call 877-344-7529 in the U.S. or 412-317-0088 outside the U.S. and use access code 5348695 until November 10, 2022.
The Company plans to report its fourth quarter and full year 2022 results after market close on February 27, 2023.
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, 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 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 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 September 30, | Nine Months Ended September 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Revenues: | ||||||||
| Portfolio income | $ | 185,853 | $ | 212,905 | $ | 587,394 | $ | 663,714 |
| Changes in expected recoveries | 48,336 | 43,820 | 134,817 | 157,504 | ||||
| Total portfolio revenue | 234,189 | 256,725 | 722,211 | 821,218 | ||||
| Fee income | 6,122 | 6,209 | 14,419 | 10,843 | ||||
| Other revenue | 4,496 | 764 | 7,044 | 6,735 | ||||
| Total revenues | 244,807 | 263,698 | 743,674 | 838,796 | ||||
| Operating expenses: | ||||||||
| Compensation and employee services | 70,382 | 74,584 | 215,615 | 228,200 | ||||
| Legal collection fees | 8,963 | 10,993 | 29,390 | 36,208 | ||||
| Legal collection costs | 23,391 | 21,450 | 57,694 | 61,231 | ||||
| Agency fees | 15,160 | 15,646 | 47,374 | 47,145 | ||||
| Outside fees and services | 24,618 | 29,434 | 71,489 | 71,167 | ||||
| Communication | 9,951 | 9,782 | 32,062 | 33,039 | ||||
| Rent and occupancy | 4,669 | 4,571 | 14,289 | 13,694 | ||||
| Depreciation and amortization | 3,741 | 3,724 | 11,384 | 11,520 | ||||
| Other operating expenses | 13,144 | 15,935 | 37,885 | 44,045 | ||||
| Total operating expenses | 174,019 | 186,119 | 517,182 | 546,249 | ||||
| Income from operations | 70,788 | 77,579 | 226,492 | 292,547 | ||||
| Other income and (expense): | ||||||||
| Interest expense, net | (32,455) | (29,599) | (95,765) | (91,987) | ||||
| Foreign exchange gain, net | 4 | 1,232 | 791 | 127 | ||||
| Other | (83) | 85 | (754) | 294 | ||||
| Income before income taxes | 38,254 | 49,297 | 130,764 | 200,981 | ||||
| Income tax expense | 11,072 | 12,627 | 29,828 | 41,870 | ||||
| Net income | 27,182 | 36,670 | 100,936 | 159,111 | ||||
| Adjustment for net income/(loss) attributable to noncontrolling interests | 2,450 | 2,190 | (252) | 10,229 | ||||
| Net income attributable to PRA Group, Inc. | $ | 24,732 | $ | 34,480 | $ | 101,188 | $ | 148,882 |
| Net income per common share attributable to PRA Group, Inc.: | ||||||||
| Basic | $ | 0.63 | $ | 0.76 | $ | 2.54 | $ | 3.27 |
| Diluted | $ | 0.63 | $ | 0.76 | $ | 2.52 | $ | 3.24 |
| Weighted average number of shares outstanding: | ||||||||
| Basic | 39,018 | 45,305 | 39,858 | 45,594 | ||||
| Diluted | 39,170 | 45,656 | 40,125 | 45,920 |
PRA Group, Inc.
