NORFOLK, Va., Aug. 08, 2017 -- PRA Group (Nasdaq:PRAA), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the second quarter of 2017. The company reported net income of $11.7 million in the second quarter, compared with $36.5 million in the prior year period. Diluted earnings per share were $0.25 versus $0.79 in the second quarter of 2016.
Second Quarter Business Highlights
- Delivered record quarterly investment in purchased portfolios in Americas Core and Americas Insolvency, outside of a business acquisition.
- Hired almost 900 net new U.S. collectors since June of 2016, including nearly 250 in the second quarter of 2017 alone.
- Plan to open new domestic call centers in order to provide continued, expanded service to customers and sellers.
- Grew cash collections in all segments on a currency adjusted basis compared with second quarter of 2016 except Americas Insolvency, where cash collections grew sequentially for the first time since the second quarter of 2014.
- Expanded North American credit facility to $1.2 billion and issued $345 million in convertible senior notes. Capital available for portfolio purchases of $1.1 billion globally.
Second Quarter Financial Highlights
- Estimated remaining collections of $5.3 billion consistent with the prior year quarter and an increase of $181 million since the first quarter of 2017.
- Cash collections of $374.7 million versus $387.2 million in the prior year quarter.
- Total revenues of $200.3 million versus $228.5 million in the prior year quarter.
- Income from operations of $48.3 million versus $72.8 million in the prior year quarter.
- Net income of $11.7 million versus $36.5 million in the prior year quarter.
- Portfolio acquisitions of $295.6 million versus $249.5 million in the prior year quarter.
"We continue to be excited about volumes and the significant level of investment in both Core and Insolvency in the United States. We are committed to working with customers to resolve their debt and helping sellers optimize the value of their charged-off inventories. To accommodate larger purchasing volumes, we are preparing to open new call centers in the U.S.," said Kevin Stevenson, president and chief executive officer. "During the quarter, we saw growth in currency adjusted cash collection in all segments except for Americas Insolvency, which grew sequentially for the first time in three years. We are very encouraged by both the industry and internal trends."
CASH COLLECTIONS AND REVENUES
- The following table presents cash collections by quarter and by source on an as reported and currency adjusted basis:
|Cash Collection Source||2017||2016|
|($ in thousands)||Q2||Q1||Q4||Q3||Q2|
|Total Cash Collections||$||374,675||$||379,830||$||348,751||$||371,700||$||387,202|
|Cash Collection Source -|
|Constant Currency Adjusted||2017||2016|
|($ in thousands)||Q2||Q2|
|Total Cash Collections||$||374,675||$||382,136|
- Currency adjusted cash collections in the quarter increased in all categories except for Americas Insolvency; however, cash collections in Americas Insolvency increased sequentially for the first time since the second quarter of 2014.
- Net finance receivable revenue was lower than the prior year quarter due in large part to the reduction in finance receivable balances from the elevated allowance charges recorded in 2016 and normal attrition. This was partially offset by significant portfolio purchases in the first half of 2017.
- The change in the fee income is primarily the result of the sale of Government Services in the first quarter of 2017 and a decrease in fee income generated by the Claims Compensation Bureau business which experienced an outsized second quarter in 2016.
- The Company recorded a gain of $1.3 million from the sale of PRA Location Services during the quarter.
- Operating expenses decreased from the previous year largely due to decreased legal collection expenses and agency fees. The decline in legal collection expense resulted primarily from an increased number of lower balance accounts which are less likely to be pursued legally and improvements to the legal selection methodology in the U.S. The decline in agency fees is primarily the result of the Company establishing a legal collection process in Italy and shifting accounts from regular collections into legal collections.
- The Company incurred nonrecurring pre-tax charges of $2.3 million in legal fees not associated with normal operations, $1.0 million in expenses related to PRA Location Services and $0.7 million related to the amended and restated North American credit facility and the convertible senior notes issuance.
