Financial Performance - Total cash collections for Q3 2023 were $419.6 million, an increase of $7.3 million, or 1.8%, compared to $412.3 million in Q3 2022[157]. - Total revenues for the three months ended September 30, 2023, were $216.4 million, a decrease of $28.4 million, or 11.6%, compared to $244.8 million for the same period in 2022[158]. - Total revenues for the nine months ended September 30, 2023, were $581.1 million[155]. - Cash collections for the nine months ended September 30, 2023, totaled $1,250.2 million, a decrease of $87.2 million, or 6.5%, from $1,337.4 million in the same period in 2022[170]. - Net loss attributable to PRA Group, Inc. for Q3 2023 was $12.3 million, or 5.5% of total revenues[155]. - Total portfolio revenue was $212.1 million for the three months ended September 30, 2023, down $22.1 million, or 9.4%, from $234.2 million in the prior year, primarily due to lower cash overperformance and a lack of certain recoveries[159]. - Other revenue decreased to $4.3 million for the three months ended September 30, 2023, a decline of $6.3 million, or 59.4%, compared to $10.6 million in 2022, mainly due to timing of settlements[160]. Cash Collections - Cash collections in Brazil increased by $20.9 million, or 87.8%, in Q3 2023 compared to Q3 2022[157]. - Cash collections in Europe rose by $13.4 million, or 8.7%, in Q3 2023 compared to Q3 2022[157]. - U.S. legal cash collections decreased by $6.1 million, or 8.5%, in Q3 2023 due to lower volumes of accounts placed in the legal channel[157]. - The overall subtotal for cash collections across all segments was $1,615,204 million, indicating a robust performance in the financial year[195]. - The company reported cash collections of $475.5 million for the year 2023, showing a significant increase compared to previous years[199]. - The total cash collections for Europe from 2012 to 2023 amounted to $4,808.3 million, with a subtotal of $4,381.2 million[199]. Portfolio Acquisitions - Total portfolio purchases for Q3 2023 amounted to $311.2 million[154]. - Total portfolio acquisitions in Q3 2023 amounted to $311,183, an increase from $183,104 in Q3 2022[212]. - Major credit card acquisitions in Q3 2023 were $57,045, representing 33.2% of total U.S. portfolio acquisitions[214]. - Fresh accounts, typically past due 120 to 270 days, accounted for $103,432 or 66.0% of total core acquisitions in Q3 2023[215]. - The company invested $850.0 million in portfolio acquisitions in 2022, which generated $109.4 million of cash collections, representing only 6.3% of 2022 cash collections[224]. Operating Expenses and Interest - Operating expenses for the three months ended September 30, 2023, were $173.4 million, a slight decrease of $0.6 million, or 0.4%, from $174.0 million in the same period last year[161]. - Interest expense, net increased to $49.5 million for the three months ended September 30, 2023, up $17.0 million, or 52.4%, compared to $32.5 million in 2022, reflecting a higher average debt balance and interest rates[166]. - Operating expenses for the nine months ended September 30, 2023, were $526.2 million, an increase of $9.0 million, or 1.7%, compared to $517.2 million in the prior year[175]. - Interest expense, net for the nine months ended September 30, 2023, was $130.8 million, an increase of $35.0 million, or 36.6%, compared to $95.8 million in 2022, primarily due to higher debt and interest rates[181]. Cash Efficiency and Ratios - Cash efficiency ratio for Q3 2023 was 58.9%[154]. - The cash efficiency ratio for Q3 2023 was 58.9%, slightly up from 58.4% in Q2 2023[209]. - The Debt to Adjusted EBITDA ratio increased to 2.84x as of September 30, 2023, compared to 2.25x for the year ended December 31, 2022[219]. Goodwill and Impairment - As of September 30, 2023, the company reported goodwill of $412.5 million, primarily from the Debt Buying and Collection (DBC) reporting unit, which accounted for $385.6 million[248]. - The company performed its most recent annual goodwill impairment review on October 1, 2022, concluding that goodwill was not impaired, with the DBC reporting unit's fair value exceeding its carrying value by a substantial margin[249]. - The company identified a heightened risk for future impairment of goodwill allocated to the DBC reporting unit due to macroeconomic conditions, higher interest rates, and recent financial performance[250]. Future Projections - The estimated remaining collections (ERC) as of September 30, 2023, amount to $5,975.6 million, categorized by geographical region[202]. - Total ERC for 2024 is projected at $1,474,521, with a significant contribution from the Americas and Australia Core at $822,339[205]. - The total ERC for 2033 is projected to be $145,548, indicating a declining trend over the years[205]. International Operations - The company generated $111.0 million in revenues from operations outside the U.S. during the three months ended September 30, 2023, using 12 functional currencies[260]. - The company actively monitors the value of finance receivables by currency and may execute re-balancing foreign exchange contracts to align funding and portfolio acquisitions by currency[264].

