PRA Group
May 9, 2016

PRA Group Reports First Quarter 2016 Results

NORFOLK, Va., May 09, 2016 (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 2016.  The company reported diluted earnings per share of $0.69 versus $1.19 in the first quarter of 2015. Non-GAAP diluted earnings per share of $0.85 for the first quarter of 2016 compared to $1.22 for the year-ago quarter. Non-GAAP financial results are presented in constant currency with the first quarter of 2015 and exclude items unrelated to normal operations. A reconciliation of all non-GAAP financial measures to the most directly comparable GAAP financial measure can be found at the end of this press release. 

First Quarter Highlights

"Broadly speaking, cash results from our global operations were generally in line with our internally forecasted expectations. Globally, our buying in Q1 was quite strong as we invested $337 million in the quarter. This enabled us to grow estimated remaining collections to a record $5.3 billion," said Steve Fredrickson, chairman and chief executive officer, PRA Group. "Our strategy going forward continues to be taking advantage of our access to low cost capital, low operating costs, scale and underwriting prowess and pressing those advantages in every market in which we operate." 

REVENUES AND CASH COLLECTIONS

         
 Cash Collection Source  2016   2015 
 ($ in thousands) Q1 Q4Q3Q2Q1
 Americas-Core $  219,571  $  195,834 $  210,725 $  218,838 $  219,371 
 Americas-Insolvency    68,646     73,843    81,865    92,974    95,533 
 Europe-Core    94,091     97,149    85,635    76,602    83,876 
 Europe-Insolvency    2,025     2,545    2,528    1,210    967 
 Total Cash Collections $  384,333  $  369,371 $  380,753 $  389,624 $  399,747 
         
 Cash Collection Source -        
 Constant Currency Adjusted  2016      2015 
 ($ in thousands) Q1    Q1
 Americas-Core $  221,268     $  219,371 
 Americas-Insolvency    68,646        95,533 
 Europe-Core    97,721        83,876 
 Europe-Insolvency    2,025        967 
 Total Cash Collections $  389,660     $  399,747 
         
         

EXPENSES AND OPERATING INCOME

PORTFOLIO ACQUISITIONS

           
 Portfolio Purchase Source  2016   2015   
 ($ in thousands) Q1 Q4Q3Q2Q1  
 Americas-Core $  136,057  $  120,554 $  90,912 $  98,317 $  138,498   
 Americas-Insolvency    22,952     20,589    9,300    19,111    16,437   
 Europe-Core (1)    172,557     79,735    240,385    88,499    21,579   
 Europe-Insolvency    5,212     4,976    3,959    2,450    8,510   
 Total Portfolio Purchasing $  336,778  $  225,854 $  344,556 $  208,377 $  185,024   
           
        
 (1)  Excludes the $27.9 million investment in the securitized fund in Poland during the three months ended March 31, 2015.  
           

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 3106779. To listen to a replay of the call until May 16, 2016, call 855-859-2056 in the U.S. or 404-537-3406 outside the U.S. and use conference ID 3106779.

About PRA Group
As a global leader in acquiring and collecting nonperforming loans, PRA Group (Nasdaq:PRAA) returns capital to banks and other creditors to help expand financial services for consumers in the Americas 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 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 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, 
        2016   2015  
           
Revenues:    
 Income recognized on finance receivables, net$  206,507  $  228,403  
 Fee income 16,266   13,053  
 Other revenue 2,109   3,750  
    Total revenues 224,882   245,206  
           
Operating expenses:    
 Compensation and employee services 66,765   65,271  
 Legal collection fees 12,950   13,691  
 Legal collection costs 17,182   20,854  
 Agency fees 10,884   8,261  
 Outside fees and services 15,808   12,797  
 Communication 9,882   10,418  
 Rent and occupancy 3,796   3,560  
 Depreciation and amortization 6,070   4,610  
 Other operating expenses 10,651   9,578  
    Total operating expenses 153,988   149,040  
    Income from operations 70,894   96,166  
           
