PRA Group Reports Third Quarter 2021 Results

NORFOLK, Va., Nov. 8, 2021 /PRNewswire/ -- PRA Group, Inc. (Nasdaq: PRAA), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the third quarter of 2021. The Company reported net income attributable to PRA Group, Inc. of $34.5 million in the third quarter, compared with $42.5 million in the prior year period. Diluted earnings per share were $0.76 versus $0.92 in the third quarter of 2020. For the nine months ended September 30, 2021, net income attributable to PRA Group, Inc. was $148.9 million, or $3.24 per diluted share, compared with $119.5 million, or $2.60 per diluted share, during the same period in 2020. 

 Third Quarter Highlights

  • Total portfolio purchases of $391.9 million, an increase of $172.3 million, or 78%, from the second quarter of 2021.
    • Purchases in Europe were $219.6 million, bringing the year to date total to $386.3 million, a record for the first nine months of the year.
    • Purchases in Americas and Australia were $172.3 million, reflecting strong geographic diversity with substantial deployment in South America.
  • Estimated remaining collections (ERC) of $6.1 billion, an increase of $91 million from the second quarter of 2021.  
  • Total cash collections were $488.4 million.
  • Total revenues were $263.7 million.
  • Cash efficiency ratio1 of 62.4%.
  • Diluted earnings per share were $0.76.
  • Common stock repurchases of $74 million, or 1.8 million shares, at an average price of $41.10.
  • Debt to Adjusted EBITDA2 for the last 12 months was 1.81x.
  • $1.4 billion available for portfolio purchases.

"We deployed almost $400 million in the third quarter, making it one of our largest portfolio purchasing quarters. In Europe, we invested $220 million, where we have seen a very healthy pipeline of deals coming to market and we also secured a large multi-year forward flow agreement. We invested $172 million in the Americas and Australia, highlighted by sizeable portfolio spot purchases in South America, which further demonstrates the benefits of our geographic diversification," said Kevin Stevenson, president and chief executive officer. "We also made excellent progress in returning capital to shareholders through the $150 million share repurchase program launched during the third quarter, repurchasing $74 million of our common stock at an average price of $41.10.  Our leverage ratios remain well below our target range, despite the strong portfolio purchasing quarter and the utilization of nearly half of our initial share repurchase authorization.  On November 1, we announced an $80 million increase to our share repurchase program, raising the total authorization to $230 million." 

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)


Q3


Q2


Q1


Q4


Q3

Americas and Australia Core


$

276,691



$

324,845



$

347,638



$

286,524



$

336,322


Americas Insolvency


37,464



37,768



35,253



36,048



37,344


Europe Core


151,625



157,637



149,486



141,471



131,702


Europe Insolvency


22,574



23,579



23,510



17,830



13,971


Total Cash Collections


$

488,354



$

543,829



$

555,887



$

481,873



$

519,339



































Cash Collection Source -











Constant Currency Adjusted


2021








2020

($ in thousands)


Q3








Q3

Americas and Australia Core


$

276,691









$

337,483


Americas Insolvency


37,464









37,373


Europe Core


151,625









136,747


Europe Insolvency


22,574









14,810


Total Cash Collections


$

488,354









$

526,413


  • Cash collections in the quarter decreased $31.0 million compared to the third quarter of 2020.  The decrease was primarily due to a return to more normal seasonal trends in the U.S., as well as the lower volume of accounts in the U.S. legal channel during 2021.  These decreases were partially offset by a 20% increase in Europe cash collections driven by significant levels of portfolio purchases in the last few years.  For the nine months ended September 30, 2021, cash collections increased $64.2 million compared to the same period last year. 
  • Total portfolio revenue in the quarter was $256.7 million compared to $265.7 million during the third quarter of 2020.  The Company has consistently 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 corresponding reductions later in the forecast period. 

Expenses

  • Operating expenses in the quarter increased $6.9 million compared to the third quarter of 2020.  The increase was primarily driven by:
    • an increase in compensation and employee services primarily due to changes in benefits and performance based accruals and an increase in the number of employees in Europe;
    • an increase in outside fees and services primarily due to higher legal expenses; and
    • an increase in other operating expenses primarily driven by ongoing efforts to enhance our digital and data.
  • For the nine months ended September 30, 2021, operating expenses increased $15.2 million compared to the same period last year. 
  • Interest expense, net decreased $4.1 million compared to the third 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 nine months ended September 30, 2021 was 20.8%.

