PRA Group Reports Fourth Quarter and Full Year 2016 Results

NORFOLK, Va., Feb. 28, 2017 -- PRA Group, Inc. (Nasdaq:PRAA), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the fourth quarter and full year of 2016.  The company reported a net loss per share of $0.38. For the full year, the company reported diluted earnings per share of $1.83.  Non-GAAP financial results are presented in constant currency with the corresponding period 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. 

Fourth Quarter Highlights

  • Estimated remaining collections of $5.05 billion. 
  • Cash collections of $348.8 million. 
  • $199.8 million in investments.

Full Year 2016 Highlights

  • Cash collections of $1.5 billion. 
  • Total revenues of $830.6 million. 
  • $947.3 million in investments.

"While our fourth quarter GAAP earnings reflect a non-cash allowance charge, our economic performance remained solid and we made substantial progress resolving operational and regulatory challenges.  PRA Group spent much of 2016 preparing for, and to the extent possible, attempting to influence, a number of evolving forces that we believe could ultimately be beneficial to our shareholders," said Steve Fredrickson, chairman and chief executive officer, PRA Group.  "Relief from the antiquated interpretation of the Telephone Consumer Protection Act (TCPA), potential increases in domestic supply of nonperforming loans, the prospect of consolidating competition in Europe, and possible clarification of collection regulations are several of these potential tailwinds.  We stand ready and waiting to capitalize on any of these events and are excited about what the future holds for PRA Group." 

REVENUES AND CASH COLLECTIONS

  • Total revenues of $155.3 million in the fourth quarter included finance receivables income net of principal amortization and net allowance charges versus $230.2 million in the prior year period.  For the year ended December 31, 2016, total revenues were $830.6 million versus $942.0 million in the prior year period. 
  • Cash collections in the fourth quarter were $348.8 million versus $369.4 million in the prior year period.  Cash collections for the full year of 2016 were $1.49 billion versus $1.54 billion in the prior year period.  Both GAAP and currency adjusted cash collections are reported below and were comprised of collections from these finance receivables sources: 
                 
  Cash Collection Source     2016     2015
  ($ in thousands)   Q4 Q3 Q2 Q1   Q4
  Americas-Core   $ 193,360 $ 210,524 $ 213,741 $ 219,571   $ 195,834
  Americas-Insolvency     52,988   60,429   67,745   68,646     73,843
  Europe-Core     97,429   96,028   102,972   94,091     97,149
  Europe-Insolvency     4,974   4,719   2,744   2,025     2,545
  Total Cash Collections   $ 348,751 $ 371,700 $ 387,202 $ 384,333   $ 369,371
                 
  Cash Collection Source -               
  Constant Currency Adjusted     2016           2015
  ($ in thousands)   Q4         Q4
  Americas-Core   $ 190,534         $ 195,834
  Americas-Insolvency     52,997           73,843
  Europe-Core     106,573           97,149
  Europe-Insolvency     5,714           2,545
  Total Cash Collections   $ 355,818         $ 369,371
                 
                 
  • Principal amortization of finance receivables in the fourth quarter was $216.8 million or 62.2% of cash collections, compared with $160.9 million or 43.6% in the prior year period.   Principal amortization included a net allowance charge of $62.5 million recorded against certain pools of finance receivables in the quarter, compared with a net allowance charge of $11.5 million recorded in the prior year period.  During the quarter, the Company made a change to its accounting estimates which generated an outsized allowance charge.  Principal amortization of finance receivables for the full year of 2016 was $746.9 million or 50.1% of cash collections, including a net allowance charge of $98.5 million compared with $674.4 million or 43.8%, including a net allowance charge of $29.4 million in 2015.
  • Revenues in the fourth quarter also included income from PRA Group's fee-based businesses of $21.2 million, compared with $19.6 million in the prior year period, and other income of $2.1 million, in-line with the prior year period.  For the full year of 2016, fee income was $77.4 million compared with $64.4 million in 2015 and other income was $8.1 million compared with $12.5 million in 2015.