Other income and (expense):    
 Interest expense (19,959)  (14,776) 
 Foreign exchange gain/(loss) (1,850)  6,789  
    Income before income taxes 49,085   88,179  
           
    Provision for income taxes 16,232   30,044  
    Net income$  32,853  $  58,135  
     Adjustment for net income attributable to noncontrolling interest 870   -  
    Net income attributable to PRA Group, Inc.$  31,983  $  58,135  
           
Net income per common share attributable to PRA Group, Inc.:    
 Basic  $  0.69  $  1.19  
 Diluted $  0.69  $  1.19  
           
Weighted average number of shares outstanding:    
 Basic   46,243   48,724  
 Diluted  46,372   49,052  
           

 

PRA Group, Inc. 
Unaudited Consolidated Balance Sheets 
(in thousands) 
           
       March 31, December 31, 
ASSETS 2016   2015  
           
Cash and cash equivalents$  79,442  $  71,372  
Investments 71,413   73,799  
Finance receivables, net 2,377,077   2,202,113  
Other receivables, net 33,555   30,771  
Income taxes receivable -   1,717  
Net deferred tax asset 15,571   13,068  
Property and equipment, net 47,785   45,394  
Goodwill   524,870   495,156  
Intangible assets, net 32,154   23,788  
Other assets 86,966   33,389  
           
     Total assets$  3,268,833  $  2,990,567  
           
LIABILITIES AND EQUITY    
           
Liabilities:     
 Accounts payable$  2,377  $  4,190  
 Accrued expenses 95,049   95,380  
 Income taxes payable 28,114   21,236  
 Net deferred tax liability 269,201   261,498  
 Interest-bearing deposits 55,349   46,991  
 Borrowings 1,896,424   1,717,129  
 Other liabilities 13,577   4,396  
           
     Total liabilities 2,360,091   2,150,820  
           
Equity:      
  Preferred stock, par value $0.01, authorized shares, 2,000,    
   issued and outstanding shares, 0 -   -  
  Common stock, par value $0.01, authorized shares, 100,000, issued    
   and outstanding shares, 46,328 at March 31, 2016; 100,000     
   authorized shares, 46,173 issued and outstanding shares at  463   462  
   December 31, 2015    
  Additional paid-in capital 64,287   64,622  
  Retained earnings 996,253   964,270  
  Accumulated other comprehensive loss (196,135)  (228,861) 
   Total stockholders' equity - PRA Group, Inc. 864,868   800,493  
    Noncontrolling interest 43,874   39,254  
    Total equity 908,742   839,747  
     Total liabilities and total equity$  3,268,833  $  2,990,567  
           

 

PRA Group, Inc. 
FINANCIAL HIGHLIGHTS 
 As of and for the  
 Three Months Ended March 31, 
  2016  2015 Change 
EARNINGS (in thousands)    
Income recognized on finance receivables, net$  206,507 $  228,403  -10% 
Fee income   16,266    13,053  25% 
Other revenue   2,109    3,750  -44% 
Total revenues   224,882    245,206  -8% 
Operating expenses   153,988    149,040  3% 
Income from operations   70,894    96,166  -26% 
Net interest expense   19,959    14,776  35% 
Net income   32,853    58,135  -43% 
Net income attributable to PRA Group, Inc.   31,983    58,135  -45% 
     
PERIOD-END BALANCES (in thousands)    
Cash and cash equivalents$  79,442 $  40,542  96% 
Finance receivables, net   2,377,077    1,954,772  22% 
Goodwill and intangible assets, net   557,024    506,695  10% 
Total assets   3,268,833    2,700,613  21% 
Borrowings   1,896,424    1,479,262  28% 
Total liabilities   2,360,091    1,883,295  25% 
Total equity - PRA Group, Inc.   864,868    817,318  6% 
     
