PRA Group Reports First Quarter 2021 Results

NORFOLK, Va., May 6, 2021 /PRNewswire/ -- PRA Group (Nasdaq: PRAA), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the first quarter of 2021.  The Company reported net income attributable to PRA Group Inc. of $58.4 million in the first quarter, compared with $19.1 million in the prior year period. Diluted earnings per share were $1.27 versus $0.42 in the first quarter of 2020.

First Quarter Highlights (compared to the first quarter of 2020, unless otherwise indicated)

  • Record total cash collections which increased 12% to $555.9 million.
  • Record total revenues which increased 15% to $289.5 million.
  • Income from operations increased 83% to $110.8 million.
  • Cash efficiency ratio1 of 68.0% during the quarter compared to 61.5% in the first quarter of 2020.
  • Net income attributable to PRA Group, Inc. increased 205% to $58.4 million.
  • Diluted earnings per share increased 202% to $1.27.
  • Debt to Adjusted EBITDA2 for the last 12 months decreased to 1.77x from 1.99x at December 31, 2020.
  • Total portfolio purchases of $159.0 million.
  • Estimated remaining collections (ERC) of $6.1 billion.
  • $1.2 billion available for portfolio purchases.

"PRA started 2021 with another record setting quarter.  We collected record levels of cash globally and had record revenues.  In Europe, solid portfolio purchases in 2020 drove record collections.  In the U.S., we continued to see strong collections particularly in our call centers and digital platform.  These results combined with increases in productivity helped to produce a near record cash efficiency ratio for the quarter," said Kevin Stevenson, president and chief executive officer.  "Portfolio purchases during the quarter increased sequentially in the U.S.  The market remains stable with little change in seller behavior; however, lower charge off rates are pushing forward flow volumes to the lower end of the contracted range.  In Europe, we were pleased with our investment volume in what is normally a seasonally slower quarter.  We have solid volumes of forward flows secured, believe the pipeline in Europe is larger than what 2020 offered, and were awarded our first portfolio, a forward flow, in Australia."  

1.  Calculated by dividing cash receipts less operating expense by cash receipts.

2.  A reconciliation of this non-GAAP financial measure to the most comparable GAAP measure can be
     found at the end of this press release.


Cash Collections and Revenues

  • The following table presents cash collections by quarter and by source on an as reported and constant currency-adjusted basis:











Cash Collection Source


2021


2020

($ in thousands)


Q1


Q4


Q3


Q2


Q1

Americas and Australia Core


$

347,638



$

286,524



$

336,322



$

343,269



$

305,780


Americas Insolvency


35,253



36,048



37,344



38,685



43,210


Europe Core


149,486



141,471



131,702



115,145



131,340


Europe Insolvency


23,510



17,830



13,971



12,841



14,243


Total Cash Collections


$

555,887



$

481,873



$

519,339



$

509,940



$

494,573



































Cash Collection Source -











Constant Currency Adjusted


2021








2020

($ in thousands)


Q1








Q1

Americas and Australia Core


$

347,638









$

301,696


Americas Insolvency


35,253









43,239


Europe Core


149,486









142,004


Europe Insolvency


23,510









15,366


Total Cash Collections


$

555,887









$

502,305


  • Cash collections in the quarter increased $61.3 million compared to the first quarter of 2020.  The increase was primarily due to a 32% increase in U.S. call center and other cash collections and a 19% increase in Europe cash collections.  This increase was partially offset by a decrease in U.S. legal and Americas Insolvency cash collections.  While cash collections decreased in Other Americas Core, this decrease was primarily driven by foreign exchange rates. 
  • Portfolio income was $231.7 million compared to $262.0 million in  the first quarter of 2020. This decrease was primarily driven by the Company's assumption that the significant cash overperformance in 2020 was largely acceleration versus an increase in total estimated collections, combined with recent purchases not offsetting runoff, primarily in Americas Insolvency and Other Americas. 
  • Changes in expected recoveries were a net positive of $50.1 million.  This amount reflects $103.0 million in recoveries received in excess of forecast from overperformance during the quarter, partially offset by a negative $52.9 million adjustment for changes in expected future recoveries.  The Company has assumed that the majority of the current quarter overperformance is acceleration of future collections and made cash forecast adjustments deemed appropriate given the current environment. 

