PRA Group
Aug 10, 2015

PRA Group Reports Second Quarter 2015 Results

NORFOLK, Va., Aug. 10, 2015 (GLOBE NEWSWIRE) -- PRA Group (Nasdaq:PRAA), a global leader in acquiring non-performing loans, today reported its financial results for the second quarter of 2015.

Second Quarter Highlights

"PRA Group continues to produce solid operating results and the quarter continued many of the trends we have seen over the last twelve months including better than expected collections in our U.S. call centers," said Steve Fredrickson, chairman, president and chief executive officer, PRA Group. "Investment in the quarter again exceeded $200 million and we signed a binding agreement to purchase a portfolio of receivables with an investment of approximately $200 million in Europe which is scheduled to close in the third quarter. Additionally, in early August we purchased a majority position in RCB Investimentos, Brazil's leading NPL master servicing platform. RCB is currently servicing the small investment we made in Brazil in the first quarter. We are very excited to continue diversifying geographically and work with Alexandre Nobre and Renato Toledo to further develop RCB." 

REVENUES

Cash Collection Source ($ in thousands)Q22015Q12015Q42014Q32014Q22014
Americas-Core  $ 218,838  $ 219,371  $ 185,921  $ 189,027  $ 190,229
Americas-Insolvency  92,974  95,533  103,104  110,544  124,101
Europe-Core  76,602  83,876  84,398  73,172  4,944
Europe-Insolvency  1,210  967  5 -- --
Total Cash Collections  $ 389,624  $ 399,747  $ 373,428  $ 372,743  $ 319,274

EXPENSES AND OPERATING INCOME

PORTFOLIO ACQUISITIONS

 
Portfolio Purchase Source
($ in thousands)

Q22015

Q12015

Q42014

Q32014

Q22014
Americas-Core  $ 98,317  $ 138,498  $ 119,714  $ 118,018  $ 91,904
Americas-Insolvency  19,111  16,437  24,949  38,535  16,187
Europe-Core (1)  88,499  21,579  123,194  734,803  1,121
Europe-Insolvency  2,450  8,510  11,625 -- --
Total Portfolio Purchasing  $ 208,377  $ 185,024  $ 279,482  $ 891,356  $ 109,212
 
(1) Excludes the $27.9 million and $34.7 million investment in the securitized fund in Poland during the three months ended March 31, 2015 and December 31, 2014, respectively.

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 95571605. A question-and-answer session on the call will be open only to analysts or investors. To listen to a replay of the call until August 16, 2015, call 855-859-2056 in the U.S. or 404-537-3406 outside the U.S. and use conference ID 95571605.                        

About PRA Group

As a global leader in acquiring non-performing loans, PRA Group returns capital to global banks and other creditors to help expand financial services for consumers in North America and Europe. PRA Group companies collaborate with customers to help them resolve their debt and provide a broad range of additional revenue and recovery services to business and government clients.

PRA has been recognized as one of Fortune's 100 Fastest-Growing Companies for the past three years and one of Forbes' Best Small Companies in America for eight consecutive years since 2007. 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 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, filed with the Securities and Exchange Commission and available through PRA Group's website, which 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 June 30,Six Months Ended June 30,
 2015201420152014
         
Revenues:        
Income recognized on finance receivables, net $ 220,064 $ 182,518 $ 448,467 $ 360,488
Fee income 13,878 14,510 26,931 30,118
Other revenue 3,255 315 7,005 659
         
Total revenues 237,197 197,343 482,403 391,265
         
Operating expenses:        
Compensation and employee services 68,320 52,461 133,591 103,846
Legal collection fees 14,114 11,371 27,805 22,204
Legal collection costs 19,556 25,429 40,410 51,962
Agent fees 7,784 1,464 16,045 2,914
Outside fees and services 12,466 12,113 25,263 22,904
Communication 8,073 7,765 18,491 16,728
Rent and occupancy 3,479 2,411 7,039 4,749
Depreciation and amortization 4,916 4,211 9,526 8,158
Other operating expenses 9,610 7,681 19,188 13,781
         