FINANCE RECEIVABLE INCOME (dollars in thousands)    
Cash collections$  384,333 $  399,747  -4% 
Cash collections on fully amortized pools   9,276    17,005  -45% 
Principal amortization without allowance (reversals)/charges   167,928    169,714  -1% 
Allowance (reversal)/charge   9,898    1,630  507% 
Principal amortization with allowance (reversals)/charges   177,826    171,344  4% 
Principal amortization w/ allowance charges as % of cash collections:    
Including fully amortized pools 46.3% 42.9% 8% 
Excluding fully amortized pools 47.4% 44.8% 6% 
Allowance (reversal)/charge to period-end net finance receivables 0.4% 0.1% 399% 
     
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)    
Purchase price - Americas core$  136,057 $  138,498  -2% 
Purchase price - Americas insolvency   22,952    16,437  40% 
Purchase price - Europe core   172,557    21,579  700% 
Purchase price - Europe insolvency   5,212    8,510  -39% 
Purchase price - total   336,778    185,024  82% 
Number of portfolios - total 139  139  0% 
ESTIMATED REMAINING COLLECTIONS (in thousands)    
Estimated remaining collections - Americas core$  2,643,410 $  2,370,086  12% 
Estimated remaining collections - Americas insolvency   421,866    577,319  -27% 
Estimated remaining collections - Europe core   2,152,403    1,619,454  33% 
Estimated remaining collections - Europe insolvency   40,938    24,838  65% 
Estimated remaining collections - total   5,258,617    4,591,697  15% 
Adjusted estimated remaining collections (7)   5,366,417    4,716,230  14% 
     
SHARE DATA (share amounts in thousands)    
Net income per common share - diluted$  0.69 $  1.19  -42% 
Weighted average number of shares outstanding - diluted   46,372    49,052  -5% 
Shares repurchased   -    1,478  -100% 
Average price paid per share repurchased (including acquisitions costs)$  - $  52.65  -100% 
Closing market price$  29.39 $  54.32  -46% 
     
RATIOS AND OTHER DATA (dollars in thousands)    
Return on average equity (1) 15.4% 30.1% -49% 
Return on revenue (2) 14.6% 23.7% -38% 
Return on average assets (3) 4.1% 8.7% -53% 
Operating margin (4) 31.5% 39.2% -20% 
Operating expense to cash receipts (5) 38.4% 36.1% 6% 
Debt to stockholders' equity (6) 219.3% 181.0% 21% 
Number of full-time equivalent collectors 2,103  2,395  -12% 
Number of full-time equivalent employees 3,748  3,847  -3% 
Cash receipts (5)$  400,599 $  412,800  -3% 
Line of credit - unused portion at period end   435,709    323,812  35% 
     
(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
  2016  2015  2015  2015  2015 
EARNINGS (in thousands)      
Income recognized on finance receivables, net$  206,507 $  208,471 $  208,184 $  220,064 $  228,403 
Fee income     16,266    19,649    17,803    13,878    13,053 
Other revenue     2,109    2,065    3,443    3,255    3,750 
Total revenues     224,882    230,185    229,430    237,197    245,206 
Operating expenses    153,988    159,013    175,303    148,318    149,040 
Income from operations    70,894    71,172    54,127    88,879    96,166 
Net interest expense    19,959    15,321    16,787    13,452    14,776 
Net income     32,853    40,988    17,583    51,425    58,135 
Net income attributable to PRA Group, Inc.   31,983    40,970    17,396    51,425    58,135 
         
PERIOD-END BALANCES (in thousands)    
Cash and cash equivalents $  79,442 $  71,372 $  69,111 $  56,811 $  40,542 
Finance receivables, net    2,377,077    2,202,113    2,167,178    2,012,552    1,954,772 
Goodwill and intangible assets, net   557,024    518,944    502,383    512,451    506,695 
Total assets     3,268,833    2,990,567    2,984,550    2,783,756    2,700,613 
Borrowings     1,896,424    1,717,129    1,654,457    1,503,363    1,479,262 
Total liabilities     2,360,091    2,150,820    2,083,131    1,885,880    1,883,295 
Total equity - PRA Group, Inc.   864,868    800,493    863,517    897,876    817,318 
         