Expenses

  • Operating expenses in the quarter decreased $12.5 million compared to the first quarter of 2020. The decrease was primarily driven by a reduction in legal collection costs mainly as a result of a shift in collections from the legal channel to the call centers and digital platforms. This decrease was partially offset by an increase in agency fees primarily outside of the U.S.
  • Interest expense, net decreased $5.7 million compared to the first quarter of 2020 primarily due to the Company's early adoption of the new accounting for convertible debt as well as lower outstanding balances.
  • The effective tax rate for the first quarter of 2021 was 21.9%.

Portfolio Acquisitions

  • The Company purchased $159.0 million in finance receivables in the first quarter of 2021.
  • At the end of the first quarter, the Company had in place forward flow commitments of up to $640.7 million with $452.7 million in the Americas and Australia and $188.0 million in Europe.











Portfolio Purchase Source


2021


2020

($ in thousands)


Q1


Q4


Q3


Q2


Q1

Americas and Australia Core


$

88,912



$

67,460



$

84,139



$

110,474



$

172,697


Americas Insolvency


9,486



12,504



14,328



14,527



20,772


Europe Core


44,095



137,647



74,930



34,247



60,990


Europe Insolvency


16,468



72,171



4,203



5,251



18,778


Total Portfolio Acquisitions


$

158,961



$

289,782



$

177,600



$

164,499



$

273,237













Conference Call Information
PRA Group, Inc. 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 https://ir.pragroup.com/events-and-presentations. To listen by phone, call 844-835-9982 in the U.S. or 412-317-5267 outside the U.S. and ask for the PRA Group conference call.  To listen to a replay of the call, either visit the same website until May 6, 2022, or  call 877-344-7529 in the U.S. or 412-317-0088 outside the U.S. and use access code 10155063 until May 13, 2021.                                                 

About PRA Group
As a global leader in acquiring and collecting nonperforming loans, PRA Group, Inc. returns capital to banks and other creditors to help expand financial services for consumers in the Americas, Europe and Australia. With thousands of employees worldwide, PRA Group, Inc. 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 that are not historical in nature, including PRA Group, Inc.'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, Inc.'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, Inc.  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, Inc.'s filings with the Securities and Exchange Commission, including PRA Group, Inc.'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, Inc.'s website and contain a detailed discussion of PRA Group, Inc.'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 more 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, Inc. assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA Group, Inc.'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

(Amounts in thousands, except per share amounts)



Three Months Ended March 31,


2021


2020

Revenues:




Portfolio income

$

231,672



$

262,022


Changes in expected recoveries

50,136



(12,816)


Fee income

2,181



2,209


Other revenue

5,480



369


Total revenues

289,469



251,784


Operating expenses:




Compensation and employee services

73,984



75,171


Legal collection fees

12,926



14,572


Legal collection costs

21,312



34,447


Agency fees

15,591



13,376


Outside fees and services

20,760



19,394


Communication

12,663



13,511


Rent and occupancy

4,480



4,484


Depreciation and amortization

3,981



4,084


Other operating expenses

13,018



12,205


Total operating expenses

178,715



191,244


   Income from operations

110,754



60,540


Other income and (expense):




Interest expense, net

(31,552)



(37,211)


Foreign exchange (loss)/gain

(26)



2,283


Other

26



(76)


Income before income taxes

79,202



25,536


Income tax expense

17,322



3,100


Net income

61,880



22,436


Adjustment for net income attributable to noncontrolling interests

3,474



3,301


Net income attributable to PRA Group, Inc.

$

58,406



$

19,135


Net income per common share attributable to PRA Group, Inc.:




Basic

$

1.28



$

0.42


Diluted

$

1.27



$

0.42


Weighted average number of shares outstanding:




Basic

45,669



45,452


Diluted

46,045



45,784


 

PRA Group, Inc.

Consolidated Balance Sheets

(Amounts in thousands)



(unaudited)




March 31, 2021


December 31,
2020

Assets




Cash and cash equivalents

$

92,798



$

108,613


Restricted cash

16,057



12,434


Investments

54,682



55,759


Finance receivables, net

3,372,666



3,514,788


Other receivables, net

3,223



13,194


Income taxes receivable

27,246



21,928


Deferred tax assets, net

72,523



83,205


Right-of-use assets

50,839



52,951


Property and equipment, net

56,825



58,356


Goodwill

492,751



492,989


Other assets

38,920



38,844


Total assets

$

4,278,530



$

4,453,061


Liabilities and Equity




Liabilities:




