PRA Group Reports Second Quarter 2021 Results

NORFOLK, Va., Aug. 5, 2021 /PRNewswire/ -- PRA Group, Inc. (Nasdaq: PRAA), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the second quarter of 2021.  The Company reported net income attributable to PRA Group, Inc. of $56.0 million in the second quarter, compared with $57.9 million in the prior year period. Diluted earnings per share were $1.22 versus $1.26 in the second quarter of 2020. For the six months ended June 30, 2021, net income attributable to PRA Group, Inc. was $114.4 million, or $2.48 per diluted share, compared with $77.0 million, or $1.68 per diluted share, during the same period in 2020. 

Second Quarter Highlights (compared to the second quarter of 2020, unless otherwise indicated)

  • Total cash collections increased 7% to $543.8 million.
  • Total revenues increased 5% to $285.6 million.
  • Cash efficiency ratio1 of 66.8%.
  • Diluted earnings per share were $1.22.
  • Debt to Adjusted EBITDA2 for the last 12 months improved to 1.69x from 1.99x at December 31, 2020.
  • Total portfolio purchases of $219.7 million, an increase of $61 million, or 38%, from the first quarter of 2021.
  • Estimated remaining collections (ERC) of $6.1 billion.
  • $1.2 billion available for portfolio purchases.

"This quarter's strong performance is yet another in a line of outstanding results that we have delivered in the past year and a half.  Global cash collections were only $12 million behind our record setting first quarter and Europe delivered the largest quarter ever.  Portfolio purchases during the quarter increased on a sequential basis, with the Americas registering its largest quarter since the second quarter of 2020, and Europe recording its second best Q2 since PRA became a global enterprise in July 2014," said Kevin Stevenson, president and chief executive officer.  "Based on our strong results and capital position, the Board of Directors approved a $150 million share repurchase program."

  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)


Q2


Q1


Q4


Q3


Q2

Americas and Australia Core


$

324,845



$

347,638



$

286,524



$

336,322



$

343,269


Americas Insolvency


37,768



35,253



36,048



37,344



38,685


Europe Core


157,637



149,486



141,471



131,702



115,145


Europe Insolvency


23,579



23,510



17,830



13,971



12,841


Total Cash Collections


$

543,829



$

555,887



$

481,873



$

519,339



$

509,940



































Cash Collection Source -











Constant Currency Adjusted


2021








2020

($ in thousands)


Q2








Q2

Americas and Australia Core


$

324,845









$

344,539


Americas Insolvency


37,768









38,732


Europe Core


157,637









128,859


Europe Insolvency


23,579









14,393


Total Cash Collections


$

543,829









$

526,523


 

  • Cash collections in the quarter increased $33.9 million compared to the second quarter of 2020. The increase was primarily due to a 42% increase in Europe cash collections and a 20% increase in Other Americas & Australia Core cash collections. This increase was partially offset by a decrease in U.S. call centers and U.S. legal cash collections. For the six months ended June 30, 2021, cash collections increased $95.2 million compared to the same period last year.
  • Total portfolio revenue was $282.7 million, an increase of $14.6 million, compared to $268.1 million during the second quarter of 2020. The Company has assumed that the majority of the current quarter overperformance was acceleration of future collections and made adjustments in some geographies to increase near term expected collections, bringing them in line with recent performance and trends in collections, with the corresponding reductions later in the forecast period.

Expenses

  • Operating expenses in the quarter increased $20.8 million compared to the second quarter of 2020. The increase is primarily driven by:
    • an increase in compensation and employee services primarily due to medical benefits, unfavorable foreign exchange and the timing of performance based compensation accruals;
    • an increase in agency fees due to increased fees outside the U.S.; and
    • an increase in other operating expenses primarily due to investments in digital and data.
  • For the six months ended June 30, 2021, operating expenses increased $8.3 million compared to the same period last year.
  • Interest expense, net decreased $4.6 million compared to the second quarter of 2020 primarily due to lower average borrowings this year and a change in accounting for convertible notes.
  • The effective tax rate for the six months ended June 30, 2021 was 19.3%.