Portfolio Acquisitions

  • The Company purchased $391.9 million in finance receivables in the third quarter of 2021.    
  • At the end of the third quarter, the Company had in place maximum forward flow commitments of up to $873.7 million with $323.1 million in the Americas and Australia and $550.6 million in Europe.   











Portfolio Purchase Source


2021


2020

($ in thousands)


Q3


Q2


Q1


Q4


Q3

Americas and Australia Core


$

162,451



$

98,901



$

88,912



$

67,460



$

84,139


Americas Insolvency


9,878



14,642



9,486



12,504



14,328


Europe Core


212,194



106,134



44,095



137,647



74,930


Europe Insolvency


7,424





16,468



72,171



4,203


Total Portfolio Acquisitions


$

391,947



$

219,677



$

158,961



$

289,782



$

177,600













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 November 8, 2022, or  call 877-344-7529 in the U.S. or 412-317-0088 outside the U.S. and use access code 10160856 until November 15, 2021.        

The Company is also announcing that it currently plans to report fourth quarter 2021 results after market close on February 28, 2022.                                                                         

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
September 30,


Nine Months Ended
September 30,


2021


2020


2021


2020

Revenues:








Portfolio income

$

212,905



$

240,250



$

663,714



$

750,556


Changes in expected recoveries

43,820



25,403



157,504



32,388


Total portfolio revenue

256,725



265,653



821,218



782,944


Fee income

6,209



1,978



10,843



6,826


Other revenue

764



233



6,735



1,788


Total revenues

263,698



267,864



838,796



791,558


Operating expenses:








Compensation and employee services

74,584



71,974



228,200



217,617


Legal collection fees

10,993



13,661



36,208



41,975


Legal collection costs

21,450



26,043



61,231



79,997


Agency fees

15,646



14,900



47,145



38,619


Outside fees and services

29,434



22,719



71,167



60,796


Communication

9,782



9,379



33,039



31,702


Rent and occupancy

4,571



4,460



13,694



13,415


Depreciation and amortization

3,724



4,301



11,520



12,494


Other operating expenses

15,935



11,761



44,045



34,457


Total operating expenses

186,119



179,198



546,249



531,072


   Income from operations

77,579



88,666



292,547



260,486


Other income and (expense):








Interest expense, net

(29,599)



(33,692)



(91,987)



(106,319)


Foreign exchange gain

1,232



61



127



3,027


Other

85



291



294



(1,367)


Income before income taxes

49,297



55,326



200,981



155,827


Income tax expense

12,627



7,497



41,870



24,734


Net income

36,670



47,829



159,111



131,093


Adjustment for net income attributable
to noncontrolling interests

2,190



5,337



10,229



11,552


Net income attributable to PRA Group, Inc.

$

34,480



$

42,492



$

148,882



$

119,541


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








Basic

$

0.76



$

0.93



$

3.27



$

2.63


Diluted

$

0.76



$

0.92



$

3.24



$

2.60


Weighted average number of shares outstanding:








Basic

45,305



45,579



45,594



45,526


Diluted

45,656



46,140



45,920



45,971


 

PRA Group, Inc.
Consolidated Balance Sheets
(Amounts in thousands)



(unaudited)




September 30, 2021


December 31,
2020

Assets




Cash and cash equivalents

$

56,545



$

108,613


Restricted cash

4,752



12,434


Investments

85,171



55,759


Finance receivables, net

3,449,939



3,514,788


Other receivables, net

7,065



13,194


Income taxes receivable

21,863



21,928


Deferred tax assets, net

77,213



83,205


Right-of-use assets

51,998



52,951


Property and equipment, net

53,767



58,356


Goodwill

482,479



492,989


Other assets

41,168



38,844


Total assets

$

4,331,960



$

4,453,061


Liabilities and Equity




Liabilities:




Accounts payable

$

5,379



$

5,294


Accrued expenses

100,342



97,320


Income taxes payable

20,719



29,692


Deferred tax liabilities, net

32,604



40,867


Lease liabilities

56,409



57,348


Interest-bearing deposits

132,612



132,739


Borrowings

2,520,903



2,661,289


Other liabilities

34,342



54,986


Total liabilities

2,903,310



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, 44,040 shares
issued and outstanding at September 30, 2021; 100,000 shares authorized,
45,585 shares issued and outstanding at December 31, 2020

440



456


Additional paid-in capital



75,282


Retained earnings

1,654,544



1,511,970


Accumulated other comprehensive loss

(264,781)



(245,791)


Total stockholders' equity - PRA Group, Inc.

