PRA Group and StepChange Unite Stakeholders in UK Parliament to Strengthen Financial Inclusion Accessibility StatementSkip NavigationCrosssector dialogue highlights practical ways to support people in financial difficultyNORFOLK, Va., March 25, 2026 /PRNewswire/ -- PRA Group, Inc.(Nasdaq: PRAA), a global leader in acquiring and collecting nonperforming loans, has once again partnered with StepChange Debt Charity, the United Kingdom's largest debt advice charity, to advance financial inclusion for consumers ...

PRA Group FY Conference Summary Company Overview - **Company**: PRA Group (NasdaqGS:PRAA) - **Industry**: Charged-off recovery specialists - **Anniversary**: Celebrating 30 years in the industry - **Global Presence**: Operates in 18 markets, with a roughly even split between the U.S. and international markets [2][3] Financial Performance - **Investment in NPL Portfolios**: $1.2 billion in the last year, third highest year ever, down from the previous year due to a focus on returns [3][4] - **Cash Collections**: $2.1 billion, up 13% year-over-year [4] - **Estimated Remaining Collections (ERC)**: Increased to $8.6 billion, up 15% [4] - **Cash Efficiency**: Increased to 61%, indicating improved operational efficiency [4] - **Adjusted Net Income**: $73 million, up from $24 million, despite a non-cash goodwill write-down of $305 million [5] - **EBITDA Growth**: Rolling 12-month EBITDA grew by 16%, indicating strong operational leverage [5] - **Leverage Ratio**: Decreased from 2.83 to 2.73, with a goal to trend down to the mid-2x area [6][38] Market Dynamics - **U.S. Market**: Strong momentum with improvements in operations, particularly in legal and digital sectors [3] - **European Market**: Consistent performance, meeting or exceeding targets for over seven years [3] - **Cyclicality**: The company benefits from both economic upturns and downturns, as bank charge-off rates rise during economic downturns, increasing the supply of NPL portfolios [7][8] Strategic Initiatives - **Three Vectors Strategy**: Focus on capital and investing, operations, technology and data, and people and culture [13] - **Capital Allocation**: Emphasis on disciplined investment with a focus on net returns rather than gross purchase price multiples [14][15] - **Cost Structure**: Aiming for a more variable cost structure to adapt to market volumes [16] - **Technology Investments**: Transitioning to cloud-based systems and leveraging AI for data analysis and operational efficiency [25][27][28] Operational Model - **Data-Driven Insights**: Focus on understanding customer journeys and optimizing channel mix [19] - **Legal Capabilities**: Balancing internal and external legal resources for cost efficiency [20] - **Digital Collections**: Digital cash collections grew by 25% last year, with ongoing investments in omnichannel capabilities [21][22] - **Internal vs. External Collections**: A mix of internal collections and external debt collection agencies (DCAs) to optimize performance [23] AI and Technology - **AI Utilization**: Exploring AI for data mining, customer engagement, and operational efficiency [28][30] - **Talent Acquisition**: Recruiting skilled personnel for AI initiatives, including establishing a new office in Charlotte [30] Cost Management - **Cost Control**: Implemented reductions in corporate roles and onshore agents, achieving a 42% reduction in onshore agents while increasing cash collections [32][33] - **Variable Cost Structure**: Building flexibility in capacity through a network of DCAs and standardized technology [34] Future Outlook - **Investment Plans**: Planning to invest between $1 billion and $1.3 billion per year in 2026, similar to 2025 [37] - **Return on Equity**: Aiming for annualized returns consistent with specialty finance companies [38] Conclusion - PRA Group is positioned to leverage its global presence, operational improvements, and strategic investments to enhance returns and navigate market dynamics effectively. The focus on technology and AI, along with a disciplined approach to capital allocation, is expected to drive future growth and shareholder value.

Statements in this presentation, other than statements of historical fact, are forward-looking statements, which are based on our current beliefs, projections, assumptions and expectations concerning future operations and financial performance. Such statements involve uncertainties and risks, some of which are not currently known to us, and may be superseded by future events that could cause actual results to differ materially from those expressed or implied in this presentation. You are cautioned not to pl ...