Portfolio Acquisitions

  • The Company purchased $219.7 million in finance receivables in the second quarter of 2021.
  • At the end of the second quarter, the Company had in place forward flow commitments of up to $521.1 million with $377.2 million in the Americas and Australia and $143.9 million in Europe.

 












Portfolio Purchase Source


2021


2020

($ in thousands)


Q2


Q1


Q4


Q3


Q2

Americas and Australia Core


$

98,901



$

88,912



$

67,460



$

84,139



$

110,474


Americas Insolvency


14,642



9,486



12,504



14,328



14,527


Europe Core


106,134



44,095



137,647



74,930



34,247


Europe Insolvency




16,468



72,171



4,203



5,251


Total Portfolio Acquisitions


$

219,677



$

158,961



$

289,782



$

177,600



$

164,499













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 August 5, 2022, or  call 877-344-7529 in the U.S. or 412-317-0088 outside the U.S. and use access code 10158082 until August 12, 2021.                   

About PRA Group, Inc.
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 June 30,


Six Months Ended June 30,


2021


2020


2021


2020

Revenues:








Portfolio income

$

219,137



$

248,284



$

450,809



$

510,306


Changes in expected recoveries

63,548



19,801



113,684



6,985


Total portfolio revenue

282,685



268,085



564,493



517,291


Fee income

2,453



2,639



4,634



4,848


Other revenue

491



1,186



5,971



1,555


Total revenues

285,629



271,910



575,098



523,694


Operating expenses:








Compensation and employee services

79,632



70,472



153,616



145,643


Legal collection fees

12,289



13,742



25,215



28,314


Legal collection costs

18,469



19,507



39,781



53,954


Agency fees

15,908



10,343



31,499



23,719


Outside fees and services

20,973



18,683



41,733



38,077


Communication

10,594



8,812



23,257



22,323


Rent and occupancy

4,643



4,471



9,123



8,955


Depreciation and amortization

3,815



4,109



7,796



8,193


Other operating expenses

15,092



10,491



28,110



22,696


Total operating expenses

181,415



160,630



360,130



351,874


   Income from operations

104,214



111,280



214,968



171,820


Other income and (expense):








Interest expense, net

(30,836)



(35,416)



(62,388)



(72,627)


Foreign exchange (loss)/gain

(1,079)



683



(1,105)



2,966


Other

183



(1,582)



209



(1,658)


Income before income taxes

72,482



74,965



151,684



100,501


Income tax expense

11,921



14,137



29,243



17,237


Net income

60,561



60,828



122,441



83,264


Adjustment for net income attributable to noncontrolling interests

4,565



2,914



8,039



6,215


Net income attributable to PRA Group, Inc.

$

55,996



$

57,914



$

114,402



$

77,049


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








Basic

$

1.22



$

1.27



$

2.50



$

1.69


Diluted

$

1.22



$

1.26



$

2.48



$

1.68


Weighted average number of shares outstanding:








Basic

45,807



45,548



45,738



45,500


Diluted

46,059



45,987



46,051



45,886


 

PRA Group, Inc.

Consolidated Balance Sheets

(Amounts in thousands)


(unaudited)




June 30, 2021


December 31,
2020

Assets




Cash and cash equivalents

$

76,013



$

108,613


Restricted cash

4,631



12,434


Investments

87,631



55,759


Finance receivables, net

3,349,038



3,514,788


Other receivables, net

7,096



13,194


Income taxes receivable

21,366



21,928


Deferred tax assets, net

78,935



83,205


Right-of-use assets

50,068



52,951


Property and equipment, net

54,895



58,356


Goodwill

492,843



492,989


Other assets

38,777



38,844


Total assets

$

4,261,293



$

4,453,061


Liabilities and Equity




Liabilities:




Accounts payable

$

5,229



$

5,294


Accrued expenses

86,634



97,320


Income taxes payable

27,872



29,692


Deferred tax liabilities, net

35,682



40,867


Lease liabilities

54,506



57,348


Interest-bearing deposits

131,221



132,739


Borrowings

2,408,875



2,661,289


Other liabilities

36,334



54,986


Total liabilities

2,786,353



3,079,535


Equity:




Preferred stock, $0.01 par value, 2,000 shares authorized, 0 shares issued and outstanding




Common stock, $0.01 par value, 100,000 shares authorized, 45,837 shares issued and outstanding at June 30, 2021; 100,000 shares authorized, 45,585 shares issued and outstanding at December 31, 2020

458



456


Additional paid-in capital

51,206



75,282


Retained earnings

1,638,380



1,511,970


Accumulated other comprehensive loss

(235,359)



(245,791)


Total stockholders' equity - PRA Group, Inc.

1,454,685



1,341,917


Noncontrolling interest

20,255



31,609


Total equity

1,474,940



1,373,526


Total liabilities and equity

$

4,261,293



$

4,453,061


 


Select Expenses (Income)

Amounts in thousands, pre-tax


Three Months Ended


June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

September 30,
2019










Acquisition/divestiture-related expenses









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


Noncash interest expense - amortization of debt issuance costs

2,391


2,256


2,393


2,476


2,743


2,640


2,649


2,649


Change in fair value of derivatives

2,911


3,102


3,875


3,701


3,284


2,039


1,247


1,126


Amortization of intangibles

105


181


1,792


360


351


349


407


400


Stock-based compensation expense

4,040


4,113


5,370


3,097


3,063


2,857


2,809


2,974


 

Purchase Price Multiples

as of June 30, 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


$

3,399,742


$

22,911


315%

240%

2011

209,602


719,746


13,914


343%

245%

2012

254,076


652,359


15,602


257%

226%

2013

390,826


894,134


24,948


229%

211%

2014

404,117


859,490


39,040


213%

204%

2015

443,114


908,215


90,848


205%

205%

2016

455,767


1,101,515


185,065


242%

201%

2017

532,851


1,213,368


292,041


228%

193%

2018

653,975


1,405,115


413,129


215%

202%

2019

581,476


1,245,056


555,835


214%

206%

2020

435,668


931,600


639,764


214%

213%

2021

187,751


372,447


351,984


198%

198%

Subtotal

5,627,442


13,702,787


2,645,081




Americas Insolvency





1996-2010

606,395


1,382,687


753


228%

180%

2011

180,432


370,168


428


205%

155%

2012

251,395


392,828


132


156%

136%

2013

227,834


355,056


545


156%

133%

2014

148,420


218,441


1,370


147%

124%

2015

63,170


87,122


562


138%

125%

2016

91,442


117,355


4,647


128%

123%

2017

275,257


349,729


40,051


127%

125%

2018

97,879


131,541


50,765


134%

127%

2019

123,077


158,965


95,913


129%

128%

2020

62,130


84,971


71,527


137%

136%

2021

24,133


33,183


32,819


138%

138%

Subtotal

2,151,564


3,682,046


299,512




Total Americas and Australia

7,779,006


17,384,833


2,944,593




Europe Core






2012

20,409


41,917



205%

187%

2013

20,334


25,881



127%

119%

2014

773,811


2,240,702


552,490


290%

208%

2015

411,340


724,135


238,174


176%

160%

2016

333,090


561,788


274,769


169%

167%

2017

252,174


353,405


175,394


140%

144%

2018

341,775


528,763


331,552


155%

148%

2019

518,610


775,304


560,752


149%

152%

2020

324,119


554,083


468,618


171%

172%

2021

148,907


262,529


254,428


176%

176%

Subtotal

3,144,569


6,068,507


2,856,177




Europe Insolvency





2014

10,876


18,258


79


168%

129%

2015

18,973


29,005


1,539


153%

139%

2016

39,338


56,883


7,124


145%

130%

2017

39,235


49,255


15,447


126%

128%

2018

44,908


52,080


29,309


116%

123%

2019

77,218


101,982


66,492


132%

130%

2020

105,440


135,895


113,782


129%

129%

2021

16,705


20,633


19,137


124%

124%

Subtotal

352,693


463,991


252,909




Total Europe

3,497,262


6,532,498


3,109,086




Total PRA Group

$

11,276,268


$

23,917,331


$

6,053,679






(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 June 30, 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 June 30, 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
June 30, 2021 (3)

