PRA Group
May 9, 2017

PRA Group Reports First Quarter 2017 Results

NORFOLK, Va., May 09, 2017 (GLOBE NEWSWIRE) -- PRA Group (Nasdaq:PRAA), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the first quarter of 2017.  The company reported diluted earnings per share of $1.03 versus $0.69 in the first quarter of 2016, including the gain from the sale of the Company's Government Services business in the first quarter of 2017. 

First Quarter Highlights

"PRA's cash collections in the first quarter exceeded our expectations while cash operating expenses remained controlled.  We are pleased with the progress made in increasing our collector workforce in the U.S. to the appropriate level.  Both our existing collector workforce and our new hires continue to impress us with their work ethic and commitment to compliance," said Steve Fredrickson, chairman and chief executive officer, PRA Group.  "Our cash efficiency ratio, measured as cash receipts less operating expenses divided by cash receipts, of 61% continues to compare well with previous years even with the impact of our current regulatory environment with its greater costs and negative impact on revenue.  We are also pleased with our first quarter investment, particularly in the U.S., where we see gradually improving volumes and pricing." 

CASH COLLECTIONS AND REVENUES

        
Cash Collection Source 2017 2016
($ in thousands) Q1 Q4Q3Q2Q1
Americas-Core $226,906 $193,360$210,524$213,741$219,571
Americas-Insolvency  49,813  52,988 60,429 67,745 68,646
Europe-Core  98,081  97,429 96,028 102,972 94,091
Europe-Insolvency  5,030  4,974 4,719 2,744 2,025
Total Cash Collections $379,830 $348,751$371,700$387,202$384,333
        
        
        
Cash Collection Source -        
Constant Currency Adjusted 2017    2016
($ in thousands) Q1    Q1
Americas-Core $226,906    $220,992
Americas-Insolvency  49,813     68,653
Europe-Core  98,081     87,220
Europe-Insolvency  5,030     1,833
Total Cash Collections $379,830    $378,698
        
        

EXPENSES AND OPERATING INCOME

NET INCOME AND EPS

PORTFOLIO ACQUISITIONS

        
Portfolio Purchase Source 2017 2016
($ in thousands) Q1 Q4Q3Q2Q1
Americas-Core $115,166 $91,800$95,452$130,529$136,057
Americas-Insolvency  67,123  20,929 16,760 33,723 22,952
Europe-Core  39,505  80,129 34,240 68,835 171,038
Europe-Insolvency  6,020  6,943 14,803 16,410 6,731
Total Portfolio Purchasing $227,814 $199,801$161,255$249,497$336,778
        
     

BALANCE SHEET

Conference Call Information
PRA Group 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, visit http://ir.pragroup.com/events.cfm.   To listen by phone, call 888-695-7639 in the U.S. or 970-315-0482 outside the U.S.  The conference ID is 14428598.  To listen to a replay of the call until May 16, 2017, call 855-859-2056 in the U.S. or 404-537-3406 outside the U.S. and use conference ID 14428598.                         

About PRA Group
As a global leader in acquiring and collecting nonperforming loans, PRA Group returns capital to banks and other creditors to help expand financial services for consumers in the Americas and Europe. With more than 4,000 employees worldwide, PRA Group companies collaborate with customers to help them resolve their debt and provide a broad range of additional revenue and recovery services to businesses. For more information, please visit www.pragroup.com.

About Forward Looking Statements
Statements made herein which are not historical in nature, including PRA Group'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'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. 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's filings with the Securities and Exchange Commission including but not limited to PRA Group'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's website and contain a detailed discussion of PRA Group'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 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 assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA Group'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 
(in thousands, except per share amounts) 
     
 Three Months Ended 
 March 31, 
  2017   2016  
     
Revenues:    
Income recognized on finance receivables, net$194,535  $206,507  
Fee income 9,858   16,266  
Other revenue 2,165   2,109  
Total revenues 206,558   224,882  
     
Operating expenses:    
Compensation and employee services 68,468   66,765  
Legal collection expenses 31,728   30,132  
Agency fees 10,800   10,884  
Outside fees and services 13,285   15,808  
Communication 9,137   9,882  
Rent and occupancy 3,783   3,796  
Depreciation and amortization 5,215   6,070  
Other operating expenses 10,885   10,651  
Total operating expenses 153,301   153,988  
Income from operations 53,257   70,894  
     