PRA Group, Inc. (NASDAQ:PRAA) Q2 2023 Earnings Conference Call August 7, 2023 5:00 PM ET Company Participants Najim Mostamand - Vice President, Investor Relations Vikram Atal - President and Chief Executive Officer Pete Graham - Executive Vice President and Chief Financial Officer Conference Call Participants David Scharf - JMP Securities Robert Napoli - William Blair Mark Hughes - Truist Securities Robert Dodd - Raymond James Operator Good afternoon and welcome to the PRA Group's Second Quarter 2023 Confer ...

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) PRA Group's unaudited financial statements reveal increased assets and borrowings, significant declines in net income and diluted EPS, and a shift to net cash used in investing activities [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) PRA Group's balance sheet reflects increased total assets, primarily from finance receivables, alongside higher liabilities due to borrowings, and a slight decrease in total equity Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (%) | | :------------------------- | :------------ | :---------------- | :--------- | | Total assets | $4,320,859 | $4,175,674 | +3.47% | | Finance receivables, net | $3,424,548 | $3,295,008 | +3.93% | | Total liabilities | $3,081,185 | $2,888,924 | +6.65% | | Borrowings | $2,739,667 | $2,494,858 | +9.81% | | Total equity | $1,239,674 | $1,286,750 | -3.66% | [Consolidated Income Statements](index=4&type=section&id=Consolidated%20Income%20Statements) PRA Group reported a significant decrease in net income and diluted EPS for both the three and six months ended June 30, 2023, driven by lower revenues and higher interest expense Consolidated Income Statement Highlights (in thousands, except per share amounts) | Metric | 3 Months Ended June 30, 2023 (in thousands) | 3 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total revenues | $209,236 | $258,262 | $364,706 | $498,867 | | Income from operations | $45,561 | $83,737 | $11,917 | $155,704 | | Interest expense, net | $(43,022) | $(31,562) | $(81,305) | $(63,310) | | Net income/(loss) | $1,160 | $39,136 | $(52,743) | $73,754 | | Diluted EPS | $(0.10) | $0.91 | $(1.60) | $1.88 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Total comprehensive income for Q2 2023 improved significantly due to positive currency translation, while the six-month period showed a total comprehensive loss Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | 3 Months Ended June 30, 2023 (in thousands) | 3 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income/(loss) | $1,160 | $39,136 | $(52,743) | $73,754 | | Currency translation adjustments | $7,083 | $(115,536) | $5,533 | $(103,266) | | Cash flow hedges | $5,719 | $5,837 | $888 | $24,417 | | Total comprehensive income/(loss) | $13,882 | $(70,805) | $(46,274) | $(5,497) | [Consolidated Statements of Changes in Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity decreased from December 31, 2022, to June 30, 2023, primarily due to a net loss and negative adjustments from accumulated other comprehensive loss Consolidated Statements of Changes in Equity Highlights (in thousands) | Metric | Balance at Dec 31, 2022 (in thousands) | Balance at Jun 30, 2023 (in thousands) | Change (in thousands) | | :-------------------------------- | :---------------------- | :---------------------- | :----- | | Common Stock | $390 | $392 | +$2 | | Additional Paid-In Capital | $2,172 | $2,541 | +$369 | | Retained Earnings | $1,573,025 | $1,510,592 | $(62,433) | | Accumulated Other Comprehensive Loss | $(347,926) | $(348,000) | $(74) | | Noncontrolling Interest | $59,089 | $74,149 | +$15,060 | | Total Equity | $1,286,750 | $1,239,674 | $(47,076) | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating and investing activities increased for the six months ended June 30, 2023, while net cash provided by financing activities rose significantly Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | Change (in thousands) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----- | | Net cash provided by/(used in) operating activities | $(80,839) | $(41,764) | $(39,075) | | Net cash provided by/(used in) investing activities | $(93,967) | $147,010 | $(240,977) | | Net cash provided by/(used in) financing activities | $208,496 | $(110,244) | $318,740 | | Net increase/(decrease) in cash and cash equivalents | $39,906 | $(19,956) | $59,862 | | Cash and cash equivalents, end of period | $124,665 | $69,116 | +$55,549 | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail PRA Group's accounting policies, financial instruments, and specific balance sheet and income statement items, covering global operations, borrowings, and contingencies [1. Organization and Business](index=9&type=section&id=1.