Total operating expenses 148,318 124,906 297,358 247,246
         
Income from operations 88,879 72,437 185,045 144,019
         
Other income and (expense):        
Interest expense (13,452) (5,067) (28,228) (9,926)
Net foreign currency transaction gain/(loss) 3,584 (6,197) 10,373 (6,189)
         
Income before income taxes 79,011 61,173 167,190 127,904
         
Provision for income taxes 27,586 23,666 57,630 49,557
         
Net income $ 51,425 $ 37,507 $ 109,560 $ 78,347
         
Net income per common share:        
Basic  $ 1.06  $ 0.75  $ 2.26  $ 1.57
Diluted  $ 1.06  $ 0.74  $ 2.25  $ 1.55
         
Weighted average number of shares outstanding:        
Basic 48,325 50,065 48,525 49,997
Diluted 48,529 50,437 48,790 50,400
 
PRA Group, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except per share amounts)
     
 June 30,December 31,
ASSETS20152014
     
Cash and cash equivalents $ 56,811 $ 39,661
Investments 88,295 89,703
Finance receivables, net 2,012,552 2,001,790
Other receivables, net 18,443 12,959
Income taxes receivable 1,580 --
Net deferred tax asset 125 6,126
Property and equipment, net 46,215 48,258
Goodwill 503,001 527,445
Intangible assets, net 9,450 10,933
Other assets 47,284 41,876
     
Total assets $ 2,783,756 $ 2,778,751
     
LIABILITIES AND EQUITY    
     
Liabilities:    
Accounts payable $ 3,933 $ 4,446
Accrued expenses 77,007 89,361
Income taxes payable 9,758 11,020
Other liabilities 5,933 5,962
Net deferred tax liability 252,638 255,587
Interest bearing deposits 33,248 27,704
Borrowings 1,503,363 1,482,456
     
Total liabilities 1,885,880 1,876,536
     
Stockholders' equity:    
Preferred stock, par value $0.01, authorized shares, 2,000, issued and outstanding shares - 0 -- --
Common stock, par value $0.01, 100,000 authorized shares, 48,333 issued and outstanding shares at June 30, 2015, and 49,577 issued and outstanding shares at December 31, 2014 483 496
Additional paid-in capital 35,360 111,659
Retained earnings 1,015,570 906,010
Accumulated other comprehensive (loss) (153,537) (115,950)
Total stockholders' equity 897,876 902,215
     
Total liabilities and equity $ 2,783,756 $ 2,778,751
 
PRA Group, Inc.
FINANCIAL HIGHLIGHTS
 As of and for the As of and for the 
 Three Months Ended June 30,Six Months Ended June 30,
  2015 2014 Change 2015 2014 Change
EARNINGS (in thousands)            
Income recognized on finance receivables, net  $ 220,064  $ 182,518 21%  $ 448,467  $ 360,488 24%
Fee income  13,878  14,510 -4%  26,931  30,118 -11%
Other revenue  3,255  315 933%  7,005  659 963%
Total revenues  237,197  197,343 20%  482,403  391,265 23%
Operating expenses  148,318  124,906 19%  297,358  247,246 20%
Income from operations  88,879  72,437 23%  185,045  144,019 28%
Net interest expense  13,452  5,067 165%  28,228  9,926 184%
Net income  51,425  37,507 37%  109,560  78,347 40%
             
PERIOD-END BALANCES (in thousands)            
Cash and cash equivalents  $ 56,811  $ 270,526 -79%  $ 56,811  $ 270,526 -79%
Finance receivables, net  2,012,552  1,219,595 65%  2,012,552  1,219,595 65%
Goodwill and intangible assets, net  512,451  118,927 331%  512,451  118,927 331%
Total assets  2,783,756  1,695,362 64%  2,783,756  1,695,362 64%
Borrowings  1,503,363  448,785 235%  1,503,363  448,785 235%
Total liabilities  1,885,880  743,106 154%  1,885,880  743,106 154%
Total equity  897,876  952,256 -6%  897,876  952,256 -6%
             