Other income and (expense):    
Gain on sale of subsidiaries 46,845   -  
Interest expense (21,257)  (19,959) 
Foreign exchange gain/(loss) 2,179   (1,850) 
Income before income taxes 81,024   49,085  
     
Provision for income taxes 31,409   16,232  
Net income$49,615  $32,853  
Adjustment for net income attributable to noncontrolling interests 1,448   870  
Net income attributable to PRA Group, Inc.$48,167  $31,983  
     
Net income per common share attributable to PRA Group, Inc.:    
Basic$1.04  $0.69  
Diluted$1.03  $0.69  
     
Weighted average number of shares outstanding:    
Basic 46,406   46,243  
Diluted 46,627   46,372  

 

PRA Group, Inc. 
Unaudited Consolidated Balance Sheets 
(in thousands) 
      
  March 31, December 31, 
ASSETS 2017   2016  
      
Cash and cash equivalents$  82,110  $  94,287  
Investments 74,055   68,543  
Finance receivables, net 2,366,880   2,307,969  
Other receivables, net 17,684   11,650  
Income taxes receivable -   9,427  
Net deferred tax asset 29,090   28,482  
Property and equipment, net 38,024   38,744  
Goodwill  506,240   499,911  
Intangible assets, net 27,393   27,935  
Other assets 32,373   33,808  
Assets held for sale -   43,243  
      
Total assets$  3,173,849  $  3,163,999  
      
LIABILITIES AND EQUITY    
      
Liabilities:     
Accounts payable$  3,924  $  2,459  
Accrued expenses 82,594   82,699  
Income taxes payable 37,960   19,631  
Net deferred tax liability 259,330   258,344  
Interest-bearing deposits 78,792   76,113  
Borrowings 1,708,687   1,784,101  
Other liabilities 13,344   10,821  
Liabilities held for sale -   4,220  
      
Total liabilities 2,184,631   2,238,388  
      
Redeemable noncontrolling interest 8,515   8,448  
      
Equity     
Preferred stock, par value $0.01, authorized shares, 2,000,    
issued and outstanding shares, 0 -   -  
Common stock, par value $0.01, authorized shares, 100,000, issued    
and outstanding shares, 46,439 at March 31, 2017; 100,000     
authorized shares, 46,356 issued and outstanding shares at  464   464  
December 31, 2016    
Additional paid-in capital 66,293   66,414  
Retained earnings 1,097,534   1,049,367  
Accumulated other comprehensive loss (233,476)  (251,944) 
Total stockholders' equity - PRA Group, Inc. 930,815   864,301  
Noncontrolling interest 49,888   52,862  
Total equity 980,703   917,163  
Total liabilities and equity$  3,173,849  $  3,163,999  
      

 

PRA Group, Inc. 
FINANCIAL HIGHLIGHTS 
 As of and for the  
 Three Months Ended March 31, 
  2017  2016 Change 
EARNINGS (in thousands)    
Income recognized on finance receivables, net$194,535 $206,507 -6% 
Fee income 9,858  16,266 -39% 
Other revenue 2,165  2,109 3% 
Total revenues 206,558  224,882 -8% 
Operating expenses 153,301  153,988 0% 
Income from operations 53,257  70,894 -25% 
Net interest expense 21,257  19,959 7% 
Net income 49,615  32,853 51% 
Net income attributable to PRA Group, Inc. 48,167  31,983 51% 
     
PERIOD-END BALANCES (in thousands)    
Cash and cash equivalents$82,110 $79,442 3% 
Finance receivables, net 2,366,880  2,377,077 0% 
Goodwill and intangible assets, net 533,633  557,024 -4% 
Total assets 3,173,849  3,268,833 -3% 
Borrowings 1,708,687  1,896,424 -10% 
Total liabilities 2,184,631  2,360,091 -7% 
Total equity - PRA Group, Inc. 930,815  864,868 8% 
     
FINANCE RECEIVABLE INCOME (dollars in thousands)    
Cash collections$379,830 $384,333 -1% 
Cash collections on fully amortized pools 13,504  9,276 46% 
Principal amortization without allowance charges 182,616  167,928 9% 
Allowance charges 2,679  9,898 -73% 
Principal amortization with allowance charges 185,295  177,826 4% 
Principal amortization w/ allowance charges as % of cash collections:    
Including fully amortized pools 48.8% 46.3%5% 
Excluding fully amortized pools 50.6% 47.4%7% 
Allowance charges to period-end net finance receivables 0.1% 0.4%-73% 
     