EXPENSES AND OPERATING INCOME

  • Operating expenses were $148.2 million in the fourth quarter, compared with $159.0 million in the prior year period.  Operating expenses include an accrual to reflect the fact that the company has reached an agreement in principle with the opposing party in the Mejia case.  The fourth quarter of 2015 included an accrual for the settlement of the TCPA lawsuit.  For the full year of 2016, operating expenses were $612.4 million, compared with $631.7 million in the prior year.  The full year of 2015 included the settlement with the CFPB and an accrual for the settlement of the TCPA lawsuit. 
  • Operating income in the fourth quarter was $7.1 million, compared with $71.2 million in the prior year period.  For the full year of 2016, operating income was $218.2 million versus $310.3 million in 2015.  The operating margin was 26.3% for the full year of 2016.     
  • The provision for income taxes was $43.2 million for the full year of 2016, or 32.2% of income before taxes, compared to $89.4 million, or 34.7% of income before taxes, in 2015. 

NET INCOME AND EPS

  • Net loss was $17.6 million in the fourth quarter, compared with net income of $41.0 million in the prior year period.  For the full year of 2016, net income was $85.1 million, compared with $167.9 million in 2015.  The net income margin for the full year of 2016 was 10.9%. 
  • Loss per share in the fourth quarter was $0.38, compared with earnings per diluted share of $0.86 in the prior year period.  For the full year of 2016, earnings per diluted share were $1.83 versus $3.47 in the prior year period.        

PORTFOLIO ACQUISITIONS

  • PRA Group invested $199.8 million in new finance receivables in the fourth quarter of 2016.  For the full year of 2016, PRA Group invested $947.3 million in new finance receivables. 
                 
  Portfolio Purchase Source     2016     2015
  ($ in thousands)   Q4 Q3 Q2 Q1   Q4
  Americas-Core   $ 91,800 $ 95,452 $ 130,529 $ 136,057   $ 120,554
  Americas-Insolvency     20,929   16,760   33,723   22,952     20,589
  Europe-Core     80,129   34,240   68,835   171,038     79,735
  Europe-Insolvency     6,943   14,803   16,410   6,731     4,976
  Total Portfolio Purchasing   $ 199,801 $ 161,255 $ 249,497 $ 336,778   $ 225,854
                 

BALANCE SHEET

  • Cash and cash equivalents were $94.3 million as of December 31, 2016, compared with $71.4 million as of December 31, 2015. 
  • Net deferred tax liabilities were $258.3 million as of December 31, 2016, compared with $261.5 million as of December 31, 2015. 
  • Borrowings totaled $1.78 billion as of December 31, 2016, compared with $1.72 billion as of December 31, 2015.
  • Equity attributable to PRA Group, Inc. was $864.3 million as of December 31, 2016, compared with $800.5 million as of December 31, 2015.   

Conference Call Information 
PRA Group will hold a conference call today at 5:00 p.m. ET to discuss the company's fourth quarter and full year 2016 results.  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 58396415.  To listen to a replay of the call until March 7, 2017, call 855-859-2056 in the U.S. or 404-537-3406 outside the U.S. and use conference ID 58396415.                         

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. With over 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, beliefs, expectations, 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 Group 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   Twelve Months Ended  
              December 31,   December 31,  
                2016       2015       2016       2015    
                             
Revenues:                
  Income recognized on finance receivables, net $ 131,965       208,471     $ 745,119     $ 865,122    
  Fee income   21,171       19,649       77,381       64,383    
  Other revenue   2,122       2,065       8,080       12,513    
        Total revenues   155,258       230,185       830,580       942,018    
                             
Operating expenses:                
  Compensation and employee services   61,390       68,670       258,846       268,345    
  Legal collection expenses   34,726       28,647       132,202       129,456    
  Agency fees   10,695       8,182       44,922       32,188    
  Outside fees and services   16,683       27,309       63,098       65,155    
  Communication   7,652       6,601       33,771       33,113    
  Rent and occupancy   4,001       3,991       15,710       14,714    
  Depreciation and amortization   6,020       4,935       24,359       19,874    
  Other operating expenses   7,023       10,678       39,466       68,829    
        Total operating expenses   148,190       159,013       612,374       631,674    
        Income from operations   7,068       71,172       218,206       310,344    
                             