Consolidated Balance Sheets
(Amounts in thousands)
| (unaudited) | ||||||||
|---|---|---|---|---|---|---|---|---|
| September 30,<br>2022 | December 31,<br>2021 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 57,991 | $ | 87,584 | ||||
| Investments | 76,171 | 92,977 | ||||||
| Finance receivables, net | 3,037,360 | 3,428,285 | ||||||
| Income taxes receivable | 36,420 | 41,146 | ||||||
| Deferred tax assets, net | 53,949 | 67,760 | ||||||
| Right-of-use assets | 52,648 | 56,713 | ||||||
| Property and equipment, net | 52,061 | 54,513 | ||||||
| Goodwill | 404,474 | 480,263 | ||||||
| Other assets | 124,256 | 57,002 | ||||||
| Total assets | $ | 3,895,330 | $ | 4,366,243 | ||||
| Liabilities and Equity | ||||||||
| Liabilities: | ||||||||
| Accounts payable | $ | 6,148 | $ | 3,821 | ||||
| Accrued expenses | 104,059 | 127,802 | ||||||
| Income taxes payable | 16,412 | 19,276 | ||||||
| Deferred tax liabilities, net | 49,248 | 36,630 | ||||||
| Lease liabilities | 57,376 | 61,188 | ||||||
| Interest-bearing deposits | 88,155 | 124,623 | ||||||
| Borrowings | 2,379,614 | 2,608,714 | ||||||
| Other liabilities | 11,729 | 59,352 | ||||||
| Total liabilities | 2,712,741 | 3,041,406 | ||||||
| Equity: | ||||||||
| Preferred stock, $0.01 par value, 2,000 shares authorized, 0 shares issued and outstanding | — | — | ||||||
| Common stock, $0.01 par value, 100,000 shares authorized, 38,976 shares issued and outstanding at September 30, 2022; 100,000 shares authorized, 41,008 shares issued and outstanding at December 31, 2021 | 389 | 410 | ||||||
| Additional paid-in capital | — | — | ||||||
| Retained earnings | 1,557,066 | 1,552,845 | ||||||
| Accumulated other comprehensive loss | (426,086) | (266,909) | ||||||
| Total stockholders' equity - PRA Group, Inc. | 1,131,369 | 1,286,346 | ||||||
| Noncontrolling interest | 51,220 | 38,491 | ||||||
| Total equity | 1,182,589 | 1,324,837 | ||||||
| Total liabilities and equity | $ | 3,895,330 | $ | 4,366,243 | ||||
| Select Expenses (Income)<br><br>Amounts in thousands, pre-tax | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended | ||||||||
| September 30,<br>2022 | June 30,<br>2022 | March 31,<br>2022 | December 31,<br>2021 | September 30,<br>2021 | June 30,<br>2021 | March 31,<br>2021 | December 31,<br>2020 | |
| Noncash interest expense - amortization of debt discount | — | — | — | — | — | — | — | 1,959 |
| Noncash interest expense - amortization of debt issuance costs | 2,555 | 2,471 | 2,627 | 2,455 | 2,406 | 2,391 | 2,256 | 2,393 |
| Change in fair value of derivatives | (1,042) | 1,525 | 2,726 | 3,115 | 2,982 | 2,911 | 3,102 | 3,875 |
| Amortization of intangibles | 73 | 77 | 83 | (269) | 104 | 105 | 181 | 1,792 |
| Stock-based compensation expense | 3,101 | 3,849 | 3,891 | 3,470 | 4,317 | 4,040 | 4,113 | 5,370 |
| Purchase Price Multiples<br><br>as of September 30, 2022<br><br>Amounts in thousands | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Purchase Period | Purchase Price (2)(3) | Total Estimated Collections (4) | Estimated Remaining Collections (5) | Current Purchase Price Multiple | Original Purchase Price Multiple (6) | |||
| Americas and Australia Core | ||||||||
| 1996-2011 | $ | 1,287,821 | $ | 4,131,141 | $ | 26,086 | 321% | 240% |
| 2012 | 254,076 | 659,669 | 13,453 | 260% | 226% | |||
| 2013 | 390,826 | 904,736 | 18,529 | 231% | 211% | |||
