PRA Group Reports Third Quarter 2021 Results

Press
Releases

PRA Investorroom

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