- The Company also recorded $1.8 million in pre-tax, noncash interest expense related to its convertible notes whose effective interest rates are 4.92% and 6.20%.
- Year-to-date tax expense was 39.9% of income before income taxes compared with 32.2% for full-year 2016, due primarily to changes in the mix of earnings and state tax rates.
- PRA Group invested $295.6 million in new finance receivables in the second quarter.
|Portfolio Purchase Source||2017||2016|
|($ in thousands)||Q2||Q1||Q4||Q3||Q2|
|Total Portfolio Purchasing||$||295,647||$||227,814||$||199,801||$||161,255||$||249,497|
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 and view the accompanying slides, 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 63045731. To listen to a replay of the call until August 15, 2017, call 855-859-2056 in the U.S. or 404-537-3406 outside the U.S. and use conference ID 63045731.
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 4,500 employees worldwide, PRA Group companies collaborate with customers to help them resolve their debt. For more information, please visit www.pragroup.com.
About Forward Looking Statements
Statements made herein 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||Six Months Ended|
|June 30,||June 30,|
|Income recognized on finance receivables, net||$||190,843||$||204,008||$||385,378||$||410,515|
|Compensation and employee services||66,771||64,793||135,239||131,558|
|Legal collection expenses||31,202||33,897||62,930||64,029|
|Outside fees and services||18,061||15,876||31,346||31,684|
|Rent and occupancy||3,387||4,038||7,170||7,834|
|Depreciation and amortization||5,041||6,085||10,256||12,155|
|Other operating expenses||11,046||11,279||21,931||21,930|
|Total operating expenses||152,016||155,700||305,317||309,688|
|Income from operations||48,316||72,756||101,573||143,650|
|Other income and (expense):|
|Gain on sale of subsidiaries||1,322||-||48,167||-|
|Foreign exchange (loss)/gain||(2,516||)||2,029||(337||)||179|
|Income before income taxes||24,616||54,216||105,640||103,301|
|Provision for income taxes||10,766||17,348||42,175||33,580|
|Adjustment for net income attributable to noncontrolling interests||2,177||412||3,625||1,282|
|Net income attributable to PRA Group, Inc.||$||11,673||$||36,456||$||59,840||$||68,439|
|Net income per common share attributable to PRA Group, Inc.:|
|Weighted average number of shares outstanding:|
|PRA Group, Inc.|
|Consolidated Balance Sheets|
|June 30,||December 31,|
|Cash and cash equivalents||$||92,756||$||94,287|
|Finance receivables, net||2,520,883||2,307,969|
|Other receivables, net||11,306||11,650|
|Income taxes receivable||2,865||9,427|
|Net deferred tax asset||37,299||28,482|
|Property and equipment, net||36,532||38,744|
|Intangible assets, net||25,878||27,935|
|Assets held for sale||-||43,243|
|LIABILITIES AND EQUITY|
|Income taxes payable||19,793||19,631|
|Net deferred tax liability||250,821||258,344|
|Liabilities held for sale||-||4,220|
|Redeemable noncontrolling interest||8,860||8,448|
|Preferred stock, par value $0.01, authorized shares, 2,000,|
|issued and outstanding shares, 0||-||-|
|Common stock, par value $0.01, authorized shares, 100,000, issued|
|and outstanding shares, 45,166 at June 30, 2017; 100,000 authorized|
|shares, 46,356 issued and outstanding shares at December 31, 2016||452||464|
|Additional paid-in capital||49,928||66,414|
|Accumulated other comprehensive loss||(204,213||)||(251,944||)|
|Total stockholders' equity - PRA Group, Inc.||955,374||864,301|
|Total liabilities and equity||$||3,360,611||$||3,163,999|
Investor Contact: Darby Schoenfeld Vice President, Investor Relations (757) 431-7913 Darby.Schoenfeld@PRAGroup.com News Media Contact: Nancy Porter Vice President, Corporate Marketing (757) 431-7950 Nancy.Porter@PRAGroup.com