| 2014 | 404,117 | 870,923 | 28,317 | 216% | 204% | |||
| 2015 | 443,114 | 909,486 | 62,917 | 205% | 205% | |||
| 2016 | 455,767 | 1,095,092 | 112,073 | 240% | 201% | |||
| 2017 | 532,851 | 1,217,840 | 179,774 | 229% | 193% | |||
| 2018 | 653,975 | 1,464,063 | 250,068 | 224% | 202% | |||
| 2019 | 581,476 | 1,287,770 | 314,269 | 221% | 206% | |||
| 2020 | 435,668 | 948,148 | 374,739 | 218% | 213% | |||
| 2021 | 435,846 | 819,353 | 599,229 | 188% | 191% | |||
| 2022 | 285,725 | 509,846 | 475,780 | 178% | 178% | |||
| Subtotal | 6,161,262 | 14,818,067 | 2,455,234 | |||||
| Americas Insolvency | ||||||||
| 1996-2011 | 786,827 | 1,752,754 | 367 | 223% | 174% | |||
| 2012 | 251,395 | 393,385 | 24 | 156% | 136% | |||
| 2013 | 227,834 | 355,528 | 188 | 156% | 133% | |||
| 2014 | 148,420 | 218,903 | 774 | 147% | 124% | |||
| 2015 | 63,170 | 87,568 | 74 | 139% | 125% | |||
| 2016 | 91,442 | 116,938 | 460 | 128% | 123% | |||
| 2017 | 275,257 | 355,601 | 7,413 | 129% | 125% | |||
| 2018 | 97,879 | 137,083 | 21,314 | 140% | 127% | |||
| 2019 | 123,077 | 168,549 | 55,014 | 137% | 128% | |||
| 2020 | 62,130 | 88,093 | 50,152 | 142% | 136% | |||
| 2021 | 55,187 | 76,130 | 58,000 | 138% | 136% | |||
| 2022 | 24,475 | 33,903 | 32,255 | 139% | 139% | |||
| Subtotal | 2,207,093 | 3,784,435 | 226,035 | |||||
| Total Americas and Australia | 8,368,355 | 18,602,502 | 2,681,269 | |||||
| Europe Core | ||||||||
| 2012 | 20,409 | 43,461 | — | 213% | 187% | |||
| 2013 | 20,334 | 26,767 | — | 132% | 119% | |||
| 2014 (1) | 773,811 | 2,344,788 | 385,634 | 303% | 208% | |||
| 2015 | 411,340 | 726,850 | 147,316 | 177% | 160% | |||
| 2016 | 333,090 | 565,943 | 179,084 | 170% | 167% | |||
| 2017 | 252,174 | 357,463 | 114,430 | 142% | 144% | |||
| 2018 | 341,775 | 533,804 | 207,082 | 156% | 148% | |||
| 2019 | 518,610 | 781,071 | 346,028 | 151% | 152% | |||
| 2020 | 324,119 | 556,213 | 293,408 | 172% | 172% | |||
| 2021 | 412,411 | 702,838 | 478,614 | 170% | 170% | |||
| 2022 | 199,320 | 364,842 | 304,229 | 183% | 183% | |||
| Subtotal | 3,607,393 | 7,004,040 | 2,455,825 | |||||
| Europe Insolvency | ||||||||
| 2014 (1) | 10,876 | 18,558 | 1 | 171% | 129% | |||
| 2015 | 18,973 | 28,871 | 196 | 152% | 139% | |||
| 2016 | 39,338 | 56,951 | 1,811 | 145% | 130% | |||
| 2017 | 39,235 | 50,887 | 5,447 | 130% | 128% | |||
| 2018 | 44,908 | 52,395 | 12,644 | 117% | 123% | |||
| 2019 | 77,218 | 102,147 | 30,380 | 132% | 130% | |||
| 2020 | 105,440 | 142,743 | 60,582 | 135% | 129% | |||
| 2021 | 53,230 | 71,526 | 45,048 | 134% | 134% | |||
| 2022 | 21,526 | 29,050 | 27,043 | 135% | 135% | |||
| Subtotal | 410,744 | 553,128 | 183,152 | |||||
| Total Europe | 4,018,137 | 7,557,168 | 2,638,977 | |||||
| Total PRA Group | $ | 12,386,492 | $ | 26,159,670 | $ | 5,320,246 |
(1) Includes finance receivables portfolios that were acquired through the acquisition of Aktiv Kapital AS in 2014 (as described in our Annual Report on Form 10-K for the year ended December 31, 2021 ("2021 Form 10-K")).
(2)Includes the acquisition date finance receivables portfolios that were acquired through our business acquisitions.
(3)Non-U.S. amounts are 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.
(4)Non-U.S. amounts are presented at the year-end exchange rate for the respective year of purchase.
(5)Non-U.S. amounts are presented at the September 30, 2022 exchange rate.