%20Organization%20and%20Business) PRA Group is a global financial services company focused on purchasing and managing nonperforming loan portfolios, operating as one accounts receivable management segment - PRA Group's primary business is the purchase, collection, and management of **nonperforming loan portfolios globally**[24](index=24&type=chunk) - The company operates as **one reportable segment**: accounts receivable management, based on similarities in economic characteristics, products, services, and customer types[31](index=31&type=chunk) Revenues by Geographical Location (in thousands) | Geographic Segment | 3 Months Ended June 30, 2023 (in thousands) | 3 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | | :----------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | U.S. | $94,246 | $136,852 | $153,393 | $288,277 | | United Kingdom | $35,261 | $45,880 | $68,570 | $89,834 | | Brazil | $25,369 | $12,814 | $44,635 | $32,080 | | Other | $54,360 | $62,716 | $98,108 | $88,676 | | Total | $209,236 | $258,262 | $364,706 | $498,867 | [2. Finance Receivables, net](index=10&type=section&id=2.%20Finance%20Receivables%2C%20net) Finance receivables, net, increased, with Q2 2023 showing positive changes in expected recoveries from Europe and South America, but a net negative for the six months due to reduced U.S. call center cash flows Finance Receivables, Net (in thousands) | Metric | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :-------------------- | :------------ | :---------------- | | Finance receivables, net | $3,424,548 | $3,295,008 | - For the three months ended June 30, 2023, changes in expected recoveries were a **net positive $21.1 million**, including **$25.3 million from overperformance** largely from Europe and South America, offset by a $4.2 million negative adjustment to future expected recoveries[45](index=45&type=chunk) - For the six months ended June 30, 2023, changes in expected recoveries were a **net negative $15.8 million**, including $29.2 million from overperformance in Europe and South America, but offset by a **$45.0 million negative adjustment** to future expected recoveries due to weaker U.S. call center performance[56](index=56&type=chunk) [3. Investments](index=15&type=section&id=3.%20Investments) Total investments decreased slightly, primarily comprising available-for-sale debt securities and equity securities, including private equity funds and equity method investments Investments (in thousands) | Investment Type | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :----------------------------- | :------------ | :---------------- | | Debt securities (Available-for-sale) | $62,740 | $66,813 | | Equity securities (Private equity funds) | $3,427 | $4,373 | | Equity method investments | $10,002 | $8,762 | | Total investments | $76,169 | $79,948 | - The Company has an **11.7% interest in RCB Investimentos S.A.**, a servicing platform for nonperforming loans in Brazil, accounted for under the equity method[61](index=61&type=chunk) [4. Goodwill](index=16&type=section&id=4.%20Goodwill) Goodwill decreased primarily due to foreign currency translation adjustments, with the company concluding no impairment in its annual review and no triggering events identified Goodwill (in thousands) | Metric | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :-------------------- | :------------ | :---------------- | | Goodwill | $414,905 | $435,921 | - Goodwill decreased by **$21.02 million** for the six months ended June 30, 2023, primarily due to foreign currency translation adjustments[64](index=64&type=chunk) - The company performs an annual goodwill impairment review as of October 1st and found **no impairment** as of October 1, 2022, with no triggering events by June 30, 2023[63](index=63&type=chunk) [5. Leases](index=16&type=section&id=5.%20Leases) The Company's operating lease portfolio consists of corporate offices and call centers, with total lease expense decreasing for the six months ended June 30, 2023, and lease liabilities totaling $55.72 million Total Lease Expense (in thousands) | Lease Expense | 3 Months Ended June 30, 2023 (in thousands) | 3 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2023 (in thousands) | 6 Months Ended June 30, 2022 (in thousands) | | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating lease expense | $2,604 | $3,088 | $5,515 | $6,320 | | Short-term lease expense | $566 | $195 | $1,027 | $1,099 | | Sublease income | $(137) | $(115) | $(275) | $(230) | | Total lease expense | $3,033 | $3,168 | $6,267 | $7,189 | - Lease liabilities at June 30, 2023, totaled **$55.72 million**, with **$5.26 million** due in the remaining six months of 2023 and **$10.23 million** due in 2024[68](index=68&type=chunk) [6. Borrowings](index=17&type=section&id=6.