FINANCE RECEIVABLE COLLECTIONS (dollars in thousands)   
Cash collections  $  384,333 $  369,371 $  380,753 $  389,624 $  399,747 
Cash collections on fully amortized pools   9,276    8,280    11,453    15,162    17,005 
Principal amortization without allowance (reversals)/charges   167,928    149,381    161,234    164,675    169,714 
Allowance (reversal)/charge    9,898    11,519    11,335    4,885    1,630 
Principal amortization with allowance (reversals)/charges   177,826    160,900    172,569    169,560    171,344 
Principal amortization w/ allowance charges as % of cash collections:   
Including fully amortized pools 46.3% 43.6% 45.3% 43.5% 42.9%
Excluding fully amortized pools 47.4% 44.6% 46.7% 45.3% 44.8%
Allowance (reversal)/charge to period-end net finance receivables 0.4% 0.5% 0.5% 0.2% 0.1%
         
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)   
Purchase price - North America core$  136,057 $  120,554 $  90,912 $  98,317 $  138,498 
Purchase price - North America insolvency   22,952    20,589    9,300    19,111    16,437 
Purchase price - Europe core    172,557    79,735    240,385    88,499    21,579 
Purchase price - Europe insolvency   5,212    4,976    3,959    2,450    8,510 
Purchase price - total    336,778    225,854    344,556    208,377    185,024 
Number of portfolios - total  139  139  128  136  139 
ESTIMATED REMAINING COLLECTIONS (in thousands)    
Estimated remaining collections - Americas core$  2,643,410 $  2,558,529 $  2,421,506 $  2,384,698 $  2,370,086 
Estimated remaining collections - Americas insolvency   421,866    448,652    474,097    529,892    577,319 
Estimated remaining collections - Europe core   2,152,403    1,964,763    1,903,226    1,685,694    1,619,454 
Estimated remaining collections - Europe insolvency   40,938    34,878    30,081    26,807    24,838 
Estimated remaining collections - total   5,258,617    5,006,822    4,828,910    4,627,091    4,591,697 
Adjusted estimated remaining collections (7)   5,366,417    5,114,923    4,945,609    4,747,552    4,716,230 
         
SHARE DATA (share amounts in thousands)    
Net income per common share - diluted$  0.69 $  0.86 $  0.36 $  1.06 $  1.19 
Weighted average number of shares outstanding - diluted   46,372    47,539    48,498    48,529    49,052 
Shares repurchased    -    2,072    133    -    1,478 
Average price paid per share repurchased (including acquisitions costs)$  - $  38.60 $  58.08 $  - $  52.65 
Closing market price $  29.39 $  34.69 $  52.92 $  62.31 $  54.32 
         
RATIOS AND OTHER DATA (dollars in thousands)    
Return on average equity (1)  15.4% 19.8% 7.8% 23.5% 30.1%
Return on revenue (2)  14.6% 17.8% 7.7% 21.7% 23.7%
Return on average assets (3)  4.1% 5.5% 2.3% 7.4% 8.7%
Operating margin (4)  31.5% 30.9% 23.6% 37.5% 39.2%
Operating expense to cash receipts (5) 38.4% 40.9% 44.0% 36.8% 36.1%
Debt to stockholders' equity (6) 219.3% 214.5% 191.6% 167.4% 181.0%
Number of collectors  2,103  2,173  2,159  2,317  2,395 
Number of full-time equivalent employees 3,748  3,799  3,715  3,820  3,847 
Cash receipts (5)  $  400,599 $  389,020 $  398,556 $  403,502 $  412,800 
Line of credit - unused portion at period end   435,709    446,769    393,246    547,017    323,812 
         
(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
PRA Group, Inc. reports financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, the Company believes certain non-GAAP performance measures and ratios which exclude penalty and fees associated with the CFPB consent order, expenses associated with acquisitions, legal costs not associated with normal operations, and constant currency adjustments may provide additional meaningful comparisons between current year results and prior periods. Reconciliations from non-GAAP to the most directly comparable GAAP financial measures are provided below. These non-GAAP financial measures should be viewed in addition to, not as an alternative for reported GAAP results.