Accounts payable

$

4,817



$

5,294


Accrued expenses

76,684



97,320


Income taxes payable

31,853



29,692


Deferred tax liabilities, net

39,739



40,867


Lease liabilities

55,322



57,348


Interest-bearing deposits

124,998



132,739


Borrowings

2,501,133



2,661,289


Other liabilities

40,755



54,986


Total liabilities

2,875,301



3,079,535


Equity:




Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued
and outstanding




Common stock, $0.01 par value, 100,000 shares authorized, 45,799 shares
issued and outstanding at March 31, 2021; 100,000 shares authorized, 45,585
shares issued and outstanding at December 31, 2020

458



456


Additional paid-in capital

47,236



75,282


Retained earnings

1,582,384



1,511,970


Accumulated other comprehensive loss

(253,576)



(245,791)


Total stockholders' equity - PRA Group, Inc.

1,376,502



1,341,917


Noncontrolling interest

26,727



31,609


Total equity

1,403,229



1,373,526


Total liabilities and equity

$

4,278,530



$

4,453,061


 

Select Expenses (Income)

Amounts in thousands, pre-tax


Three Months Ended


March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019

June 30,
2019

Acquisition/divestiture-
related expenses








227


Legal costs not
associated with normal
operations









Noncash interest expense
- amortization of debt
discount


1,959


2,388


3,247


3,217


3,157


3,128


3,071


Noncash interest expense
- amortization of debt
issuance costs

2,256


2,393


2,476


2,743


2,640


2,649


2,649


2,655


Change in fair value of
derivatives

3,102


3,875


3,701


3,284


2,039


1,247


1,126


1,645


Amortization of
intangibles

181


1,792


360


351


349


407


400


418


Stock-based
compensation expense

4,113


5,370


3,097


3,063


2,857


2,809


2,974


2,620



 

Purchase Price Multiples

as of March 31, 2021

Amounts in thousands

Purchase Period

Purchase Price (1)(2)

Total Estimated
Collections (3)

Estimated
Remaining
Collections (4)

Current Estimated
Purchase Price
Multiple

Original Estimated
Purchase Price
Multiple (5)

Americas and Australia Core






1996-2010

$

1,078,219


$

3,397,952


$

24,585


315%

240%

2011

209,602


719,618


15,897


343%

245%

2012

254,076


652,293


18,061


257%

226%

2013

390,826


894,640


30,051


229%

211%

2014

404,117


859,775


45,345


213%

204%

2015

443,114


913,857


106,551


206%

205%

2016

455,767


1,098,295


207,608


241%

201%

2017

532,851


1,211,584


325,675


227%

193%

2018

653,975


1,368,879


447,682


209%

202%

2019

581,476


1,239,777


622,713


213%

206%

2020

435,668


931,493


717,342


214%

213%

2021

88,822


188,644


184,196


212%

212%

Subtotal

5,528,513


13,476,807


2,745,706




Americas Insolvency





1996-2010

606,395


1,382,677


920


228%

180%

2011

180,432


370,183


493


205%

155%

2012

251,395


392,723


184


156%

136%

2013

227,834


354,943


651


156%

133%

2014

148,420


218,432


1,695


147%

124%

2015

63,170


87,087


876


138%

125%

2016

91,442


117,159


6,736


128%

123%

2017

275,257


349,209


51,318


127%

125%

2018

97,879


131,461


58,999


134%

127%

2019

123,077


158,692


105,361


129%

128%

2020

62,130


84,972


75,489


137%

136%

2021

9,486


13,185


13,168


139%

139%

Subtotal

2,136,917


3,660,723


315,890




Total Americas and Australia

7,665,430


17,137,530


3,061,596




Europe Core






2012

20,409


41,543



204%

187%

2013

20,334


25,653



126%

119%

2014

773,811


2,240,653


586,113


290%

208%

2015

411,340


725,713


250,732


176%

160%

2016

333,090


562,194


285,405


169%

167%

2017

252,174


354,024


184,108


140%

144%

2018

341,775


529,154


346,370


155%

148%

2019

518,610


776,604


587,133


150%

152%

2020

324,119


557,506


491,301


172%

172%

2021

43,635


77,780


76,397


178%

178%

Subtotal

3,039,297


5,890,824


2,807,559




Europe Insolvency





2014

10,876


18,228


130


168%

129%

2015

18,973


29,018


1,997


153%

139%

2016

39,338


56,926


8,784


145%

130%

2017

39,235


49,255


17,707


126%

128%

2018

44,908


52,080


32,060


116%

123%

2019

77,218


101,866


72,242


132%

130%

2020

105,440


135,896


121,891


129%

129%

2021

16,621


20,786


20,151


125%

125%

Subtotal

352,609


464,055


274,962




Total Europe

3,391,906


6,354,879


3,082,521




Total PRA Group

$

11,057,336


$

23,492,409


$

6,144,117






(1)

Includes the acquisition date finance receivables portfolios that were acquired through our business acquisitions.