Other income and (expense):                
  Interest expense   (21,026 )     (15,321 )     (80,864 )     (60,336 )  
  Impairment of investments   (5,823 )     -       (5,823 )     -    
  Foreign exchange (loss)/gain   (2,619 )     301       2,564       7,514    
        (Loss)/Income before income taxes   (22,400 )     56,152       134,083       257,522    
                             
        Provision for income taxes   (7,053 )     15,164       43,191       89,391    
        Net (loss)/income $ (15,347 )   $ 40,988     $   90,892     $ 168,131    
          Adjustment for net income attributable to noncontrolling interests   2,301       18       5,795       205    
        Net (loss)/income attributable to PRA Group, Inc. $ (17,648 )   $ 40,970     $   85,097     $ 167,926    
                             
Net (loss)/income per common share attributable to PRA Group, Inc.:                
  Basic     $   (0.38 )   $   0.87     $   1.84     $   3.49    
  Diluted   $   (0.38 )   $   0.86     $   1.83     $   3.47    
                             
Weighted average number of shares outstanding:                
  Basic       46,346       47,197       46,316       48,128    
  Diluted     46,346       47,539       46,388       48,405    
                             

 

PRA Group, Inc.  
Unaudited Consolidated Balance Sheets  
(in thousands)  
                     
              December 31,   December 31,  
ASSETS   2016       2015    
                     
Cash and cash equivalents $   94,287     $   71,372    
Investments   68,543       73,799    
Finance receivables, net   2,307,969       2,202,113    
Other receivables, net   11,650       30,771    
Income taxes receivable   9,427       1,717    
Net deferred tax asset   28,482       13,068    
Property and equipment, net   38,744       45,394    
Goodwill       499,911       495,156    
Intangible assets, net   27,935       23,788    
Other assets   33,808       33,389    
Assets held for sale   43,243       -    
                     
          Total assets $   3,163,999     $   2,990,567    
                     
LIABILITIES AND EQUITY        
                     
Liabilities:          
  Accounts payable $   2,459     $   4,190    
  Accrued expenses   82,699       95,380    
  Income taxes payable   19,631       21,236    
  Net deferred tax liability   258,344       261,498    
  Interest-bearing deposits   76,113       46,991    
  Borrowings   1,784,101       1,717,129    
  Other liabilities   10,821       4,396    
  Liabilities held for sale   4,220       -    
                     
          Total liabilities   2,238,388       2,150,820    
                     
Redeemable noncontrolling interest   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, 46,356 at December 31, 2016; 100,000         
      authorized shares, 46,173 issued and outstanding shares at    464       462    
      December 31, 2015        
    Additional paid-in capital   66,414       64,622    
    Retained earnings   1,049,367       964,270    
    Accumulated other comprehensive loss   (251,944 )     (228,861 )  
      Total stockholders' equity - PRA Group, Inc.   864,301       800,493    
        Noncontrolling interest   52,862       39,254    
        Total equity   917,163       839,747    
          Total liabilities and equity $   3,163,999     $   2,990,567    
                           

 

PRA Group, Inc.
Financial Highlights
  As of and for the   As of and for the
  Three Months Ended December 31,   Twelve Months Ended December 31,
    2016     2015   Change     2016     2015   Change
EARNINGS (in thousands)              
Income recognized on finance receivables, net $ 131,965   $ 208,471   -37 %   $ 745,119   $ 865,122   -14 %
Fee income   21,171     19,649   8 %     77,381     64,383   20 %
Other revenue   2,122     2,065   3 %     8,080     12,513   -35 %
Total revenues   155,258     230,185   -33 %     830,580     942,018   -12 %
Operating expenses   148,190     159,013   -7 %     612,374     631,674   -3 %
Income from operations   7,068     71,172   -90 %     218,206     310,344   -30 %
Net interest expense   21,026     15,321   37 %     80,864     60,336   34 %
Net (loss)/income   (15,347 )   40,988   -137 %     90,892     168,131   -46 %
Net (loss)/income attributable to PRA Group, Inc.   (17,648 )   40,970   -143 %     85,097     167,926   -49 %
               