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)    
Purchase price - Americas core$115,166 $136,057 -15% 
Purchase price - Americas insolvency 67,123  22,952 192% 
Purchase price - Europe core 39,505  171,038 -77% 
Purchase price - Europe insolvency 6,020  6,731 -11% 
Purchase price - total 227,814  336,778 -32% 
Number of portfolios - total 126  139 -9% 
     
ESTIMATED REMAINING COLLECTIONS (in thousands)    
Estimated remaining collections - Americas core$2,604,039 $2,643,410 -1% 
Estimated remaining collections - Americas insolvency 373,729  421,866 -11% 
Estimated remaining collections - Europe core 2,089,659  2,152,403 -3% 
Estimated remaining collections - Europe insolvency 75,942  40,938 86% 
Estimated remaining collections - total 5,143,369  5,258,617 -2% 
Adjusted estimated remaining collections (7) 5,206,044  5,366,417 -3% 
     
SHARE DATA (share amounts in thousands)    
Net income per common share - diluted$1.03 $0.69 50% 
Weighted average number of shares outstanding - diluted 46,627  46,372 1% 
Shares repurchased -  - 0% 
Closing market price$33.15 $29.39 13% 
     
RATIOS AND OTHER DATA (dollars in thousands)    
Return on average equity (1) 20.6% 15.4%34% 
Return on revenue (2) 24.0% 14.6%64% 
Return on average assets (3) 6.1% 4.1%48% 
Operating margin (4) 25.8% 31.5%-18% 
Operating expense to cash receipts (5) 39.3% 38.4%2% 
Debt to stockholders' equity (6) 183.6% 219.3%-16% 
Number of full-time equivalent collectors 2,294  1,881 22% 
Number of full-time equivalent employees 4,205  3,748 12% 
Cash receipts (5)$389,688 $400,599 -3% 
Lines of credit - unused portion at period end 712,637  435,709 64% 
     
(1)  Calculated as annualized net income divided by average equity for the period   
(2)  Calculated as net income divided by total revenues    
(3)  Calculated as annualized net income divided by average assets for the period   
(4)  Calculated as income from operations divided by total revenues    
(5)  "Cash receipts" is defined as cash collections plus fee income    
(6)  For purposes of this ratio, "debt" equals borrowings    
(7)  Equals total estimated remaining collections on our owned finance receivable    
portfolios plus the estimated remaining collections on certain of our other investments.   
     

 

PRA Group, Inc.
FINANCIAL HIGHLIGHTS
  For the Quarter Ended
 March 31December 31September 30June 30March 31
  2017  2016  2016  2016  2016 
EARNINGS (in thousands)     
Income recognized on finance receivables, net$194,535 $131,965 $202,639 $204,008 $206,507 
Fee income 9,858  21,171  17,597  22,347  16,266 
Other revenue 2,165  2,122  1,748  2,101  2,109 
Total revenues 206,558  155,258  221,984  228,456  224,882 
Operating expenses 153,301  148,190  154,496  155,700  153,988 
Income from operations 53,257  7,068  67,488  72,756  70,894 
Net interest expense 21,257  21,026  19,310  20,569  19,959 
Net income/(loss) 49,615  (15,347) 36,518  36,868  32,853 
Net income/(loss) attributable to PRA Group, Inc. 48,167  (17,648) 34,306  36,456  31,983 
      
PERIOD-END BALANCES (in thousands)     
Cash and cash equivalents$82,110 $94,287 $91,791 $117,071 $79,442 
Finance receivables, net 2,366,880  2,307,969  2,392,408  2,399,949  2,377,077 
Goodwill and intangible assets, net 533,633  527,846  592,044  576,992  557,024 
Total assets 3,173,849  3,163,999  3,279,347  3,305,596  3,268,833 
Borrowings 1,708,687  1,784,101  1,816,600  1,912,283  1,896,424 
Total liabilities 2,184,631  2,238,388  2,291,369  2,370,415  2,360,091 
Total equity - PRA Group, Inc. 930,815  864,301  937,702  886,077  864,868 
      