Americas and Australia Core






1996-2010

$

7,190


$

4,282


$

1,944


$

6,226


$

5,173


2011

4,371


2,586


1,146


3,732


2,503


2012

5,310


2,364


1,042


3,406


4,857


2013

9,565


4,580


(493)


4,087


10,810


2014

13,130


6,135


(2,361)


3,774


15,970


2015

21,951


11,424


(8,717)


2,707


36,653


2016

45,983


22,459


3,354


25,813


72,898


2017

77,310


34,297


7,802


42,099


130,286


2018

141,054


47,049


24,688


71,737


216,883


2019

166,716


65,539


18,558


84,097


299,328


2020

159,431


67,614


35,441


103,055


341,846


2021

20,472


13,641


148


13,789


180,575


Subtotal

672,483


281,970


82,552


364,522


1,317,782


Americas Insolvency






1996-2010

357


352


5


357



2011

126


138


(12)


126



2012

347


124


225


349



2013

421


287


134


421



2014

633


652


(117)


535


125


2015

795


383


(167)


216


319


2016

5,031


867


447


1,314


3,707


2017

23,539


4,792


1,113


5,905


34,136


2018

16,125


3,380


932


4,312


43,837


2019

18,361


4,768


(1,467)


3,301


82,243


2020

6,920


3,755


637


4,392


55,112


2021

366


566


(92)


474


24,153


Subtotal

73,021


20,064


1,638


21,702


243,632


Total Americas and Australia

745,504


302,034


84,190


386,224


1,561,414


Europe Core






2012

604



604


604



2013

363



363


363



2014

77,988


50,288


15,601


65,889


153,921


2015

26,926


14,276


(7,091)


7,185


124,109


2016

24,620


12,632


(597)


12,035


158,984


2017

18,839


6,259


(3,049)


3,210


119,645


2018

36,684


12,439


5,101


17,540


217,182


2019

63,968


19,814


7,106


26,920


376,028


2020

48,947


18,892


6,322


25,214


282,525


2021

8,184


2,474


1,680


4,154


144,787


Subtotal

307,123


137,074


26,040


163,114


1,577,181


Europe Insolvency






2014

171


79


36


115


34


2015

989


406


64


470


1,115


2016

3,449


1,012


295


1,307


5,454


2017

4,874


754


298


1,052


13,865


2018

5,962


1,224


(655)


569


25,789


2019

12,523


3,017


880


3,897


55,338


2020

17,618


4,713


1,545


6,258


92,948


2021

1,503


496


991


1,487


15,900


Subtotal

47,089


11,701


3,454


15,155


210,443


Total Europe

354,212


148,775


29,494


178,269


1,787,624


Total PRA Group

$

1,099,716


$

450,809


$

113,684


$

564,493


$

3,349,038




(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 June 30, 2021 exchange rate.

 