1,390,203



1,341,917


Noncontrolling interest

38,447



31,609


Total equity

1,428,650



1,373,526


Total liabilities and equity

$

4,331,960



$

4,453,061


 

Select Expenses (Income)

Amounts in thousands, pre-tax


Three Months Ended


September 30,
2021

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019










Noncash interest
expense - amortization
of debt discount




1,959


2,388


3,247


3,217


3,157


Noncash interest
expense - amortization
of debt issuance costs

2,406


2,391


2,256


2,393


2,476


2,743


2,640


2,649


Change in fair value of
derivatives

2,982


2,911


3,102


3,875


3,701


3,284


2,039


1,247


Amortization of
intangibles

104


105


181


1,792


360


351


349


407


Stock-based
compensation expense

4,317


4,040


4,113


5,370


3,097


3,063


2,857


2,809


 

Purchase Price Multiples

as of September 30, 2021

Amounts in thousands

Purchase Period

Purchase Price (1)(2)

Total Estimated
Collections (3)

Estimated
Remaining
Collections (4)

Current Purchase
Price Multiple

Original Purchase
Price Multiple (5)

Americas and Australia Core






1996-2010

$

1,078,219


$

3,400,695


$

20,886


315%

240%

2011

209,602


719,844


12,296


343%

245%

2012

254,076


652,359


13,851


257%

226%

2013

390,826


894,134


21,565


229%

211%

2014

404,117


859,487


34,155


213%

204%

2015

443,114


908,490


84,319


205%

205%

2016

455,767


1,112,953


174,608


244%

201%

2017

532,851


1,214,479


263,966


228%

193%

2018

653,975


1,396,690


350,509


214%

202%

2019

581,476


1,249,471


487,764


215%

206%

2020

435,668


931,651


572,004


214%

213%

2021

347,641


672,752


624,805


194%

194%

Subtotal

5,787,332


14,013,005


2,660,728




Americas Insolvency





1996-2010

606,395


1,382,652


604


228%

180%

2011

180,432


370,146


370


205%

155%

2012

251,395


392,933


94


156%

136%

2013

227,834


355,191


453


156%

133%

2014

148,420


219,081


1,760


148%

124%

2015

63,170


87,229


418


138%

125%

2016

91,442


117,105


2,878


128%

123%

2017

275,257


350,845


30,193


127%

125%

2018

97,879


131,527


42,766


134%

127%

2019

123,077


159,298


86,020


129%

128%

2020

62,130


85,128


67,104


137%

136%

2021

34,003


47,105


45,525


139%

139%

Subtotal

2,161,434


3,698,240


278,185




Total Americas and Australia

7,948,766


17,711,245


2,938,913




Europe Core






2012

20,409


42,267



207%

187%

2013

20,334


26,084



128%

119%

2014

773,811


2,240,031


502,932


289%

208%

2015

411,340


723,559


218,870


176%

160%

2016

333,090


561,613


256,468


169%

167%

2017

252,174


353,381


162,591


140%

144%

2018

341,775


527,899


304,855


154%

148%

2019

518,610


775,332


515,554


150%

152%

2020

324,119


554,041


433,847


171%

172%

2021

353,539


599,818


577,137


170%

170%

Subtotal

3,349,201


6,404,025


2,972,254




Europe Insolvency





2014

10,876


18,297


46


168%

129%

2015

18,973


29,009


1,157


153%

139%

2016

39,338


56,850


5,593


145%

130%

2017

39,235


49,180


12,650


125%

128%

2018

44,908


51,977


25,606


116%

123%

2019

77,218


102,011


58,984


132%

130%

2020

105,440


135,893


102,428


129%

129%

2021

23,485


29,676


27,003


126%

126%

Subtotal

359,473


472,893


233,467




Total Europe

3,708,674


6,876,918


3,205,721




Total PRA Group

$

11,657,440


$

24,588,163


$

6,144,634






(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 September 30, 2021 exchange rate.