(6)The Original Purchase Price Multiple represents the purchase price multiple at the end of the year of acquisition.
| Portfolio Financial Information<br><br>Year-to-date as of September 30, 2022<br><br>Amounts in thousands | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Purchase Period | Cash<br><br>Collections (2) | Portfolio Income (2) | Change in Expected Recoveries (2) | Total Portfolio Revenue (2) | Net Finance Receivables as of September 30, 2022 (3) | |||||
| Americas and Australia Core | ||||||||||
| 1996-2011 | $ | 13,134 | $ | 7,292 | $ | 4,835 | $ | 12,127 | $ | 5,422 |
| 2012 | 5,724 | 2,423 | 3,188 | 5,611 | 4,334 | |||||
| 2013 | 9,928 | 3,523 | 5,619 | 9,142 | 7,975 | |||||
| 2014 | 11,829 | 4,580 | 6,521 | 11,101 | 11,250 | |||||
| 2015 | 15,857 | 10,007 | (1,342) | 8,665 | 24,192 | |||||
| 2016 | 31,174 | 22,699 | (11,293) | 11,406 | 38,183 | |||||
| 2017 | 62,608 | 32,415 | 987 | 33,402 | 78,847 | |||||
| 2018 | 118,715 | 43,169 | 47,990 | 91,159 | 138,982 | |||||
| 2019 | 144,093 | 60,488 | 21,204 | 81,692 | 175,831 | |||||
| 2020 | 154,569 | 69,885 | (1,727) | 68,158 | 210,540 | |||||
| 2021 | 137,971 | 87,411 | (34,705) | 52,706 | 322,937 | |||||
| 2022 | 34,834 | 23,347 | 543 | 23,890 | 273,718 | |||||
| Subtotal | 740,436 | 367,239 | 41,820 | 409,059 | 1,292,211 | |||||
| Americas Insolvency | ||||||||||
| 1996-2011 | 405 | 423 | (18) | 405 | — | |||||
| 2012 | 411 | 43 | 367 | 410 | — | |||||
| 2013 | 439 | 186 | 255 | 441 | — | |||||
| 2014 | 565 | 593 | (87) | 506 | 83 | |||||
| 2015 | 478 | 154 | 165 | 319 | 58 | |||||
| 2016 | 1,449 | 251 | 453 | 704 | 315 | |||||
| 2017 | 18,072 | 2,180 | 2,329 | 4,509 | 6,729 | |||||
| 2018 | 19,482 | 2,688 | 3,063 | 5,751 | 19,525 | |||||
| 2019 | 29,637 | 4,706 | 5,303 | 10,009 | 49,692 | |||||
| 2020 | 15,307 | 4,524 | 2,027 | 6,551 | 41,694 | |||||
| 2021 | 13,505 | 5,179 | 1,555 | 6,734 | 46,112 | |||||
| 2022 | 1,648 | 930 | 725 | 1,655 | 24,195 | |||||
| Subtotal | 101,398 | 21,857 | 16,137 | 37,994 | 188,403 | |||||
| Total Americas and Australia | 841,834 | 389,096 | 57,957 | 447,053 | 1,480,614 | |||||
| Europe Core | ||||||||||
| 2012 | 684 | — | 685 | 685 | — | |||||
| 2013 | 380 | — | 380 | 380 | — | |||||
| 2014 (1) | 92,922 | 56,246 | 30,385 | 86,631 | 105,512 | |||||
| 2015 | 31,962 | 14,986 | 6,222 | 21,208 | 79,865 | |||||
| 2016 | 28,843 | 13,916 | 2,215 | 16,131 | 105,874 | |||||
| 2017 | 19,486 | 6,797 | 1,868 | 8,665 | 78,211 | |||||
| 2018 | 39,948 | 13,343 | 4,585 | 17,928 | 137,042 | |||||
| 2019 | 69,957 | 21,255 | 8,356 | 29,611 | 237,146 | |||||
| 2020 | 53,882 | 20,731 | 4,395 | 25,126 | 180,980 | |||||
| 2021 | 69,485 | 30,813 | 2,453 | 33,266 | 286,915 | |||||
| 2022 | 18,155 | 6,127 | 3,791 | 9,918 | 190,522 | |||||
| Subtotal | 425,704 | 184,214 | 65,335 | 249,549 | 1,402,067 | |||||
| Europe Insolvency | ||||||||||
| 2014 (1) | 192 | 13 | 167 | 180 | 1 | |||||
| 2015 | 502 | 163 | (66) | 97 | 159 | |||||
| 2016 | 2,218 | 532 | 65 | 597 | 1,375 | |||||
| 2017 | 5,278 | 484 | 1,355 | 1,839 | 5,022 | |||||
| 2018 | 7,513 | 971 | 691 | 1,662 | 11,475 | |||||
| 2019 | 15,806 | 2,788 | 914 | 3,702 | 26,865 | |||||
| 2020 | 25,557 | 4,753 | 6,747 | 11,500 | 52,940 | |||||
| 2021 | 10,608 | 3,626 | 1,015 | 4,641 | 36,157 | |||||
| 2022 | 2,172 | 754 | 637 | 1,391 | 20,685 | |||||
| Subtotal | 69,846 | 14,084 | 11,525 | 25,609 | 154,679 | |||||
| Total Europe | 495,550 | 198,298 | 76,860 | 275,158 | 1,556,746 | |||||
| Total PRA Group | $ | 1,337,384 | $ | 587,394 | $ | 134,817 | $ | 722,211 | $ | 3,037,360 |
(1) Includes finance receivables portfolios that were acquired through the acquisition of Aktiv Kapital AS in 2014 (as described in our 2021 Form 10-K).