The constant currency results assume that foreign revenues and expenses are translated from foreign currencies to the U.S. Dollar at rates consistent with the prior year, and that any benefit or loss caused by foreign currency fluctuations would be consistent with the prior year. To do this the company translates the current year's income statements into U.S. Dollars using the prior year's average exchange rates and then replaces the foreign exchange gain or loss for the current year with the balance from the prior year. Finally, the company calculates the tax impact of the constant currency results to reflect the current effective tax rate of the reporting period.

   
 Three Months Ended March 31, 2016 
  Cash Collections Amortization Income Recognized on Finance Receivables, net Fee Income Other Revenue Total Revenues Expenses Income from Operations Income before Income Taxes Provision for Income Taxes Net Income attributable to PRA Group, Inc. Diluted EPS 
 As Reported$  384,333  $  177,826  $  206,507  $  16,266  $  2,109  $  224,882  $  153,988  $  70,894  $  49,085  $  16,232  $  31,983  $  0.69  
 Adjustments:                        
 CFPB expenses including penalty and redress   -     -     -     -     -     -     (52)    52     52     18     34     -  
 Acquisition-related expenses   -     -     -     -     -     -     (1,034)    1,034     1,034     355     679     0.01  
 Legal costs not associated with normal operations   -     -     -     -     -     -     (435)    435     435     149     286     0.01  
 Constant currency adjustments   5,327     2,539     2,788     494     413     3,695     1,731     1,964     10,054     3,325     6,515     0.14  
 Subtotal of adjustments   5,327     2,539     2,788     494     413     3,695     210     3,485     11,575     3,847     7,514     0.16  
 As Adjusted   389,660     180,365     209,295     16,760     2,522     228,577     154,198     74,379     60,660     20,079     39,497     0.85  
                        
                         
 Three Months Ended March 31, 2015 
  Cash Collections Amortization Income Recognized on Finance Receivables, net Fee Income Other Revenue Total Revenues Expenses Income from Operations Income before Income Taxes Provision for Income Taxes Net Income attributable to PRA Group, Inc. Diluted EPS 
 As Reported$  399,747  $  171,344  $  228,403  $  13,053  $  3,750  $  245,206  $  149,040  $  96,166  $  88,179  $  30,044  $  58,135  $  1.19  
 Adjustments:                        
 Acquisition-related expenses   -     -     -     -     -     -     (2,243)    2,243     2,243     536     1,707     0.03  
 Legal costs not associated with normal operations   -     -     -     -     -     -     (125)    125     125     30     95     -  
 Subtotal of adjustments   -     -     -     -     -     -     (2,368)    2,368     2,368     566     1,802     0.03  
 As Adjusted   399,747     171,344     228,403     13,053     3,750     245,206     146,672     98,534     90,547     30,610     59,937     1.22  
 
 

 

Three Months Ended March 31, 2016
  Net Income   Average Equity   Return on Average Equity, Annualized 
 As Reported $  31,983  $  831,301   15.4%
      
 Adjustments    7,514     2,505   3.5%
      
 As Adjusted    39,497     833,806   18.9%
      
Three Months Ended March 31, 2015
  Net Income   Average Equity   Return on Average Equity, Annualized 
 As Reported $  58,135  $  772,336   30.1%
      
 Adjustments    1,802     600   0.9%
      
 As Adjusted    59,937     772,936   31.0%
      


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