FINANCE RECEIVABLE INCOME (dollars in thousands)            
Cash collections  $ 389,624  $ 319,274 22%  $ 789,371  $ 632,641 25%
Cash collections on fully amortized pools  15,162  16,943 -11%  32,167  33,459 -4%
Principal amortization without allowance (reversals)/charges  164,675  139,055 18%  334,389  276,405 21%
Allowance (reversal)/charge  4,885  (2,299) -312%  6,515  (4,252) -253%
Principal amortization with allowance (reversals)/charges  169,560  136,756 24%  340,904  272,153 25%
Principal amortization w/ allowance charges as % of cash collections:            
Including fully amortized pools 43.5% 42.8% 2% 43.2% 43.0% 0%
Excluding fully amortized pools 45.3% 45.2% 0% 45.0% 45.4% -1%
Allowance (reversal)/charge to period-end net finance receivables 0.2% (0.2%) -229% 0.3% (0.3%) -193%
             
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)            
Purchase price - Americas core  $ 98,317  $ 91,904 7%  $ 236,815  $ 170,989 38%
Purchase price - Americas insolvency  19,111  16,187 18%  35,548  88,190 -60%
Purchase price - Europe core  88,499  1,121 7795%  110,078  2,747 3907%
Purchase price - Europe insolvency  2,450 -- 100%  10,960 -- 100%
Purchase price - total  208,377  109,212 91%  393,401  261,926 50%
Number of portfolios - total 136 85 60% 275 189 46%
ESTIMATED REMAINING COLLECTIONS (in thousands)            
Estimated remaining collections - Americas core  $ 2,384,698  $ 1,948,414 22%  $ 2,384,698  $ 1,948,414 22%
Estimated remaining collections - Americas insolvency  529,892  733,176 -28%  529,892  733,176 -28%
Estimated remaining collections - Europe core  1,685,694  20,349 8184%  1,685,694  20,349 8184%
Estimated remaining collections - Europe insolvency  26,807 -- 100%  26,807 -- 100%
Estimated remaining collections - total  4,627,091  2,701,939 71%  4,627,091  2,701,939 71%
Adjusted estimated remaining collections (7)  4,747,552  2,701,939 76%  4,747,552  2,701,939 76%
             
SHARE DATA (share amounts in thousands)            
Net income per common share - diluted  $ 1.06  $ 0.74 43%  $ 2.25  $ 1.55 45%
Weighted average number of shares outstanding - diluted  48,529  50,437 -4%  48,790  50,400 -3%
Shares repurchased -- -- 0%  1,478 -- 100%
Average price paid per share repurchased (including acquisitions costs)  $ --  $ -- 0%  $ 52.65  $ -- 100%
Closing market price  $ 62.31  $ 59.53 5%  $ 62.31  $ 59.53 5%
             
RATIOS AND OTHER DATA (dollars in thousands)            
Return on average equity (1) 23.5% 16.0% 47% 26.6% 17.1% 55%
Return on revenue (2) 21.7% 19.0% 14% 22.7% 20.0% 13%
Return on average assets (3) 7.4% 9.0% -18% 8.0% 9.5% -16%
Operating margin (4) 37.5% 36.7% 2% 38.4% 36.8% 4%
Operating expense to cash receipts (5) 36.8% 37.4% -2% 36.4% 37.3% -2%
Debt to equity (6) 167.4% 47.1% 255% 167.4% 47.1% 255%
Number of full-time equivalent collectors 2,317 2,258 3% 2,317 2,258 3%
Number of full-time equivalent employees 3,820 3,567 7% 3,820 3,567 7%
Cash receipts (5)  $ 403,502  $ 333,784 21%  $ 816,302  $ 662,759 23%
Line of credit - unused portion at period end  547,017  650,000 -16%  547,017  650,000 -16%
(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
 June 30March 31December 31September 30June 30
 20152015201420142014
EARNINGS (in thousands)          
Income recognized on finance receivables, net  $ 220,064  $ 228,403  $ 222,660  $ 224,326  $ 182,518
Fee income  13,878  13,053  22,800  12,757  14,510
Other revenue  3,255  3,750  5,271  1,890  315
Total revenues  237,197  245,206  250,731  238,973  197,343
Operating expenses  148,318  149,040  140,871  150,784  124,906
Income from operations  88,879  96,166  109,860  88,189  72,437
Net interest expense  13,452  14,776  13,493  11,807  5,067
Net income  51,425  58,135  46,991  51,167  37,507
           