Company Operations and Structure - The company operates with a diverse global presence, holding portfolios in 18 countries, which supports its competitive advantage [30]. - As of December 31, 2025, the company employed 2,615 full-time equivalents globally, with approximately 60% in the U.S., 35% in Europe, and 5% in other markets [40]. - International operations represented 43% of the total portfolio income in 2025, exposing the company to various geopolitical and economic risks [72]. - Revenues from operations outside the U.S. reached $590.6 million in 2025, indicating significant international exposure [234]. Financial Performance and Risks - Economic conditions, such as inflation and interest rate uncertainty, could adversely affect the company's financial performance and collections [44]. - The company recorded a goodwill impairment charge of $412.6 million due to a decrease in the terminal value assumption and an increase in the discount rate assumption [70]. - Total consolidated indebtedness as of December 31, 2025, was $3.7 billion, with $2.1 billion being secured indebtedness [93]. - The company expects to continue using leverage in its business strategy, which may have adverse consequences on cash flow and operational flexibility [93]. - The company may incur foreign currency gains and losses due to fluctuations, which can impact comprehensive income and stockholders' equity [235]. Compliance and Regulatory Environment - The company is subject to various federal, state, local, and international regulations, including the Fair Debt Collection Practices Act and the Fair Credit Reporting Act, which impact its operations [31]. - The company faces risks related to compliance with complex international and U.S. laws, which could increase operational costs and affect profitability [75]. - The CFPB has the authority to impose monetary penalties ranging from $7,000 to over $1.4 million per day for violations, which could adversely affect the company's financial condition [85]. - Investigations by governmental authorities could lead to enforcement actions, fines, and reputational damage, impacting business operations [84]. - The company must maintain licenses to purchase or own debt and perform debt recovery services, with non-compliance potentially restricting operations [79]. Operational Effectiveness and Strategy - The company emphasizes a performance-oriented culture, focusing on accountability and execution, with clear objectives and key-result metrics [26]. - The company has a comprehensive compliance program and strong relationships with credit originators, enhancing its operational effectiveness [30]. - The company prioritizes investments in portfolios that align with its return objectives, maintaining a solid financial profile and diversified funding base [26]. - The company relies on third-party service providers for collection and processing activities, which could adversely affect business operations if these providers fail to meet service obligations [53]. Technology and Data Management - The company relies on internally developed models for cash flow projections and strategic decision-making, which may be impacted by inaccuracies in data or assumptions [49]. - The effectiveness of the company's predictive models is contingent on the accuracy and completeness of the underlying data, which may not always be reliable [51]. - The use of AI and machine learning technologies presents risks related to performance, accuracy, and potential legal liabilities [67]. - Changes in regulatory environments regarding automated decision-making and data use could expose the company to scrutiny and affect its operations [68]. - The company is subject to various laws and regulations regarding data privacy and cybersecurity, which could increase compliance costs and affect competitiveness [88]. Employee and Workplace Culture - The company is committed to employee health and wellness, offering a comprehensive total rewards program that includes competitive pay and benefits [38]. Financial Instruments and Debt Management - Unsecured indebtedness included $398.0 million of 8.375% senior notes due 2028, $350.0 million of 5.00% senior notes due 2029, $550.0 million of 8.875% senior notes due 2030, and €300.0 million ($352.4 million) of 6.250% senior notes due 2032 [93]. - Total availability under credit facilities as of December 31, 2025, was $1.1 billion, comprising $825.2 million based on current ERC and $274.3 million of additional availability [93]. - As of December 31, 2025, the company had total borrowings of $3.7 billion, with $1.7 billion classified as fixed rate debt, resulting in 66% of total debt being either fixed rate or converted to a fixed rate [232]. - Borrowings on variable rate credit facilities amounted to $2.1 billion as of December 31, 2025, with a potential interest expense fluctuation of approximately $6.4 million for a 50 basis point change in interest rates over the next 12 months [233]. Currency and Foreign Operations - Foreign currency translation adjustments are included in Other comprehensive income/(loss) and affect equity in the Consolidated Balance Sheets [236]. - The company has organized its European business to align portfolio ownership and collections within the same entity to mitigate foreign currency fluctuations [237]. - Multi-currency credit facilities in Europe and the UK allow better matching of funding and portfolio acquisitions by currency [237]. Performance Metrics - The term "Purchase price multiple" (PPM) refers to total estimated collections on nonperforming loan portfolios divided by purchase price [238]. - "Recoveries collected" includes cash collections, buybacks, and other adjustments, while "Total estimated collections" (TEC) refers to actual cash collections plus estimated remaining collections on nonperforming loan portfolios [238].