%20Borrowings) Total borrowings increased due to higher revolving credit balances and new senior notes, partially offset by convertible note retirement, with the company remaining in compliance with all covenants Borrowings (in thousands) | Borrowing Type | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :---------------------------- | :------------ | :---------------- | | Americas revolving credit | $273,397 | $186,867 | | UK revolving credit | $512,791 | $453,528 | | Europe revolving credit | $476,089 | $419,856 | | Term loan | $445,000 | $450,000 | | Senior notes | $1,046,000 | $650,000 | | Convertible notes | $0 | $345,000 | | Total borrowings | $2,739,667 | $2,494,858 | - The Company issued **$400 million in 8.375% Senior Notes due 2028** and used substantially all proceeds to retire the **$345 million Convertible Senior Notes due 2023**[91](index=91&type=chunk)[101](index=101&type=chunk) - The Company was in **compliance with all covenants** of its financing arrangements as of June 30, 2023[71](index=71&type=chunk) [7. Derivatives](index=21&type=section&id=7.%20Derivatives) The Company uses derivative financial instruments, including interest rate swaps and foreign currency contracts, to manage market exposures, not for speculation, with fair values for assets and liabilities reported - The Company uses interest rate swap agreements, interest rate caps, and foreign currency contracts to reduce exposure to interest rate and foreign currency exchange rate fluctuations, **not for trading or speculative purposes**[102](index=102&type=chunk) Fair Value of Derivative Instruments (in thousands) | Derivative Type | June 30, 2023 (Fair Value, in thousands) | December 31, 2022 (Fair Value, in thousands) | | :----------------------------- | :------------------------- | :----------------------------- | | Interest rate contracts (assets) | $39,795 | $37,305 | | Interest rate contracts (liabilities) | $540 | $0 | | Foreign currency contracts (assets) | $4,966 | $487 | | Foreign currency contracts (liabilities) | $8,576 | $19,120 | - As of June 30, 2023, the notional amount of interest rate contracts designated as cash flow hedges was **$729.5 million**, and foreign currency contracts not designated as hedges was **$1,693.0 million**[103](index=103&type=chunk)[107](index=107&type=chunk) [8. Fair Value](index=22&type=section&id=8.%20Fair%20Value) Financial instruments are categorized into a three-level fair value hierarchy, with fair values estimated using proprietary models, market quotes, or standard valuation models - Fair value measurements are categorized into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (unobservable inputs)[109](index=109&type=chunk) Financial Instruments Not Carried at Fair Value (in thousands) | Instrument | June 30, 2023 (Carrying Amount, in thousands) | June 30, 2023 (Estimated Fair Value, in thousands) | December 31, 2022 (Carrying Amount, in thousands) | December 31, 2022 (Estimated Fair Value, in thousands) | | :---------------------- | :------------------------------ | :----------------------------------- | :---------------------------------- | :----------------------------------- | | Finance receivables, net | $3,424,548 | $3,183,414 | $3,295,008 | $3,167,813 | | Senior Notes | $1,046,000 | $913,620 | $650,000 | $580,433 | | Convertible Notes | $0 | $0 | $345,000 | $341,926 | Financial Instruments Carried at Fair Value (in thousands) | Instrument | June 30, 2023 (Total Fair Value, in thousands) | December 31, 2022 (Total Fair Value, in thousands) | | :------------------------------------ | :------------------------------- | :----------------------------------- | | Government securities | $62,740 | $66,813 | | Derivative contracts (assets) | $44,761 | $37,792 | | Derivative contracts (liabilities) | $9,116 | $19,120 | [9. Accumulated Other Comprehensive Loss](index=24&type=section&id=9.%20Accumulated%20Other%20Comprehensive%20Loss) Accumulated other comprehensive loss remained stable, with a net current period other comprehensive gain for Q2 2023 primarily from cash flow hedges and currency translation adjustments Accumulated Other Comprehensive Loss by Component (in thousands) | Component | Balance at Dec 31, 2022 (in thousands) | Balance at Jun 30, 2023 (in thousands) | | :----------------------- | :---------------------- | :---------------------- | | Debt Securities Available-for-sale | $(237) | $(189) | | Cash Flow Hedges | $27,804 | $28,692 | | Currency Translation Adjustments | $(375,493) | $(376,503) | | Total Accumulated Other Comprehensive Loss | $(347,926) | $(348,000) | - For the three months ended June 30, 2023, net current period other comprehensive gain was **$8.73 million**, driven by **$5.72 million from cash flow hedges** and **$3.09 million from currency translation adjustments**[125](index=125&type=chunk) [10. Earnings per Share](index=25&type=section&id=10.