PERIOD-END BALANCES (in thousands)              
Cash and cash equivalents $ 94,287   $ 71,372   32 %   $ 94,287   $ 71,372   32 %
Finance receivables, net   2,307,969     2,202,113   5 %     2,307,969     2,202,113   5 %
Goodwill and intangible assets, net   527,846     518,944   2 %     527,846     518,944   2 %
Total assets   3,163,999     2,990,567   6 %     3,163,999     2,990,567   6 %
Borrowings   1,784,101     1,717,129   4 %     1,784,101     1,717,129   4 %
Total liabilities   2,238,388     2,150,820   4 %     2,238,388     2,150,820   4 %
Total equity - PRA Group, Inc.   864,301     800,493   8 %     864,301     800,493   8 %
               
FINANCE RECEIVABLE INCOME (dollars in thousands)              
Cash collections $ 348,751   $ 369,371   -6 %   $ 1,491,986   $ 1,539,495   -3 %
Cash collections on fully amortized pools   9,041     8,280   9 %     34,185     51,900   -34 %
Principal amortization without allowance charges   154,271     149,381   3 %     648,388     645,004   1 %
Allowance charges   62,515     11,519   443 %     98,479     29,369   235 %
Principal amortization with allowance charges   216,786     160,900   35 %     746,867     674,373   11 %
Principal amortization w/ allowance charges as % of cash collections:              
Including fully amortized pools   62.2 %   43.6 % 43 %     50.1 %   43.8 % 14 %
Excluding fully amortized pools   63.8 %   44.6 % 43 %     51.2 %   45.3 % 13 %
Allowance charges to period-end net finance receivables   2.7 %   0.5 % 418 %     4.3 %   1.3 % 220 %
               
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)              
Purchase price - Americas core $ 91,800   $ 120,554   -24 %   $ 453,838   $ 448,281   1 %
Purchase price - Americas insolvency   20,929     20,589   2 %     94,364     65,437   44 %
Purchase price - Europe core   80,129     79,735   0 %     354,242     430,198   -18 %
Purchase price - Europe insolvency   6,943     4,976   40 %     44,887     19,895   126 %
Purchase price - total   199,801     225,854   -12 %     947,331     963,811   -2 %
Number of portfolios - total   126     139   -9 %     523     542   -4 %
               
ESTIMATED REMAINING COLLECTIONS (in thousands)              
Estimated remaining collections - Americas core $ 2,571,887   $ 2,558,529   1 %   $ 2,571,887   $ 2,558,529   1 %
Estimated remaining collections - Americas insolvency   331,371     448,652   -26 %     331,371     448,652   -26 %
Estimated remaining collections - Europe core   2,072,936     1,964,763   6 %     2,072,936     1,964,763   6 %
Estimated remaining collections - Europe insolvency   71,810     34,878   106 %     71,810     34,878   106 %
Estimated remaining collections - total   5,048,004     5,006,822   1 %     5,048,004     5,006,822   1 %
Adjusted estimated remaining collections (7)   5,109,404     5,114,923   0 %     5,109,404     5,114,923   0 %
               
SHARE DATA (share amounts in thousands)              
Net (loss)/income per common share - diluted $ (0.38 ) $ 0.86   -144 %   $ 1.83   $ 3.47   -47 %
Weighted average number of shares outstanding - diluted   46,346     47,539   -3 %     46,388     48,405   -4 %
Shares repurchased   -     2,072   -100 %     -     3,683   -100 %
Average price paid per share repurchased (including acquisitions costs) $ -     38.60   -100 %     -     44.94   -100 %
Closing market price $ 39.10   $ 34.69   13 %   $ 39.10   $ 34.69   13 %
               