PERIOD-END BALANCES (in thousands)          
Cash and cash equivalents  $ 56,811  $ 40,542  $ 39,661  $ 70,300  $ 270,526
Finance receivables, net  2,012,552  1,954,772  2,001,790  1,913,710  1,219,595
Goodwill and intangible assets, net  512,451  506,695  538,378  606,716  118,927
Total assets  2,783,756  2,700,613  2,778,751  2,757,429  1,695,362
Borrowings  1,503,363  1,479,262  1,482,456  1,425,409  448,785
Total liabilities  1,885,880  1,883,295  1,876,536  1,797,569  743,106
Total equity  897,876  817,318  902,215  959,860  952,256
           
FINANCE RECEIVABLE COLLECTIONS (dollars in thousands)          
Cash collections  $ 389,624  $ 399,747  $ 373,428  $ 372,743  $ 319,274
Cash collections on fully amortized pools  15,162  17,005  17,785  17,105  16,943
Principal amortization without allowance (reversals)/charges  164,675  169,714  149,753  150,115  139,055
Allowance (reversal)/charge  4,885  1,630  1,015  (1,698)  (2,299)
Principal amortization with allowance (reversals)/charges  169,560  171,344  150,768  148,417  136,756
Principal amortization w/ allowance charges as % of cash collections:        
Including fully amortized pools 43.5% 42.9% 40.4% 39.8% 42.8%
Excluding fully amortized pools 45.3% 44.8% 42.4% 41.7% 45.2%
Allowance (reversal)/charge to period-end net finance receivables 0.2% 0.1% 0.1% -0.1% -0.2%
           
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)        
Purchase price - North America core  $ 98,317  $ 138,498  $ 119,714  $ 118,018  $ 91,904
Purchase price - North America insolvency  19,111  16,437  24,949  38,535  16,187
Purchase price - Europe core  88,499  21,579  123,194  734,803  1,121
Purchase price - Europe insolvency  2,450  8,510  11,625 -- --
Purchase price - total  208,377  185,024  279,482  891,356  109,212
Number of portfolios - total 136 139 142 125 85
ESTIMATED REMAINING COLLECTIONS (in thousands)          
Estimated remaining collections - Americas core  $ 2,384,698  $ 2,370,086  $ 2,229,403  $ 2,089,253  $ 1,948,414
Estimated remaining collections - Americas insolvency  529,892  577,319  642,552  697,662  733,176
Estimated remaining collections - Europe core  1,685,694  1,619,454  1,478,738  1,582,135  20,349
Estimated remaining collections - Europe insolvency  26,807  24,838  15,021  -- --
Estimated remaining collections - total  4,627,091  4,591,697  4,365,714  4,369,050  2,701,939
Adjusted estimated remaining collections (7)  4,747,552  4,716,230  4,437,264  -- --
           
SHARE DATA (share amounts in thousands)          
Net income per common share - diluted  $ 1.06  $ 1.19  $ 0.93  $ 1.01  $ 0.74
Weighted average number of shares outstanding - diluted  48,529  49,052  50,444  50,439  50,437
Shares repurchased  --  1,478  574 -- --
Average price paid per share repurchased (including acquisitions costs)  $ --  $ 52.65  $ 57.79  $ --  $ --
Closing market price  $ 62.31  $ 54.32  $ 57.93  $ 52.23  $ 59.53
           
RATIOS AND OTHER DATA (dollars in thousands)          
Return on average equity (1) 23.5% 30.1% 20.2% 21.1% 16.0%
Return on revenue (2) 21.7% 23.7% 18.7% 21.4% 19.0%
Return on average assets (3) 7.4% 8.7% 6.9% 7.3% 9.0%
Operating margin (4) 37.5% 39.2% 43.8% 36.9% 36.7%
Operating expense to cash receipts (5) 36.8% 36.1% 35.6% 39.1% 37.4%
Debt to equity (6) 167.4% 181.0% 164.3% 148.5% 47.1%
Number of collectors 2,317 2,395 2,457 2,498 2,258
Number of full-time equivalent employees 3,820 3,847 3,880 3,913 3,567
Cash receipts (5)  $ 403,502  $ 412,800  $ 396,228  $ 385,500  $ 333,784
Line of credit - unused portion at period end  547,017  323,812  352,926  513,800  650,000
(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.