Core Viewpoint - PRA Group's fourth-quarter results exceeded expectations, showing double-digit revenue growth after a period of significant share price weakness [1] Financial Performance - The company reported better-than-expected fourth-quarter results, indicating a recovery in performance [1] - Revenue growth was in double digits, reflecting positive operational trends [1]

Core Insights - PRA Group, Inc. (PRAA) reported Q4 2025 EPS of $1.46, exceeding Zacks Consensus Estimate by 192% and increasing over threefold year over year [1][9] - Total revenues reached $333.4 million, a 13.7% year-over-year increase, surpassing the consensus mark by 9.6% [1][9] Revenue and Collections - Strong cash collections from the U.S. and Europe contributed to the quarterly results, with cash collections rising 13.6% year over year to $531.7 million, exceeding the Zacks Consensus Estimate of $517 million [2][3] - Portfolio income grew 14.4% year over year to $262.8 million, matching the consensus mark, while other revenues fell 19% year over year to $6.7 million but still beat the consensus of $3.1 million [4] Expenses and Profitability - Total operating expenses increased 4.4% year over year to $207.8 million, driven by higher legal collection costs and fees [4] - Net income for the quarter was $59.2 million, nearly tripling year over year [4] Loan Purchases and Efficiency - Nonperforming loan portfolio purchases totaled $314.8 million, a decline of 27.2% year over year [5] - The adjusted cash efficiency ratio improved by 250 basis points year over year to 61.3% [5] Financial Position - As of December 31, 2025, PRA Group had cash and cash equivalents of $104.4 million, a decrease of 1.4% from the end of 2024, with total assets increasing 3.5% to $5.1 billion [6] - Borrowings rose 11.1% year over year to $3.7 billion, while total equity fell 12.9% to $1 billion [6] Share Repurchase - The company executed share repurchases amounting to $20 million in 2025 [7] Full Year Results - For the full year 2025, total revenues increased 7.8% year over year to $1.2 billion, while portfolio income rose 18.2% to $1 billion [8] - The company reported a net loss per share of $7.79 compared to a net income of $1.79 per share in 2024 [8]

Core Insights - PRA Group achieved significant progress in 2025, marked by record cash collections, revenue, and estimated remaining collections (ERC) [5][7][19] - The company focused on operational improvements and strategic investments, particularly in the U.S. legal collections channel, which contributed to strong financial performance [3][6][21] Financial Performance - Cash collections reached a record $2.1 billion in 2025, reflecting a double-digit increase for both the quarter and the full year, driven by operational initiatives and strong performance in Europe [3][11] - Revenue for the year was also a record at $1.2 billion, with portfolio income growing 18% to a company-record $1.0 billion [3][15] - Adjusted EBITDA increased by 16% year-over-year to $1.3 billion, with net leverage at 2.7x, down from 2.8x the previous year [6][20] Portfolio Investments - PRA purchased $1.2 billion of portfolios in 2025, aligning with its investment targets and marking its third-highest investment year on record [4][5] - The U.S. core purchase price multiple increased to 2.16x in 2025, compared to 2.11x in 2024, while the European core purchase price multiple was 1.85x [12] Operational Highlights - The U.S. legal collections channel saw a 28% increase, contributing to 48% of U.S. core cash collections, up from 39% two years prior [13][17] - Global digital collections grew by 25% in 2025, indicating a strong momentum in this area [14] Strategic Outlook - The company plans to maintain annual investments between $1.0 billion and $1.3 billion, with a focus on reducing leverage over time [22][23] - Management anticipates stable portfolio supply over the next 18 months, with significant U.S. credit card balances and higher industry-wide charge-off rates [10][23]