RATIOS AND OTHER DATA (dollars in thousands)              
Return on average equity (1)   -7.9 %   19.8 % -140 %     9.7 %   19.9 % -51 %
Return on revenue (2)   -9.9 %   17.8 % -156 %     10.9 %   17.8 % -39 %
Return on average assets (3)   -2.2 %   5.5 % -140 %     2.6 %   5.9 % -56 %
Operating margin (4)   4.6 %   30.9 % -85 %     26.3 %   32.9 % -20 %
Operating expense to cash receipts (5)   40.1 %   40.9 % -2 %     39.0 %   39.4 % -1 %
Debt to total equity - PRA Group, Inc. (6)   206.4 %   214.5 % -4 %     206.4 %   214.5 % -4 %
Number of full-time equivalent collectors   1,906     2,029   -6 %     1,906     2,029   -6 %
Number of full-time equivalent employees   4,019     3,799   6 %     4,019     3,799   6 %
Cash receipts (5) $   369,922   $   389,020   -5 %   $   1,569,367   $   1,603,878   -2 %
Lines of credit - unused portion at period end     641,132       446,769   44 %       641,132       446,769   44 %
               
(1)  Calculated as annualized or annual net income divided by average equity for the period
(2)  Calculated as net income divided by total revenues
(3)  Calculated as annualized or annual 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
  December 31 September 30 June 30 March 31 December 31
    2016     2016     2016     2016     2015  
EARNINGS (in thousands)          
Income recognized on finance receivables, net $   131,965   $   202,639   $   204,008   $   206,507   $   208,471  
Fee income     21,171       17,597       22,347       16,266       19,649  
Other revenue     2,122       1,748       2,101       2,109       2,065  
Total revenues     155,258       221,984       228,456       224,882       230,185  
Operating expenses     148,190       154,496       155,700       153,988       159,013  
Income from operations     7,068       67,488       72,756       70,894       71,172  
Net interest expense     21,026       19,310       20,569       19,959       15,321  
Net (loss)/income     (15,347 )     36,518       36,868       32,853       40,988  
Net (loss)/income attributable to PRA Group, Inc.     (17,648 )     34,306       36,456       31,983       40,970  
           
PERIOD-END BALANCES (in thousands)          
Cash and cash equivalents $   94,287   $   91,791   $   117,071   $   79,442   $   71,372  
Finance receivables, net     2,307,969       2,392,408       2,399,949       2,377,077       2,202,113  
Goodwill and intangible assets, net     527,846       592,044       576,992       557,024       518,944  
Total assets     3,163,999       3,279,347       3,305,596       3,268,833       2,990,567  
Borrowings     1,784,101       1,816,600       1,912,283       1,896,424       1,717,129  
Total liabilities     2,238,388       2,291,369       2,370,415       2,360,091       2,150,820  
Total equity - PRA Group, Inc.     864,301       937,702       886,077       864,868       800,493  
           
FINANCE RECEIVABLE COLLECTIONS (dollars in thousands)          
Cash collections $   348,751   $   371,700   $   387,202   $   384,333   $   369,371  
Cash collections on fully amortized pools     9,041       7,744       8,124       9,276       8,280  
Principal amortization without allowance charges     154,271       155,915       170,274       167,928       149,381  
Allowance charges     62,515       13,146       12,920       9,898       11,519  
Principal amortization with allowance charges     216,786       169,061       183,194       177,826       160,900  
Principal amortization w/ allowance charges as % of cash collections:          
Including fully amortized pools   62.2 %   45.5 %   47.3 %   46.3 %   43.6 %
Excluding fully amortized pools   63.8 %   46.5 %   48.3 %   47.4 %   44.6 %
Allowance charges to period-end net finance receivables   2.7 %   0.5 %   0.5 %   0.4 %   0.5 %
           
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)          
Purchase price - North America core $   91,800   $   95,452   $   130,529   $   136,057   $   120,554  
Purchase price - North America insolvency     20,929       16,760       33,723       22,952       20,589  
Purchase price - Europe core     80,129       34,240       68,835       171,038       79,735  
Purchase price - Europe insolvency     6,943       14,803       16,410       6,731       4,976  
Purchase price - total     199,801       161,255       249,497       336,778       225,854  
Number of portfolios - total   126     122     136     139     139  
           