%20Earnings%20per%20Share) Basic and diluted EPS decreased significantly for both the three and six months ended June 30, 2023, reflecting a net loss attributable to PRA Group, Inc Earnings Per Share (EPS) | EPS Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :--------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic EPS | $(0.10) | $0.92 | $(1.60) | $1.90 | | Diluted EPS | $(0.10) | $0.91 | $(1.60) | $1.88 | - The Company did not repurchase any common stock during the six months ended June 30, 2023, and had **$67.7 million remaining** for share repurchases under its program[130](index=130&type=chunk) [11. Income Taxes](index=26&type=section&id=11.%20Income%20Taxes) The Company accounts for income taxes using the asset and liability method, intends to indefinitely reinvest international earnings, and is subject to examination for tax years from 2014 onwards - The Company intends to **indefinitely reinvest international earnings**, so no deferred tax liabilities are recorded for unremitted earnings[134](index=134&type=chunk) - Tax years subject to examination by major federal, state, and international taxing jurisdictions are **2014 and subsequent years**[133](index=133&type=chunk) - Cash on hand related to international operations with indefinitely reinvested earnings was **$83.2 million** at June 30, 2023, up from $75.3 million at December 31, 2022[134](index=134&type=chunk) [12. Commitments and Contingencies](index=26&type=section&id=12.%20Commitments%20and%20Contingencies) The Company has various commitments, including employment and forward flow agreements, and is subject to routine legal matters, with reasonably possible losses not material at June 30, 2023 - Estimated future compensation under employment agreements with U.S. executive officers is **$4.4 million**[135](index=135&type=chunk)[137](index=137&type=chunk) - The maximum remaining amount to be purchased under forward flow agreements for nonperforming loans was **$557.7 million** at June 30, 2023, with **$535.0 million** due within the next 12 months[138](index=138&type=chunk)[227](index=227&type=chunk) - The aggregate range of reasonably possible losses in excess of the amount accrued for legal proceedings was **not material** at June 30, 2023[142](index=142&type=chunk) [13. Recently Issued Accounting Standards](index=27&type=section&id=13.%20Recently%20Issued%20Accounting%20Standards) The Company does not anticipate any recently issued accounting pronouncements to have a material effect on its Consolidated Financial Statements - No material effect is expected from recently issued accounting pronouncements on the Consolidated Financial Statements[145](index=145&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights decreased cash collections, total revenues, and net income due to lower purchasing and higher interest rates, noting an increased Debt to Adjusted EBITDA ratio - For the three months ended June 30, 2023, total portfolio purchases were **$327.8 million**, total cash collections were **$419.3 million**, and diluted EPS was **$(0.10)**[151](index=151&type=chunk) - For the six months ended June 30, 2023, total portfolio purchases were **$558.0 million**, total cash collections were **$830.6 million**, and diluted EPS was **$(1.60)**[151](index=151&type=chunk) - Cash collections decreased by **5.6%** for the three months and **10.2%** for the six months ended June 30, 2023, primarily due to lower purchasing levels in recent years, particularly in U.S. call centers and Americas Insolvency[154](index=154&type=chunk)[167](index=167&type=chunk) - Total portfolio revenue decreased by **18.0%** for the three months and **26.9%** for the six months ended June 30, 2023, largely due to lower purchasing, reduced cash overperformance, and a negative adjustment to estimated remaining collections (ERC) for certain U.S. Core portfolios[156](index=156&type=chunk)[169](index=169&type=chunk) - Interest expense, net, increased by **36.3%** for the three months and **28.4%** for the six months ended June 30, 2023, reflecting a higher average debt balance and increased interest rates[163](index=163&type=chunk)[177](index=177&type=chunk) - The company's Debt to Adjusted EBITDA ratio increased to **2.76x** as of June 30, 2023, from 2.25x at December 31, 2022[220](index=220&type=chunk) - Estimated remaining collections (ERC) totaled **$5.90 billion** at June 30, 2023[151](index=151&type=chunk)[197](index=197&type=chunk) Quarterly Cash Collections by Geography and Type (in thousands) | Quarter | Americas and Australia Core (in thousands) | Americas Insolvency (in thousands) | Europe Core (in thousands) | Europe Insolvency (in thousands) | Total Cash Collections (in thousands) | | :------ | :-------------------------- | :------------------ | :---------- | :---------------- | :--------------------- | | 2023 Q2 | $220,886 | $26,384 | $149,324 | $22,725 | $419,319 | | 2023 Q1 | $227,960 | $25,751 | $134,005 | $23,568 | $411,284 | | 2022 Q4 | $205,619 | $27,971 | $134,016 | $24,051 | $391,657 | | 2022 Q3 | $225,775 | $31,911 | $132,072 | $22,586 | $412,344 | | 2022 Q2 | $244,377 | $34,278 | $142,470 | $22,935 | $444,060 | | 2022 Q1 | $270,284 | $35,209 | $151,162 | $24,325 | $480,980 | Quarterly Portfolio Acquisitions by Geography and Type (in thousands) | Quarter | Americas and Australia Core (in thousands) | Americas Insolvency (in thousands) | Europe Core (in thousands) | Europe Insolvency (in thousands) | Total Portfolio Acquisitions (in thousands) | | :------ | :-------------------------- | :------------------ | :---------- | :---------------- | :--------------------------- | | 2023 Q2 | $171,440 | $12,189 | $136,834 | $7,296 | $327,759 | | 2023 Q1 | $116,867 | $15,701 | $90,454 | $7,203 | $230,225 | | 2022 Q4 | $118,581 | $8,967 | $140,011 | $20,535 | $288,094 | | 2022 Q3 | $100,780 | $8,988 | $59,426 | $13,910 | $183,104 | | 2022 Q2 | $99,962 | $6,369 | $123,814 | $1,202 | $231,347 | | 2022 Q1 | $90,639 | $9,118 | $38,764 | $8,929 | $147,450 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company is exposed to interest rate and currency exchange risks, which it mitigates using derivative financial instruments like interest rate and currency derivatives, hedging 62% of its variable rate debt - The Company is subject to interest rate risk from approximately **$1.7 billion in variable rate credit facilities** as of June 30, 2023, where a 50 basis point increase/decrease in interest rates would change interest expense by an estimated **$5.4 million** over 12 months[255](index=255&type=chunk) - To mitigate interest rate risk, the Company uses interest rate derivative contracts, **hedging 62% of its notional variable rate debt** as of June 30, 2023[256](index=256&type=chunk) - International operations expose the Company to currency exchange risk, with **$115.0 million in non-U.S. revenues** in Q2 2023 across 12 functional currencies, mitigated by multi-currency credit facilities and re-balancing foreign exchange contracts[257](index=257&type=chunk)[261](index=261&type=chunk) [Item 4. Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) The Company's disclosure controls and procedures were deemed effective as of June 30, 2023, with no material changes in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were **effective** as of June 30, 2023[262](index=262&type=chunk) - No **material changes in internal control over financial reporting** occurred during the quarter ended June 30, 2023[263](index=263&type=chunk) [Part II. Other Information](index=51&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) No material developments occurred in previously disclosed legal proceedings, nor were there any new material legal proceedings during the six months ended June 30, 2023 - No material developments in legal proceedings disclosed in the 2022 Form 10-K or March 31, 2023, 10-Q, and no new material legal proceedings during the six months ended June 30, 2023[144](index=144&type=chunk) [Item 1A. Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes in the Company's risk factors from those disclosed in its 2022 Form 10-K - No material changes in risk factors from the 2022 Form 10-K[267](index=267&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company made no common stock repurchases during Q2 2023, with $67.7 million remaining in its share repurchase program, and does not currently pay regular dividends - No common stock repurchases were made during Q2 2023[268](index=268&type=chunk) - **$67.7 million remained** for share repurchases under the $150.0 million program as of June 30, 2023[230](index=230&type=chunk) - The Company does not currently pay regular dividends on its common stock[269](index=269&type=chunk) [Item 3. Defaults Upon Senior Securities](index=51&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities - No defaults upon senior securities[270](index=270&type=chunk) [Item 4. Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Not applicable[271](index=271&type=chunk) [Item 5. Other Information](index=51&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the three months ended June 30, 2023 - No Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during Q2 2023[272](index=272&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate organizational documents, indentures for senior notes, certifications, and XBRL interactive data files - The exhibits include the Fifth Amended and Restated Certificate of Incorporation, Amended and Restated By-Laws, various Indentures for Senior Notes (2029, 2028, 2025), and certifications by the CEO and CFO[273](index=273&type=chunk)[274](index=274&type=chunk)