(5)

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

 

Portfolio Financial Information

Year-to-date as of September 30, 2021

Amounts in thousands

Purchase Period

Cash

Collections (1)

Portfolio Income (1)

Change in Expected
Recoveries (1)

Total Portfolio
Revenue (1)

Net Finance
Receivables as of
September 30, 2021 (2)

Americas and Australia Core






1996-2010

$

10,168


$

6,227


$

2,465


$

8,692


$

4,657


2011

6,086


3,717


1,223


4,940


1,995


2012

7,061


3,290


1,387


4,677


4,375


2013

12,948


6,289


(1,772)


4,517


7,857


2014

17,717


8,350


(3,773)


4,577


12,105


2015

28,449


15,707


(9,526)


6,181


33,589


2016

60,990


32,106


(115)


31,991


63,980


2017

105,643


48,701


10,228


58,929


118,667


2018

193,699


66,584


31,149


97,733


189,064


2019

232,297


92,750


26,418


119,168


265,681


2020

226,068


97,175


52,411


149,586


322,912


2021

48,048


33,002


(183)


32,819


331,622


Subtotal

949,174


413,898


109,912


523,810


1,356,504


Americas Insolvency






1996-2010

471


501


(15)


486



2011

162


196


(33)


163



2012

489


161


340


501



2013

647


379


268


647



2014

881


856


(32)


824


156


2015

1,046


471


(85)


386


238


2016

6,543


1,137


230


1,367


2,247


2017

34,514


6,501


2,351


8,852


26,108


2018

24,111


4,768


1,079


5,847


37,385


2019

28,538


6,855


(1,017)


5,838


74,558


2020

11,501


5,533


903


6,436


52,559


2021

1,582


1,448


229


1,677


33,916


Subtotal

110,485


28,806


4,218


33,024


227,167


Total Americas and Australia

1,059,659


442,704


114,130


556,834


1,583,671


Europe Core






2012

901



901


901



2013

532



533


533



2014

113,726


73,152


21,097


94,249


142,909


2015

39,404


20,653


(8,937)


11,716


112,919


2016

35,457


18,422


(1,387)


17,035


149,054


2017

27,247


9,083


(2,960)


6,123


111,143


2018

53,130


18,174


5,817


23,991


201,056


2019

93,839


28,871


9,890


38,761


347,599


2020

71,264


27,566


10,664


38,230


263,916


2021

23,248


8,152


3,645


11,797


342,204


Subtotal

458,748


204,073


39,263


243,336


1,670,800


Europe Insolvency






2014

242


97


76


173


21


2015

1,342


544


43


587


853


2016

4,783


1,388


226


1,614


4,301


2017

7,236


1,056


249


1,305


11,426


2018

8,846


1,750


(748)


1,002


22,699


2019

18,390


4,353


1,070


5,423


49,581


2020

26,073


6,845


2,045


8,890


84,688


2021

2,751


904


1,150


2,054


21,899


Subtotal

69,663


16,937


4,111


21,048


195,468


Total Europe

528,411


221,010


43,374


264,384


1,866,268


Total PRA Group

$

1,588,070


$

663,714


$

157,504


$

821,218


$

3,449,939




(1)

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

(2)

For our non-U.S. amounts, Net Finance Receivables are presented at the September 30, 2021 exchange rate.

 