(2)Non-U.S. amounts are presented using the average exchange rates during the current reporting period.
(3)Non-U.S. amounts are presented at the September 30, 2022 exchange rate.
| Cash Collections by Year, By Year of Purchase (1)<br><br>as of September 30, 2022<br><br>Amounts in millions | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash Collections | ||||||||||||||||||||||||||||
| Purchase Period | Purchase Price (3)(4) | 1996-2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 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 | $ | 13.1 | $ | 4,097.8 |
| 2012 | 254.1 | — | 56.9 | 173.6 | 146.2 | 97.3 | 60.0 | 40.0 | 27.8 | 17.9 | 11.8 | 9.0 | 5.7 | 646.2 | ||||||||||||||
| 2013 | 390.8 | — | — | 101.6 | 247.8 | 194.0 | 120.8 | 78.9 | 56.4 | 36.9 | 23.2 | 16.7 | 9.9 | 886.2 | ||||||||||||||
| 2014 | 404.1 | — | — | — | 92.7 | 253.4 | 170.3 | 114.2 | 82.2 | 55.3 | 31.9 | 22.3 | 11.8 | 834.1 | ||||||||||||||
| 2015 | 443.1 | — | — | — | — | 117.0 | 228.4 | 185.9 | 126.6 | 83.6 | 57.2 | 34.9 | 15.9 | 849.5 | ||||||||||||||
| 2016 | 455.8 | — | — | — | — | 138.7 | 256.5 | 194.6 | 140.6 | 105.9 | 74.2 | 31.2 | 941.7 | |||||||||||||||
| 2017 | 532.9 | — | — | — | — | — | — | 107.3 | 278.7 | 256.5 | 192.5 | 130.0 | 62.6 | 1027.6 | ||||||||||||||
| 2018 | 654.0 | — | — | — | — | — | — | — | 122.7 | 361.9 | 337.7 | 239.9 | 118.7 | 1,180.9 | ||||||||||||||
| 2019 | 581.5 | — | — | — | — | — | — | — | — | 143.8 | 349.0 | 289.8 | 144.1 | 926.7 | ||||||||||||||
| 2020 | 435.7 | — | — | — | — | — | — | — | — | — | 133.0 | 284.3 | 154.6 | 571.9 | ||||||||||||||
| 2021 | 435.8 | — | — | — | — | — | — | — | — | — | — | 85.0 | 138.0 | 223.0 | ||||||||||||||
| 2022 | 285.7 | — | — | — | — | — | — | — | — | — | — | — | 34.8 | 34.8 | ||||||||||||||
| Subtotal | 6,161.3 | 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 | 740.4 | 12,220.4 | ||||||||||||||
| 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 | 0.4 | 1,752.4 | ||||||||||||||
| 2012 | 251.4 | — | 17.4 | 103.6 | 94.1 | 80.1 | 60.7 | 29.3 | 4.3 | 1.9 | 0.9 | 0.6 | 0.4 | 393.3 | ||||||||||||||
| 2013 | 227.8 | — | — | 52.5 | 82.6 | 81.7 | 63.4 | 47.8 | 21.9 | 2.9 | 1.3 | 0.8 | 0.4 | 355.3 | ||||||||||||||
| 2014 | 148.4 | — | — | — | 37.0 | 50.9 | 44.3 | 37.4 | 28.8 | 15.8 | 2.2 | 1.1 | 0.6 | 218.1 | ||||||||||||||
| 2015 | 63.2 | — | — | — | — | 3.4 | 17.9 | 20.1 | 19.8 | 16.7 | 7.9 | 1.3 | 0.5 | 87.6 | ||||||||||||||
| 2016 | 91.4 | — | — | — | — | — | 18.9 | 30.4 | 25.0 | 19.9 | 14.4 | 7.4 | 1.4 | 117.4 | ||||||||||||||
| 2017 | 275.3 | — | — | — | — | — | — | 49.1 | 97.3 | 80.9 | 58.8 | 44.0 | 18.1 | 348.2 | ||||||||||||||