Financial Data and Key Metrics Changes - In 2025, the company purchased $1.2 billion of portfolios, marking the third highest investment year on record [8][21] - Cash collections reached a record $2.1 billion, up 13% year-over-year, driven by operational initiatives and strong performance in Europe [9][26] - Adjusted net income increased to $73 million in 2025, reflecting a 3% growth from the previous year [10][41] - Adjusted EBITDA for the last 12 months was up 16% to $1.3 billion, growing faster than cash collections [10][45] - The cash efficiency ratio improved to 61% from 59% the previous year [10][44] Business Line Data and Key Metrics Changes - U.S. legal cash collections grew 28% to $483 million in 2025, with a significant increase of approximately 83% since 2023 [27] - Portfolio income increased by 34% compared to 2023, contributing more to net income [31][32] - Legal accounted for 48% of U.S. core cash collections in 2025, up from 39% two years ago [29] Market Data and Key Metrics Changes - Estimated remaining collections (ERC) reached a record $8.6 billion, up 15% year-over-year, with the U.S. accounting for 42% and Europe for 51% [24] - The replenishment rate needed to maintain current ERC levels was $982 million [25] - U.S. credit card balances are at $1.1 trillion, with industry-wide charge-off rates above 4%, providing significant supply opportunities [25] Company Strategy and Development Direction - The company is evolving into a high-performing, technology-enabled global allocator of capital, focusing on disciplined investments and operational improvements [52][53] - Key strategic vectors include capital and investing, operations and technology, and people and culture [53][54] - The company aims to maintain a conservative balance sheet with ample liquidity and explore alternative funding mechanisms [56][57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong position entering 2026, with good cash performance and key metrics trending positively [86] - The competitive landscape in Europe remains stable, with opportunities for capital deployment despite pricing pressures [90][92] - The company is focused on leveraging technology, including AI, to enhance operational efficiency and improve collection strategies [63][81] Other Important Information - The company repurchased $20 million of its stock in 2025, with approximately $50 million remaining under board authorization for future repurchases [19][50] - The net leverage ratio declined from 2.9x in 2024 to 2.7x at the end of 2025 [19][46] Q&A Session Summary Question: What are the top three initiatives to focus on? - Management highlighted capital discipline, cost flexibility, and technology modernization as key priorities [78][80] Question: Can you share details on new asset classes being considered? - Management refrained from specifics but indicated interest in adjacent asset classes with attractive return opportunities [82] Question: How should collections be viewed in 2026? - Management expects strong momentum from 2025 to carry into 2026, with cash collections growth anticipated to continue [86][88] Question: What is the competitive dynamic in Europe? - Management noted a stable and competitive market in Europe, with opportunities for capital deployment [90][92] Question: How much can the expense structure be pushed to variable? - Management indicated a mix of in-house and outsourced collections is optimal, balancing cost control and flexibility [114]

Financial Data and Key Metrics Changes - In 2025, the company purchased $1.2 billion of portfolios, marking the third highest investment year on record, with estimated remaining collections (ERC) reaching a record $8.6 billion, up 15% year-over-year [4][12] - Cash collections for the year were $2.1 billion, reflecting a 13% growth, exceeding the high single-digit growth target set for 2025 [5][14] - Adjusted net income increased to $73 million in 2025, with adjusted EBITDA rising 16% to $1.3 billion, outpacing cash collections growth of 13% [5][25] - The cash efficiency ratio improved to 61% from 59% the previous year, aligning with the company's cash efficiency target [5][25] Business Line Data and Key Metrics Changes - U.S. legal cash collections grew 28% to $483 million in 2025, with a significant increase of approximately 83% since 2023 [15] - Portfolio income, a stable revenue component, grew 14% in Q4 and 18% for the full year, reaching a record $1 billion [17] - Legal collections accounted for 48% of U.S. core cash collections in 2025, up from 39% two years ago [15] Market Data and Key Metrics Changes - The U.S. accounted for 42% of ERC, while Europe represented 51%, indicating a well-diversified portfolio that mitigates risks from economic cycles [12] - The replenishment rate needed to maintain current ERC levels was $982 million, with U.S. credit card balances at $1.1 trillion and industry-wide charge-off rates above 4% [13] Company Strategy and Development Direction - The company is evolving into a technology-enabled global allocator of capital, focusing on disciplined investments, operational efficiency, and leveraging technology [29][30] - The strategy includes modernizing operations, enhancing data analytics, and utilizing AI to improve collection processes [34][35] - The company aims to maintain a conservative balance sheet with ample liquidity and a flexible cost structure, targeting net leverage in the mid-2x area over time [30][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong momentum entering 2026, with expectations for continued cash collection growth and improved operational metrics [51][52] - The competitive landscape in Europe remains stable, with opportunities for capital deployment despite pricing pressures in certain markets [55][56] - The company anticipates investments in the range of $1 billion to $1.3 billion per year, with a focus on returns over growth for growth's sake [38] Other Important Information - The company repurchased $20 million of its stock in 2025, with an additional $50 million remaining under board authorization for future buybacks [27][61] - The company has no debt maturities until November 2027, providing a stable financial outlook [27] Q&A Session Summary Question: What are the top three initiatives to focus on? - Management highlighted the importance of disciplined capital investment, operational flexibility, and leveraging technology, particularly AI, as key areas of focus [42][46] Question: What new asset classes are being considered? - Management refrained from disclosing specific asset classes but indicated interest in adjacent opportunities that align with their capabilities [47][48] Question: How should collections be viewed in 2026? - Management noted strong momentum from 2025 and expected continued growth in cash collections, driven by investments in the U.S. legal channel [51][52] Question: What is the competitive dynamic in Europe? - Management described the European market as stable and competitive, with opportunities for capital deployment despite pricing pressures [55][56] Question: How much can the expense structure be made variable? - Management indicated a mixed approach, balancing in-house collections with external debt collection agencies to optimize costs [71][73]