Use of Non-GAAP Financial Measures

Management believes that the presentation of certain financial information in this press release, excluding the costs associated with the Aktiv Kapital acquisition and foreign exchange losses that were recorded during the three and six months ended June 30, 2014, which is non-GAAP financial information, is useful to investors and improves the comparability of the Company's ongoing operational results between periods. The non-GAAP information should be considered in addition to, not as a substitute for, financial information prepared in accordance with GAAP.

 
PRA Group, Inc.
Reconciliation of Net Income, Earnings Per Share and Financial Ratios to GAAP Net Income, Earnings Per Share and Financial Ratios
(in thousands, except per share amounts)
             
             
 GAAP ThreeLess: Adjustments Adjusted ThreeGAAP SixLess: Adjustments Adjusted Six
 Months EndedRelated to AktivMonths EndedMonths EndedRelated to AktivMonths Ended
 June 30, 2014Kapital AcquisitionJune 30, 2014June 30, 2014Kapital AcquisitionJune 30, 2014
             
Revenues:            
Income recognized on finance receivables, net $ 182,518   $ 182,518 $ 360,488   $ 360,488
Fee income 14,510   14,510 30,118   30,118
Other revenue 315   315 659   659
             
Total revenues 197,343   197,343 391,265   391,265
             
Operating expenses:            
Compensation and employee services 52,461   52,461 103,846   103,846
Legal collection fees 11,371   11,371 22,204   22,204
Legal collection costs 25,429   25,429 51,962   51,962
Agent fees 1,464   1,464 2,914   2,914
Outside fees and services 12,113 (4,052) 8,061 22,904 (8,413) 14,491
Communication 7,765   7,765 16,728   16,728
Rent and occupancy 2,411   2,411 4,749   4,749
Depreciation and amortization 4,211   4,211 8,158   8,158
Other operating expenses 7,681   7,681 13,781   13,781
             
Total operating expenses 124,906 (4,052) 120,854 247,246 (8,413) 238,833
             
Income from operations 72,437 4,052 76,489 144,019 8,413 152,432
             
Other income and (expense):            
Interest expense (5,067)   (5,067) (9,926)   (9,926)
Foreign exchange (loss)/gain (6,197) 6,224 27 (6,189) 6,224 35
             
Income before income taxes 61,173 10,276 71,449 127,904 14,637 142,541
             
Provision for income taxes 23,666 3,976 27,642 49,557 5,671 55,228
             
Net income $ 37,507 $ 6,300 $ 43,807 $ 78,347 $ 8,966 $ 87,313
             
Net income per common share:            
Basic  $ 0.75  $ 0.13  $ 0.88  $ 1.57  $ 0.18  $ 1.75
Diluted  $ 0.74  $ 0.12  $ 0.87  $ 1.55  $ 0.18  $ 1.73
             
Weighted average number of shares outstanding:            
Basic 50,065 50,065 50,065 49,997 49,997 49,997
Diluted 50,437 50,437 50,437 50,400 50,400 50,400
             
Operating margin: 36.7%   38.8% 36.8%   39.0%
             
Net income margin: 19.0%   22.2% 20.0%   22.3%
             
Return on average equity: 16.0%   18.7% 17.1%   19.0%
CONTACT: Investor Contact:

         Darby Schoenfeld

         Director of Investor Relations

         (757) 431-7913

         DCSchoenfeld@PRAGroup.com

         

         News Media Contact:

         Nancy Porter

         Vice President, Corporate Communications

         (757) 431-7950

         NAPorter@PRAGroup.com