Financial Data and Key Metrics Changes - Total cash collections for Q1 2023 were $411 million, a 14% year-over-year decrease, or a 12% decrease on a constant currency basis, primarily due to lower portfolio purchases in 2021 and 2022 [10][40] - Total revenues for the quarter were $155 million, with portfolio revenue at $151 million and portfolio income at $188 million, reflecting a negative change in expected recoveries of $37 million [29] - Operating expenses increased by $20 million to $189 million, driven by higher compensation, employee services, and legal collection costs [34] Business Line Data and Key Metrics Changes - Quarterly portfolio purchases were $230 million, up 56% year-over-year, indicating a positive trend in purchasing activity [18] - Cash collections in the Americas decreased by $52 million to $254 million, attributed to lower portfolio purchases and a muted tax season [41] - European cash collections decreased by 10%, but only 2% on a currency-adjusted basis, representing over-performance of approximately 3% compared to internal expectations [43] Market Data and Key Metrics Changes - Active US credit card balances exceeded pre-pandemic levels by 14%, with delinquency and charge-off rates rising to 2.3% and 2.6%, respectively [28] - The US market is experiencing challenges due to a weaker economic environment and reduced consumer liquidity, impacting cash performance and margins [8][40] Company Strategy and Development Direction - The company aims to deepen seller relationships to boost purchasing opportunities and drive market share growth while maintaining a disciplined customer-centric focus [9] - The strategy remains intact, focusing on purchasing non-performing loans and expanding addressable markets [9][74] - The company is committed to optimizing internal processes and enhancing execution speed to align with customer and market expectations [74] Management's Comments on Operating Environment and Future Outlook - Management acknowledges near-term challenges in the US business due to economic conditions but remains optimistic about future supply opportunities [8][49] - The company is implementing initiatives to drive efficiencies, including a reduction in force and potential outsourcing of certain activities [16][90] - Management expects to collect $1.4 billion of the ERC balance over the next 12 months, with anticipated investments exceeding $848 million to maintain current ERC levels [46] Other Important Information - The company completed a $400 million offering of senior unsecured notes, with proceeds primarily allocated for repaying convertible notes maturing in June [23] - The cash efficiency ratio for Q1 was 54.3%, with expectations to reach a 60% run rate by Q4 2023 [44][80] Q&A Session Summary Question: What led to the new CEO accepting the role? - The new CEO accepted the role due to prior knowledge of the company and the opportunities for growth identified during his tenure on the Board [54] Question: What are the main strategic priorities moving forward? - The focus is on execution and optimizing operations rather than pursuing M&A at this time [57] Question: How is the company addressing cash collection challenges? - The company is adjusting its collection strategies and expanding its legal channel to improve cash generation [26][90] Question: What is the outlook for cash collections in the current economic environment? - The company anticipates continued softness in cash collections due to economic conditions but expects this to lead to more portfolio supply in the future [33][115] Question: How does the company view pricing dynamics in the market? - There are signs of pricing normalization as some sellers pull deals from the market due to unmet pricing expectations [81]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2023 ☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ________ to ________ Commission File Number: 000-50058 PRA Group, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation ...

806 Adjusted EBITDA Income tax expense | --- | --- | --- | |-------|---------------------------------------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Najim Mostamand, CFA | | | | VP, Investor Relations (757) 431-7913 | | | | IR@pragroup.com | | | | IR.PRAGROUP.COM | | Recoveries applied to negative allowance less Changes in expected recoveries 820 1 15 15 Depreciation and amortization Adjustment for net income attributable to noncontrolling interests ור • 27 years across v ...

PRA Group, Inc. (NASDAQ:PRAA) Q4 2022 Results Conference Call February 27, 2023 5:00 PM ET Company Participants Najim Mostamand - Vice President of Investor Relations Kevin Stevenson - President & Chief Executive Officer Pete Graham - Executive Vice President & Chief Financial Officer Conference Call Participants Bob Napoli - William Blair David Scharf - JMP Securities Mark Hughes - Truist Robert Dodd - Raymond James Operator Good afternoon, and welcome to the PRA Group's Q4 2022 Conference Call. All partic ...