FINANCE RECEIVABLE COLLECTIONS (dollars in thousands)     
Cash collections$379,830 $348,751 $371,700 $387,202 $384,333 
Cash collections on fully amortized pools 13,504  9,041  7,744  8,124  9,276 
Principal amortization without allowance charges 182,616  154,271  155,915  170,274  167,928 
Allowance charges 2,679  62,515  13,146  12,920  9,898 
Principal amortization with allowance charges 185,295  216,786  169,061  183,194  177,826 
Principal amortization w/ allowance charges as % of cash collections:     
Including fully amortized pools 48.8% 62.2% 45.5% 47.3% 46.3%
Excluding fully amortized pools 50.6% 63.8% 46.5% 48.3% 47.4%
Allowance charges to period-end net finance receivables 0.1% 2.7% 0.5% 0.5% 0.4%
      
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)     
Purchase price - North America core$115,166 $91,800 $95,452 $130,529 $136,057 
Purchase price - North America insolvency 67,123  20,929  16,760  33,723  22,952 
Purchase price - Europe core 39,505  80,129  34,240  68,835  171,038 
Purchase price - Europe insolvency 6,020  6,943  14,803  16,410  6,731 
Purchase price - total 227,814  199,801  161,255  249,497  336,778 
Number of portfolios - total 126  126  122  136  139 
      
ESTIMATED REMAINING COLLECTIONS (in thousands)     
Estimated remaining collections - Americas core$2,604,039 $2,571,887 $2,672,427 $2,705,781 $2,643,410 
Estimated remaining collections - Americas insolvency 373,729  331,371  356,363  396,667  421,866 
Estimated remaining collections - Europe core 2,089,659  2,072,936  2,148,230  2,171,542  2,152,403 
Estimated remaining collections - Europe insolvency 75,942  71,810  72,919  59,107  40,938 
Estimated remaining collections - total 5,143,369  5,048,004  5,249,939  5,333,097  5,258,617 
Adjusted estimated remaining collections (7) 5,206,044  5,109,404  5,345,657  5,430,192  5,366,417 
      
SHARE DATA (share amounts in thousands)     
Net income/(loss) per common share - diluted$1.03 $(0.38)$0.74 $0.79 $0.69 
Weighted average number of shares outstanding - diluted 46,627  46,346  46,434  46,402  46,372 
Shares repurchased -  -  -  -  - 
Closing market price$33.15 $39.10 $34.54 $24.14 $29.39 
      
RATIOS AND OTHER DATA (dollars in thousands)     
Return on average equity (1) 20.6% -7.9% 15.1% 16.4% 15.4%
Return on revenue (2) 24.0% -9.9% 16.5% 16.1% 14.6%
Return on average assets (3) 6.1% -2.2% 4.2% 4.4% 4.1%
Operating margin (4) 25.8% 4.6% 30.4% 31.8% 31.5%
Operating expense to cash receipts (5) 39.3% 40.1% 39.7% 38.0% 38.4%
Debt to stockholders' equity (6) 183.6% 206.4% 193.7% 215.8% 219.3%
Number of full-time equivalent collectors 2,294  1,906  1,859  1,804  1,881 
Number of full-time equivalent employees 4,205  4,019  3,859  3,816  3,748 
Cash receipts (5)$389,688 $369,922 $389,297 $409,549 $400,599 
Lines of credit - unused portion at period end 712,637  641,132  630,775  430,651  435,709 
      
(1)  Calculated as annualized net income divided by average equity for the period    
(2)  Calculated as net income divided by total revenues     
(3)  Calculated as annualized net income divided by average assets for the period    
(4)  Calculated as income from operations divided by total revenues     
(5)  "Cash receipts" is defined as cash collections plus fee income     
(6)  For purposes of this ratio, "debt" equals borrowings     
(7)  Equals total estimated remaining collections on our owned finance receivable     
portfolios plus the estimated remaining collections on certain of our other investments.    
      
Investor Contact:
Darby Schoenfeld
Director of Investor Relations
(757) 431-7913
Darby.Schoenfeld@PRAGroup.com

News Media Contact:
Nancy Porter
Vice President, Corporate Communications
(757) 431-7950
Nancy.Porter@PRAGroup.com