(2)

For our non-U.S. amounts, purchase price is presented at the exchange rate at the end of the year in which the portfolio  was purchased.  In addition, any purchase price adjustments that occur throughout the life of the portfolio are presented at the year-end exchange rate for the respective year of purchase.

(3)

For our non-U.S. amounts, TEC is presented at the year-end exchange rate for the respective year of purchase.

(4)

For our non-U.S. amounts, ERC is presented at the March 31, 2021 exchange rate.

(5)

The Original Estimated Purchase Price Multiple represents the purchase price multiple at the end of the year of acquisition.



Portfolio Financial Information

Year-to-date as of March 31, 2021

Amounts in thousands

Purchase Period

Cash

Collections (1)

Portfolio Income (1)

Change in Expected
Recoveries (1)

Total Portfolio
Revenue (1)(2)

Net Finance
Receivables as of
March 31, 2021 (3)

Americas and Australia Core






1996-2010

$

3,726


$

2,319


$

447


$

2,766


$

5,178


2011

2,259


1,405


309


1,714


2,596


2012

2,786


1,286


375


1,661


5,638


2013

4,968


2,526


(351)


2,175


13,495


2014

6,937


3,494


(2,154)


1,340


19,677


2015

11,958


6,355


(4,961)


1,394


45,306


2016

24,893


11,990


3,908


15,898


84,015


2017

41,722


18,236


3,937


22,173


145,799


2018

75,462


25,404


10,591


35,995


245,467


2019

88,246


35,129


6,417


41,546


331,169


2020

80,231


35,446


16,613


52,059


369,418


2021

4,450


2,728


838


3,566


87,902


Subtotal

347,638


146,318


35,969


182,287


1,355,660


Americas Insolvency






1996-2010

181


186


(5)


181



2011

76


73


3


76



2012

190


72


120


192



2013

201


181


20


201



2014

298


355


(90)


265


190


2015

446


247


(202)


45


497


2016

2,727


491


241


732


5,429


2017

11,752


2,621


468


3,089


43,107


2018

7,812


1,778


751


2,529


50,368


2019

8,594


2,488


(1,786)


702


89,380


2020

2,960


1,897


535


2,432


57,174


2021

16


101


(14)


87


9,553


Subtotal

35,253


10,490


41


10,531


255,698


Total Americas and Australia

382,891


156,808


36,010


192,818


1,611,358


Europe Core






2012

283



283


283



2013

171



171


171



2014

37,843


25,589


7,184


32,773


159,401


2015

13,464


7,427


(6,091)


1,336


130,541


2016

11,956


6,431


(649)


5,782


164,228


2017

9,565


3,191


(1,076)


2,115


127,233


2018

18,365


6,289


4,576


10,865


226,773


2019

32,020


10,111


2,450


12,561


390,892


2020

24,425


9,595


4,578


14,173


293,315


2021

1,394


210


1,015


1,225


43,431


Subtotal

149,486


68,843


12,441


81,284


1,535,814


Europe Insolvency






2014

88


48


6


54


55


2015

530


225


5


230


1,335


2016

1,762


546


118


664


6,487


2017

2,484


398


140


538


15,696


2018

2,967


640


(764)


(124)


27,919


2019

6,222


1,554


183


1,737


59,244


2020

8,817


2,410


850


3,260


98,227


2021

640


200


1,147


1,347


16,531


Subtotal

23,510


6,021


1,685


7,706


225,494


Total Europe

172,996


74,864


14,126


88,990


1,761,308


Total PRA Group

$

555,887


$

231,672


$

50,136


$

281,808


$

3,372,666




(1)

For our non-U.S. amounts, amounts are presented using the average exchange rates during the current reporting period.

(2)

Total Portfolio Revenue refers to Portfolio Income and Changes in Expected Recoveries combined.