Financial Data and Key Metrics Changes - In 2025, the company purchased $1.2 billion of portfolios, marking the third highest investment year on record, and driving estimated remaining collections (ERC) to a record $8.6 billion, up 15% year-over-year [4][12] - Cash collections reached a new record of $2.1 billion, reflecting a 13% growth for the year, exceeding the high single-digit growth target [5][14] - Adjusted net income increased to $73 million in 2025, with adjusted EBITDA rising 16% to $1.3 billion, outpacing cash collections growth [5][25] Business Line Data and Key Metrics Changes - U.S. legal cash collections grew 28% to $483 million in 2025, significantly contributing to overall cash collections [14][16] - Portfolio income, a stable revenue component, grew 18% for the full year to $1 billion, a company record, and increased by 34% compared to 2023 [17][22] - Legal accounted for 48% of U.S. core cash collections in 2025, up from 39% two years ago, indicating a shift towards more legal collections [16] Market Data and Key Metrics Changes - The U.S. accounted for 42% of ERC, while Europe accounted for 51%, showcasing a well-diversified portfolio that mitigates risks from economic cycles [12] - The replenishment rate needed to maintain current ERC levels was $982 million, with U.S. credit card balances at $1.1 trillion and industry-wide charge-off rates above 4% [13] Company Strategy and Development Direction - The company is evolving into a technology-enabled global allocator of capital, focusing on disciplined investments, operational efficiency, and leveraging technology [29][30] - The strategy includes modernizing operations, enhancing data analytics, and utilizing AI to improve collection processes and customer engagement [34][35] - The company aims to maintain a conservative balance sheet with ample liquidity and explore alternative funding mechanisms [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2026 with strong momentum, driven by good cash performance and operational improvements [50] - The competitive landscape in Europe remains stable, with opportunities for capital deployment despite pricing pressures in certain markets [55][56] - The focus remains on improving cash collections while managing costs effectively, with expectations for adjusted EBITDA to continue growing [64][68] Other Important Information - The company repurchased $20 million of its stock in 2025, with an additional $50 million remaining under board authorization for future buybacks [27][61] - The net leverage ratio decreased from 2.9x in 2024 to 2.7x at the end of 2025, indicating a reduction in debt levels [10][25] Q&A Session Summary Question: What are the top three initiatives to focus on? - Management highlighted the importance of disciplined capital investment, creating cost flexibility, and leveraging technology, particularly AI, as key initiatives [42][45] Question: Can you share details on new asset classes being considered? - Management refrained from specifics but indicated interest in adjacent asset classes that align with their capabilities and operational strengths [46][47] Question: How should collections be viewed in 2026? - Management noted strong momentum entering 2026, with expectations for cash collections to grow, albeit at a slower rate than in 2025 [50][51] Question: What is the competitive dynamic in Europe? - Management described the European market as competitive but stable, with opportunities for capital deployment based on diversification [55][56] Question: What has driven recent improvements in collections? - Management attributed improvements to several years of initiatives, including investments in legal collections and digital channels, as well as the use of AI for data processing [57][59] Question: How far can the expense structure be made variable? - Management indicated a mixed approach, balancing in-house collections with external debt collection agencies to maintain flexibility and cost-effectiveness [70][72]