| 2018 | 97.9 | — | — | — | — | — | — | — | 6.7 | 27.4 | 30.5 | 31.6 | 19.5 | 115.7 | ||||||||||||||
| 2019 | 123.1 | — | — | — | — | — | — | — | — | 13.4 | 31.4 | 39.1 | 29.7 | 113.6 | ||||||||||||||
| 2020 | 62.1 | — | — | — | — | — | — | — | — | — | 6.5 | 16.1 | 15.3 | 37.9 | ||||||||||||||
| 2021 | 55.2 | — | — | — | — | — | — | — | — | — | — | 4.5 | 13.5 | 18.0 | ||||||||||||||
| 2022 | 24.5 | — | — | — | — | — | — | — | — | — | — | — | 1.6 | 1.6 | ||||||||||||||
| Subtotal | 2,207.1 | 667.4 | 354.2 | 469.8 | 458.4 | 344.3 | 249.8 | 222.5 | 207.8 | 181.0 | 155.2 | 147.3 | 101.4 | 3,559.1 | ||||||||||||||
| Total Americas and Australia | 8,368.4 | 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 | 841.8 | 15,779.5 | ||||||||||||||
| 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 | 0.7 | 40.2 | ||||||||||||||
| 2013 | 20.3 | — | — | 7.1 | 8.5 | 2.3 | 1.3 | 1.2 | 1.3 | 0.9 | 0.7 | 0.7 | 0.4 | 24.4 | ||||||||||||||
| 2014 (2) | 773.8 | — | — | — | 153.2 | 292.0 | 246.4 | 220.8 | 206.3 | 172.9 | 149.8 | 149.2 | 92.9 | 1,683.5 | ||||||||||||||
| 2015 | 411.3 | — | — | — | — | 45.8 | 100.3 | 86.2 | 80.9 | 66.1 | 54.3 | 51.4 | 32.0 | 517.0 | ||||||||||||||
| 2016 | 333.1 | — | — | — | — | — | 40.4 | 78.9 | 72.6 | 58.0 | 48.3 | 46.7 | 28.8 | 373.7 | ||||||||||||||
| 2017 | 252.2 | — | — | — | — | — | — | 17.9 | 56.0 | 44.1 | 36.1 | 34.8 | 19.5 | 208.4 | ||||||||||||||
| 2018 | 341.8 | — | — | — | — | — | — | — | 24.3 | 88.7 | 71.2 | 69.1 | 39.9 | 293.2 | ||||||||||||||
| 2019 | 518.6 | — | — | — | — | — | — | — | — | 47.9 | 125.7 | 121.4 | 70.0 | 365.0 | ||||||||||||||
| 2020 | 324.1 | — | — | — | — | — | — | — | — | — | 32.4 | 91.7 | 53.9 | 178.0 | ||||||||||||||
| 2021 | 412.4 | — | — | — | — | — | — | — | — | — | — | 48.4 | 69.5 | 117.9 | ||||||||||||||
| 2022 | 199.4 | — | — | — | — | — | — | — | — | — | — | — | 18.1 | 18.1 | ||||||||||||||
| Subtotal | 3,607.4 | — | 11.6 | 16.1 | 167.3 | 343.3 | 390.6 | 407.0 | 443.4 | 480.1 | 519.7 | 614.6 | 425.7 | 3,819.4 | ||||||||||||||
| Europe Insolvency | ||||||||||||||||||||||||||||
| 2014 (2) | 10.9 | — | — | — | — | 4.3 | 3.9 | 3.2 | 2.6 | 1.5 | 0.8 | 0.3 | 0.2 | 16.8 | ||||||||||||||
| 2015 | 19.0 | — | — | — | — | 3.0 | 4.4 | 5.0 | 4.8 | 3.9 | 2.9 | 1.6 | 0.5 | 26.1 | ||||||||||||||
| 2016 | 39.3 | — | — | — | — | — | 6.2 | 12.7 | 12.9 | 10.7 | 7.9 | 6.0 | 2.2 | 58.6 | ||||||||||||||
| 2017 | 39.2 | — | — | — | — | — | — | 1.2 | 7.9 | 9.2 | 9.8 | 9.4 | 5.3 | 42.8 | ||||||||||||||
| 2018 | 44.9 | — | — | — | — | — | — | — | 0.6 | 8.4 | 10.3 | 11.7 | 7.5 | 38.5 | ||||||||||||||
| 2019 | 77.2 | — | — | — | — | — | — | — | — | 5.1 | 21.1 | 23.9 | 15.8 | 65.9 | ||||||||||||||