ESTIMATED REMAINING COLLECTIONS (in thousands)          
Estimated remaining collections - Americas core $   2,571,887   $   2,672,427   $   2,705,781   $   2,643,410   $   2,558,529  
Estimated remaining collections - Americas insolvency     331,371       356,363       396,667       421,866       448,652  
Estimated remaining collections - Europe core     2,072,936       2,148,230       2,171,542       2,152,403       1,964,763  
Estimated remaining collections - Europe insolvency     71,810       72,919       59,107       40,938       34,878  
Estimated remaining collections - total     5,048,004       5,249,939       5,333,097       5,258,617       5,006,822  
Adjusted estimated remaining collections (7)     5,109,404       5,345,657       5,430,192       5,366,417       5,114,923  
           
SHARE DATA (share amounts in thousands)          
Net (loss)/income per common share - diluted $   (0.38 ) $   0.74   $   0.79   $   0.69   $   0.86  
Weighted average number of shares outstanding - diluted     46,346       46,434       46,402       46,372       47,539  
Shares repurchased     -       -       -       -       2,072  
Average price paid per share repurchased (including acquisitions costs) $   -    $   -    $   -    $   -    $   38.60  
Closing market price $   39.10   $   34.54   $   24.14   $   29.39   $   34.69  
           
RATIOS AND OTHER DATA (dollars in thousands)          
Return on average equity (1)   -7.9 %   15.1 %   16.4 %   15.4 %   19.8 %
Return on revenue (2)   -9.9 %   16.5 %   16.1 %   14.6 %   17.8 %
Return on average assets (3)   -2.2 %   4.2 %   4.4 %   4.1 %   5.5 %
Operating margin (4)   4.6 %   30.4 %   31.8 %   31.5 %   30.9 %
Operating expense to cash receipts (5)   40.1 %   39.7 %   38.0 %   38.4 %   40.9 %
Debt to total equity - PRA Group, Inc. (6)   206.4 %   193.7 %   215.8 %   219.3 %   214.5 %
Number of full-time equivalent collectors   1,906     1,859     1,804     1,881     2,029  
Number of full-time equivalent employees   4,019     3,859     3,816     3,748     3,799  
Cash receipts (5) $   369,922   $   389,297   $   409,549   $   400,599   $   389,020  
Lines of credit - unused portion at period end     641,132       630,775       430,651       435,709       446,769  
           
(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 financial measures and ratios, which exclude penalty and redress associated with the Consumer Financial Protection Bureau consent order, expenses associated with acquisitions, legal costs not associated with normal operations, one-time tax items and constant currency adjustments, improve comparability between current year results and prior periods and better reflect the Company's operational performance.  In all periods presented, the Company adjusted the income tax provision by excluding the tax impact of the non-GAAP adjustments discussed above in non-GAAP financial measures. Management uses non-GAAP financial measures internally to evaluate the Company's performance and to set performance goals.  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 December 31, 2016
   Net (Loss)     Average Equity     Return on Average 
Equity, Annualized
 
 As Reported  $   (17,648 )   $   894,821   -7.9 %
 Adjustments      2,210         738   1.0 %
 As Adjusted      (15,438 )       895,559   -6.9 %
           
Twelve Months Ended December 31, 2016
   Net Income     Average Equity     Return on Average
Equity
 As Reported  $   85,097     $   880,394   9.7 %
 Adjustments      8,900         745   1.0 %
 As Adjusted      93,997         881,139   10.7 %
           
Three Months Ended December 31, 2015
   Net Income     Average Equity     Return on Average 
Equity, Annualized
 
 As Reported  $   40,970     $   826,853   19.8 %
 Adjustments      8,455         2,818   4.0 %
 As Adjusted      49,425         829,671   23.8 %
           