(3)

For our non-U.S. amounts, Net Finance Receivables are presented at the March 31, 2021 exchange rate.



Cash Collections by Year, By Year of Purchase (1)

as of March 31, 2021 

Amounts in millions



Cash Collections

Purchase Period

Purchase
Price (2)(3)

1996-
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

Total

Americas and Australia Core














1996-2010

$

1,078.2


$

1,990.5


$

367.1


$

311.5


$

228.4


$

157.7


$

109.3


$

70.2


$

46.0


$

34.4


$

28.4


$

18.8


$

3.7


$

3,366.0


2011

209.6



62.0


174.5


152.9


108.5


73.8


48.7


32.0


21.6


16.6


10.9


2.3


703.8


2012

254.1




56.9


173.6


146.2


97.3


60.0


40.0


27.8


17.9


11.8


2.8


634.3


2013

390.8





101.6


247.8


194.0


120.8


78.9


56.4


36.9


23.2


5.0


864.6


2014

404.1






92.7


253.4


170.3


114.2


82.2


55.3


31.9


6.9


806.9


2015

443.1







117.0


228.4


185.9


126.6


83.6


57.2


12.0


810.7


2016

455.8








138.7


256.5


194.6


140.6


105.9


24.9


861.2


2017

532.9









107.3


278.7


256.5


192.5


41.7


876.7


2018

654.0










122.7


361.9


337.7


75.5


897.8


2019

581.5










143.8


349.0


88.2


581.0


2020

435.7












133.0


80.2


213.2


2021

88.8













4.4


4.4


Subtotal

5,528.6


1,990.5


429.1


542.9


656.5


752.9


844.8


837.1


860.8


945.0


1,141.5


1,271.9


347.6


10,620.6


Americas Insolvency














1996-2010

606.4


390.9


261.2


270.4


231.0


158.9


51.2


8.6


4.6


2.5


1.4


0.8


0.2


1,381.7


2011

180.4



15.2


66.4


82.8


85.8


76.9


36.0


3.7


1.6


0.7


0.5


0.1


369.7


2012

251.4




17.4


103.6


94.1


80.1


60.7


29.3


4.3


1.9


0.9


0.2


392.5


2013

227.8





52.5


82.6


81.7


63.4


47.8


21.9


2.9


1.3


0.2


354.3


2014

148.4






37.0


50.9


44.3


37.4


28.8


15.8


2.2


0.3


216.7


2015

63.2







3.4


17.9


20.1


19.8


16.7


7.9


0.4


86.2


2016

91.4








18.9


30.4


25.0


19.9


14.4


2.7


111.3


2017

275.3









49.1


97.3


80.9


58.8


11.8


297.9


2018

97.9










6.7


27.4


30.5


7.8


72.4


2019

123.1











13.3


31.4


8.6


53.3


2020

62.1












6.6


3.0


9.6


2021

9.5















Subtotal

2,136.9


390.9


276.4


354.2


469.9


458.4


344.2


249.8


222.4


207.9


180.9


155.3


35.3


3,345.6


Total Americas and Australia

7,665.5


2,381.4


705.5


897.1


1,126.4


1,211.3


1,189.0


1,086.9


1,083.2


1,152.9


1,322.4


1,427.2


382.9


13,966.2


Europe Core














2012

20.4




11.6


9.0


5.6


3.2


2.2


2.0


2.0


1.5


1.2


0.3


38.6


2013

20.3





7.1


8.5


2.3


1.3


1.2


1.3


0.9


0.7


0.2


23.5


2014

773.8






153.2


292.0


246.4


220.8


206.3


172.9


149.8


37.8


1,479.2


2015

411.3







45.8


100.3


86.2


80.9


66.1


54.3


13.4


447.0


2016

333.1








40.4


78.9


72.6


58.0


48.3


12.0


310.2


2017

252.2









17.9


56.0


44.1


36.1


9.6


163.7


2018

341.8










24.3


88.7


71.2


18.4


202.6


2019

518.6











47.9


125.7


32.0


205.6


2020

324.1












32.4


24.4


56.8


2021

43.6













1.4


1.4


Subtotal

3,039.2




11.6


16.1


167.3


343.3


390.6


407.0


443.4


480.1


519.7


149.5


2,928.6


Europe Insolvency













2014

10.9







4.3


3.9


3.2


2.6


1.5


0.8


0.1


16.4


2015

19.0







3.0


4.4


5.0


4.8


3.9


2.9


0.5


24.5


2016

39.3








6.2


12.7


12.9


10.7


7.9


1.8


52.2


2017

39.2









1.2


7.9


9.2


9.8


2.5


30.6


2018

44.9










0.6


8.4


10.3


3.0


22.3


2019

77.2











5.1


21.1


6.2


32.4


2020

105.4












6.1


8.8


14.9


2021

16.7













0.6


0.6


Subtotal

352.6







7.3


14.5


22.1


28.8


38.8


58.9


23.5


193.9


Total Europe

3,391.8