| 2020 | 105.4 | — | — | — | — | — | — | — | — | — | 6.1 | 34.6 | 25.6 | 66.3 | ||||||||||||||
| 2021 | 53.3 | — | — | — | — | — | — | — | — | — | — | 5.4 | 10.6 | 16.0 | ||||||||||||||
| 2022 | 21.5 | — | — | — | — | — | — | — | — | — | — | — | 2.2 | 2.2 | ||||||||||||||
| Subtotal | 410.7 | — | — | — | — | 7.3 | 14.5 | 22.1 | 28.8 | 38.8 | 58.9 | 92.9 | 69.9 | 333.2 | ||||||||||||||
| Total Europe | 4,018.1 | — | 11.6 | 16.1 | 167.3 | 350.6 | 405.1 | 429.1 | 472.2 | 518.9 | 578.6 | 707.5 | 495.6 | 4,152.6 | ||||||||||||||
| Total PRA Group | $ | 12,386.5 | $ | 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 | $ | 1,337.4 | $ | 19,932.1 |
(1)Non-U.S. amounts are presented using the average exchange rates during the cash collection period.
(2)Includes finance receivables portfolios that were acquired through the acquisition of Aktiv Kapital AS in 2014 (as described in our 2021 Form 10-K).
(3)Includes the nonperforming loan portfolios that were acquired through our business acquisitions.
(4)Non-U.S. amounts are 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 last twelve months (LTM) ended September 30, 2022 and for the year ended December 31, 2021, 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 | For the Year Ended | |||
| Adjusted EBITDA for PRA Group ($ in millions) | September 30, 2022 | December 31, 2021 | ||
| Net income attributable to PRA Group, Inc. | $ | 135 | $ | 183 |
| Adjustments: | ||||
| Income tax expense | 43 | 55 | ||
| Foreign exchange losses | — | 1 | ||
| Interest expense, net | 128 | 124 | ||
| Other expense | 1 | — | ||
| Depreciation and amortization | 15 | 15 | ||
| Adjustment for net income attributable to noncontrolling interests | 2 | 12 | ||
| Recoveries applied to negative allowance less Changes in expected recoveries | 842 | 988 | ||
| Adjusted EBITDA | $ | 1,167 | $ | 1,378 |
Additionally, management evaluates the Company's business using certain ratios that use Adjusted EBITDA, including Debt to Adjusted EBITDA, which is calculated by dividing borrowings by Adjusted EBITDA. The following table reflects our Debt to Adjusted EBITDA for LTM as of September 30, 2022 and for the year ended December 31, 2021:
| Debt to Adjusted EBITDA | ||||
|---|---|---|---|---|
| ($ in millions) | LTM | For the Year Ended | ||
| September 30, 2022 | December 31, 2021 | |||
| Borrowings | $ | 2,380 | $ | 2,609 |
| LTM Adjusted EBITDA | 1,167 | 1,378 | ||
| Debt to LTM Adjusted EBITDA | 2.04 | 1.89 |
Investor Contact:
Najim Mostamand, CFA
Vice President, Investor Relations
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