Twelve Months Ended December 31, 2015
   Net Income     Average Equity     Return on Average 
Equity
 As Reported  $   167,926     $   843,164   19.9 %
 Adjustments      34,930         2,926   4.1 %
 As Adjusted      202,856         846,090   24.0 %
           

 

  Three Months Ended December 31, 2016  
    Total 
Revenues
  Total 
Operating 
Expenses
  Income 
from 
Operations
  Provision for 
Income Taxes
  Net Loss 
attributable to 
PRA Group, Inc.
  Diluted 
EPS
 
  As Reported $ 155,258   $ 148,190     $ 7,068   $ (7,053 )   $ (17,648 )   $ (0.38 )  
  Adjustments:                        
  Acquisition-related expenses   -     (458 )     458     168       290       0.01    
  One-time tax items   -     -       -     (461 )     461       0.01    
  Legal costs not associated with normal operations   -     (3,741 )     3,741     1,459       2,282       0.05    
  Constant currency adjustments   1,998     1,941       57     706       (823 )     (0.02 )  
  Subtotal of adjustments   1,998     (2,258 )     4,256     1,872       2,210       0.05    
  As Adjusted   157,256     145,932       11,324     (5,181 )     (15,438 )     (0.33 )  
                       
  Twelve Months Ended December 31, 2016  
    Total 
Revenues
  Total 
Operating 
Expenses
  Income 
from 
Operations
  Provision for 
Income Taxes
  Net Income 
attributable to 
PRA Group, Inc.
  Diluted 
EPS
 
  As Reported $ 830,580   $ 612,374     $ 218,206   $ 43,191     $ 85,097     $ 1.83    
  Adjustments:                        
  CFPB expenses including penalty and redress   -     (93 )     93     35       58       0.00    
  Acquisition-related expenses   -     (2,265 )     2,265     850       1,415       0.03    
  One-time tax items   -     -       -     (1,844 )     1,844       0.04    
  Legal costs not associated with normal operations   -     (7,310 )     7,310     2,742       4,568       0.10    
  Constant currency adjustments   9,485     6,698       2,787     (272 )     1,015       0.03    
  Subtotal of adjustments   9,485     (2,970 )     12,455     1,511       8,900       0.20    
  As Adjusted   840,065     609,404       230,661     44,702       93,997       2.03    
                         
  Three Months Ended December 31, 2015  
    Total 
Revenues
  Total 
Operating 
Expenses
  Income 
from 
Operations
  Provision for
Income Taxes
  Net Income 
attributable to 
PRA Group, Inc.
  Diluted 
EPS
 
  As Reported $ 230,185   $ 159,013     $ 71,172   $ 15,164     $ 40,970     $ 0.86    
  Adjustments:                        
  CFPB expenses including penalty and redress   -     (111 )     111     43       68       0.00    
  Acquisition-related expenses   -     (1,639 )     1,639     634       1,005       0.02    
  Legal costs not associated with normal operations   -     (12,045 )     12,045     4,663       7,382       0.16    
  Subtotal of adjustments   -     (13,795 )     13,795     5,340       8,455       0.18    
  As Adjusted   230,185     145,218       84,967     20,504       49,425       1.04    
 
 
  Twelve Months Ended December 31, 2015  
    Total 
Revenues
  Total 
Operating 
Expenses
  Income 
from 
Operations
  Provision for 
Income Taxes
  Net Income 
attributable to 
PRA Group, Inc.
  Diluted 
EPS
 
  As Reported $ 942,018   $ 631,674     $ 310,344   $ 89,391     $ 167,926     $ 3.47    
  Adjustments:                        
  CFPB expenses including penalty and redress   -     (28,917 )     28,917     8,158       20,759       0.43    
  Acquisition-related expenses   -     (5,627 )     5,627     1,668       3,959       0.08    
  One-time tax items   -     -       -     (1,846 )     1,846       0.04    
  Legal costs not associated with normal operations   -     (13,714 )     13,714     5,348       8,366       0.17    
  Subtotal of adjustments   -     (48,258 )     48,258     13,328       34,930       0.72    
  As Adjusted   942,018     583,416       358,602     102,719       202,856       4.19    
 

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