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

as of September 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


$

10.2


$

3,372.5


2011

209.6



62.0


174.5


152.9


108.5


73.8


48.7


32.0


21.6


16.6


10.9


6.1


707.6


2012

254.1




56.9


173.6


146.2


97.3


60.0


40.0


27.8


17.9


11.8


7.1


638.6


2013

390.8





101.6


247.8


194.0


120.8


78.9


56.4


36.9


23.2


12.9


872.5


2014

404.1






92.7


253.4


170.3


114.2


82.2


55.3


31.9


17.7


817.7


2015

443.1







117.0


228.4


185.9


126.6


83.6


57.2


28.4


827.1


2016

455.8








138.7


256.5


194.6


140.6


105.9


61.0


897.3


2017

532.9









107.3


278.7


256.5


192.5


105.6


940.6


2018

654.0










122.7


361.9


337.7


193.7


1016.0


2019

581.5










143.8


349.0


232.3


725.1


2020

435.7












133.0


226.1


359.1


2021

347.6













48.1


48.1


Subtotal

5,787.4


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


949.2


11,222.2


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


0.5


1,382.0


2011

180.4



15.2


66.4


82.8


85.8


76.9


36.0


3.7


1.6


0.7


0.5


0.2


369.8


2012

251.4




17.4


103.6


94.1


80.1


60.7


29.3


4.3


1.9


0.9


0.5


392.8


2013

227.8





52.5


82.6


81.7


63.4


47.8


21.9


2.9


1.3


0.6


354.7


2014

148.4






37.0


50.9


44.3


37.4


28.8


15.8


2.2


0.9


217.3


2015

63.2







3.4


17.9


20.1


19.8


16.7


7.9


1.0


86.8


2016

91.4








18.9


30.4


25.0


19.9


14.4


6.5


115.1


2017

275.3









49.1


97.3


80.9


58.8


34.5


320.6


2018

97.9










6.7


27.4


30.5


24.1


88.7


2019

123.1











13.3


31.4


28.5


73.2


2020

62.1












6.6


11.5


18.1


2021

34.0













1.7


1.7


Subtotal

2,161.4


390.9


276.4


354.2


469.9


458.4


344.2


249.8


222.4


207.9


180.9


155.3


110.5


3,420.8


Total Americas and Australia

7,948.8


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


1,059.7


14,643.0


Europe Core














2012

20.4




11.6


9.0


5.6


3.2


2.2


2.0


2.0


1.5


1.2


0.9


39.2


2013

20.3





7.1


8.5


2.3


1.3


1.2


1.3


0.9


0.7


0.5


23.8


2014

773.8






153.2


292.0


246.4


220.8


206.3


172.9


149.8


113.7


1,555.1


2015

411.3







45.8


100.3


86.2


80.9


66.1


54.3


39.4


473.0


2016

333.1








40.4


78.9


72.6


58.0


48.3


35.5


333.7


2017

252.2









17.9


56.0


44.1


36.1


27.2


181.3


2018

341.8










24.3


88.7


71.2


53.1


237.3


2019

518.6











47.9


125.7


93.8


267.4


2020

324.1












32.4


71.3


103.7


2021

353.6













23.3


23.3


Subtotal

3,349.2




11.6


16.1


167.3


343.3


390.6


407.0


443.4


480.1


519.7


458.7


3,237.8


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


1.3


25.3


2016

39.3








6.2


12.7


12.9


10.7


7.9


4.8


55.2


2017

39.2









1.2


7.9


9.2


9.8


7.2


35.3


2018

44.9










0.6


8.4


10.3


8.8


28.1


2019

77.2











5.1


21.1


18.4


44.6


2020

105.4












6.1


26.1


32.2


2021

23.5













2.8


2.8


Subtotal

359.4







7.3


14.5


22.1


28.8


38.8


58.9


69.6


240.0


Total Europe

3,708.6




11.6


16.1


167.3


350.6


405.1


429.1


472.2


518.9


578.6


528.3


3,477.8


Total PRA Group

$

11,657.4


$

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


$

1,588.0


$

18,120.8




(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 September 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)

September 30, 2021

December 31, 2020

Net income attributable to PRA Group, Inc.

$

179


$

149


Adjustments:







Income tax expense

58


41


Foreign exchange losses/(gains)

1


(2)


Interest expense, net

127


142


Other expense

(1)


1


Depreciation and amortization

17


18


Adjustment for net income attributable to noncontrolling interests

17


18


Recoveries applied to negative allowance less Changes in expected recoveries

993


968


Adjusted EBITDA

$

1,392


$

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 September 30, 2021 and for the year ended December 31, 2020 (amounts in millions):

Debt to Adjusted EBITDA


LTM

For the Year Ended


September 30, 2021

December 31, 2020

Borrowings

$

2,521


$

2,661


LTM Adjusted EBITDA

1,392


1,337


Debt to LTM Adjusted EBITDA

1.81


1.99


Investor Contact:
Pete Graham
Executive Vice President and Chief Financial Officer
(757) 431-7913
IR@PRAGroup.com

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

SOURCE PRA Group