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

as of June 30, 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


$

7.2


$

3,369.5


2011

209.6



62.0


174.5


152.9


108.5


73.8


48.7


32.0


21.6


16.6


10.9


4.4


705.9


2012

254.1




56.9


173.6


146.2


97.3


60.0


40.0


27.8


17.9


11.8


5.3


636.8


2013

390.8





101.6


247.8


194.0


120.8


78.9


56.4


36.9


23.2


9.6


869.2


2014

404.1






92.7


253.4


170.3


114.2


82.2


55.3


31.9


13.1


813.1


2015

443.1







117.0


228.4


185.9


126.6


83.6


57.2


22.0


820.7


2016

455.8








138.7


256.5


194.6


140.6


105.9


46.0


882.3


2017

532.9









107.3


278.7


256.5


192.5


77.3


912.3


2018

654.0










122.7


361.9


337.7


141.1


963.4


2019

581.5











143.8


349.0


166.7


659.5


2020

435.7












133.0


159.4


292.4


2021

187.8













20.4


20.4


Subtotal

5,627.6


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


672.5


10,945.5


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


0.4


1,381.9


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


0.3


392.6


2013

227.8





52.5


82.6


81.7


63.4


47.8


21.9


2.9


1.3


0.4


354.5


2014

148.4






37.0


50.9


44.3


37.4


28.8


15.8


2.2


0.6


217.0


2015

63.2







3.4


17.9


20.1


19.8


16.7


7.9


0.8


86.6


2016

91.4








18.9


30.4


25.0


19.9


14.4


5.0


113.6


2017

275.3









49.1


97.3


80.9


58.8


23.6


309.7


2018

97.9










6.7


27.4


30.5


16.1


80.7


2019

123.1











13.3


31.4


18.4


63.1


2020

62.1












6.6


6.9


13.5


2021

24.1













0.4


0.4


Subtotal

2,151.5


390.9


276.4


354.2


469.9


458.4


344.2


249.8


222.4


207.9


180.9


155.3


73.0


3,383.3


Total Americas and Australia

7,779.1


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


745.5


14,328.8


Europe Core














2012

20.4




11.6


9.0


5.6


3.2


2.2


2.0


2.0


1.5


1.2


0.6


38.9


2013

20.3





7.1


8.5


2.3


1.3


1.2


1.3


0.9


0.7


0.4


23.7


2014

773.8






153.2


292.0


246.4


220.8


206.3


172.9


149.8


78.0


1,519.4


2015

411.3







45.8


100.3


86.2


80.9


66.1


54.3


26.9


460.5


2016

333.1








40.4


78.9


72.6


58.0


48.3


24.6


322.8


2017

252.2









17.9


56.0


44.1


36.1


18.8


172.9


2018

341.8










24.3


88.7


71.2


36.7


220.9


2019

518.6











47.9


125.7


64.0


237.6


2020

324.1












32.4


48.9


81.3


2021

148.9













8.2


8.2


Subtotal

3,144.5




11.6


16.1


167.3


343.3


390.6


407.0


443.4


480.1


519.7


307.1


3,086.2


Europe Insolvency













2014

10.9







4.3


3.9


3.2


2.6


1.5


0.8


0.2


16.5


2015

19.0







3.0


4.4


5.0


4.8


3.9


2.9


1.0


25.0


2016

39.3








6.2


12.7


12.9


10.7


7.9


3.4


53.8


2017

39.2









1.2


7.9


9.2


9.8


4.9


33.0


2018

44.9










0.6


8.4


10.3


6.0


25.3


2019

77.2











5.1


21.1


12.5


38.7


2020

105.4












6.1


17.6


23.7


2021

16.7













1.5


1.5


Subtotal

352.6







7.3


14.5


22.1


28.8


38.8


58.9


47.1


217.5


Total Europe

3,497.1




11.6


16.1


167.3


350.6


405.1


429.1


472.2


518.9


578.6


354.2


3,303.7


Total PRA Group

$

11,276.2


$

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


$

1,099.7


$

17,632.5




(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 June 30, 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)

June 30, 2021

December 31, 2020

Net income attributable to PRA Group, Inc.

$

187


$

149


Adjustments:







Income tax expense

53


41


Foreign exchange losses/(gains)

2


(2)


Interest expense, net

131


142


Other expense

(1)


1


Depreciation and amortization

18


18


Adjustment for net income attributable to noncontrolling interests

20


18


Recoveries applied to negative allowance less Changes in expected recoveries

1,017


968


Adjusted EBITDA

$

1,428


$

1,337


Additionally, management evaluates the Company's business using certain ratios that use Adjusted EBITDA, including Debt to Adjusted EBITDA, which is calculated by dividing borrowings by Adjusted EBITDA.  The following table reflects our Debt to Adjusted EBITDA for LTM as of June 30, 2021 and for the year ended December 31, 2020 (amounts in millions):

Debt to Adjusted EBITDA


LTM

For the Year Ended


June 30, 2021

December 31, 2020

Borrowings

$

2,409


$

2,661


LTM Adjusted EBITDA

1,428


1,337


Debt to LTM Adjusted EBITDA

1.69


1.99


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

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

SOURCE PRA Group