11.6


16.1


167.3


350.6


405.1


429.1


472.2


518.9


578.6


173.0


3,122.5


Total PRA Group

$

11,057.3


$

2,381.4


$

705.5


$

908.7


$

1,142.5


$

1,378.6


$

1,539.6


$

1,492.0


$

1,512.3


$

1,625.1


$

1,841.3


$

2,005.8


$

555.9


$

17,088.7




(1)

For our non-U.S. amounts, cash collections are presented using the average exchange rates during the cash collection period.

(2)

Includes the finance receivables portfolios that were acquired through our business acquisitions.

(3)

For our non-U.S. amounts, purchase price is presented at the exchange rate at the end of the year in which the portfolio was purchased.  In addition, any purchase price adjustments that occur throughout the life of the pool are presented at the year-end exchange rate for the respective year of purchase.

 

Use of Non-GAAP Financial Measures

PRA Group, Inc. reports financial results in accordance with U.S. generally accepted accounting principles (GAAP).  However, management uses certain non-GAAP financial measures, including  Adjusted EBITDA, internally to evaluate the Company's performance and to set performance goals.  Adjusted EBITDA is calculated as net income attributable to PRA Group, Inc. plus income tax expense; less foreign exchange gain (or plus foreign exchange loss); plus interest expense, net; plus other expense; plus depreciation and amortization; plus adjustment for net income attributable to noncontrolling interests; and plus recoveries applied to negative allowance less changes in expected recoveries. Adjusted EBITDA is a supplemental measure of performance that is not required by, or presented in accordance with, GAAP. PRA Group, Inc. presents Adjusted EBITDA because the Company considers it an important supplemental measure of operations and financial performance. Management believes Adjusted EBITDA helps provide enhanced period-to-period comparability of operations and financial performance and is useful to investors as other companies in the industry report similar financial measures. Adjusted EBITDA should not be considered as an alternative to net income determined in accordance with GAAP. Set forth below is a reconciliation of Adjusted EBITDA for the last twelve months (LTM) ended March 31, 2021 and for the year ended December 31, 2020, to net income, the most directly comparable financial measure calculated and reported in accordance with GAAP. The calculation of Adjusted EBITDA below may not be comparable to the calculation of similarly titled measures reported by other companies.

Reconciliation of Non-GAAP Financial Measures






LTM

For the Year Ended

Adjusted EBITDA for PRA Group ($ in millions)

March 31, 2021

December 31, 2020

Net income attributable to PRA Group, Inc.

$

189


$

149


Adjustments:







Income tax expense

55


41


Foreign exchange losses/(gains)


(2)


Interest expense, net

136


142


Other expense

1


1


Depreciation and amortization

18


18


Adjustment for net income attributable to noncontrolling interests

19


18


Recoveries applied to negative allowance less Changes in expected
recoveries

997


968


Adjusted EBITDA

$

1,416


$

1,337


Additionally, The Company evaluates our business using certain ratios that use Adjusted EBITDA.  Debt to Adjusted EBITDA is calculated by dividing borrowings by Adjusted EBITDA.  The following table reflects our Debt to Adjusted EBITDA for LTM as of March 31, 2021 and for the year ended December 31, 2020 (amounts in millions):

Debt to Adjusted EBITDA


LTM

For the Year Ended


March 31, 2021

December 31, 2020

Borrowings

$

2,501


$

2,661


LTM Adjusted EBITDA

1,416


1,337


Debt to LTM Adjusted EBITDA

1.77


1.99


 

Investor Contact:
Darby Schoenfeld
Vice President, Investor Relations
(757) 431-7913
Darby.Schoenfeld@PRAGroup.com

News Media Contact:
Elizabeth Kersey
Vice President, Communications and Public Policy
(757) 431-3398
Elizabeth.Kersey@PRAGroup.com

SOURCE PRA Group