Business Operations - PRA Group Inc. operates in the purchase, collection, and management of nonperforming loans, focusing on Core and Insolvency portfolios[16]. - The company has expanded through acquisitions, including the purchase of Aktiv Kapital AS in 2014 and a 55% stake in RCB Investimentos S.A. in 2015, which established operations in Brazil[17]. - As of December 31, 2022, PRA Group employed 3,277 full-time equivalents globally, with 73% in the Americas and Australia and 27% in Europe[36]. - The company has an 11.7% equity interest in RCB, a servicer of nonperforming loans in Brazil[27]. - PRA Group's collection operations utilize internally staffed call centers in higher volume markets and external vendors in newer or less consistent markets[22]. - The company has developed digital capabilities to support collection efforts across all operating markets, enhancing inbound and outbound collections[26]. Financial Performance - Total cash collections for 2022 were $1,729.1 million, a decrease of $332.6 million, or 16.1%, compared to $2,061.7 million in 2021[112]. - Portfolio income for 2022 was $772.3 million, down $103.0 million, or 11.8%, from $875.3 million in 2021[114]. - Total portfolio revenue decreased to $941.2 million in 2022, a decline of $132.0 million, or 12.3%, compared to $1,073.2 million in 2021[115]. - Operating expenses for 2022 were $680.7 million, a decrease of $40.0 million, or 5.6%, from $720.7 million in 2021[117]. - Net income attributable to PRA Group, Inc. was $117.1 million in 2022, representing 12.1% of total revenues, compared to $183.2 million, or 16.7%, in 2021[111]. - The cash efficiency ratio was reported at 61.0%, reflecting the company's ability to convert collections into cash[107]. - Total revenue for PRA Group in 2022 was $941.2 million, with a net finance receivables amounting to $3.295 billion as of December 31, 2022[139]. Economic and Regulatory Risks - The company faces risks from economic deterioration and inflation, which could adversely affect its business and operating results[42]. - A significant rise in personal bankruptcy and insolvency filings could impact the company's ability to collect on nonperforming loans[43]. - The availability of nonperforming loan portfolios at appropriate prices is dependent on high levels of consumer debt obligations and market conditions[48]. - Heightened regulation in the credit card and consumer lending industry may lead to decreased availability of credit to consumers, affecting future nonperforming loans[49]. - Legal and regulatory compliance is critical, as failure to adhere to laws could limit the company's ability to collect on nonperforming loans[64]. - International operations expose the company to various risks, including political and economic conditions that could negatively impact business[58]. - New international regulations, such as the OECD Pillar Two Directive, could significantly increase the company's tax liabilities starting January 1, 2024[63]. Debt and Financing - As of December 31, 2022, the company had total consolidated indebtedness of approximately $2.5 billion, with $1.6 billion in committed revolving borrowing capacity available under credit facilities[78]. - The company’s existing indebtedness includes $345 million in 3.50% Convertible Notes due 2023, $300 million in 7.375% Senior Notes due 2025, and $350 million in 5.00% Senior Notes due 2029[78]. - The company’s ability to generate sufficient cash flow from operations to meet debt obligations is uncertain and may be affected by economic conditions and operational performance[81]. - The company’s credit facilities and indentures contain restrictive covenants that may limit operational flexibility and affect business activities[82]. - The debt to adjusted EBITDA ratio increased to 2.25x in 2022 from 1.89x in 2021, indicating a higher leverage position[174]. Operational Challenges - Seasonal trends affect customer payment patterns, with cash collections typically higher in the first half of the year due to income tax refunds in the U.S.[29]. - The company anticipates an increase in charge-offs, which may lead to a greater supply of portfolios available for purchase in the coming months[105]. - The company reported changes in expected recoveries amounting to $44.6 million across all regions in 2022[139]. - The company has noted that customer payment patterns are influenced by seasonal employment trends and tax refund cycles, particularly in the U.S.[150]. International Operations - The company generated $445.8 million in revenues from operations outside the U.S. in 2022, utilizing 12 functional currencies[208]. - Fluctuations in foreign currencies could adversely affect the company's comprehensive income and stockholders' equity[209]. - Foreign currency gains and losses are included in Other income and (expense) in the Consolidated Income Statements[210]. - The company has organized its European operations to mitigate the impact of foreign currency fluctuations[212]. Shareholder Activities - The company has a share repurchase program authorized for up to $150.0 million, although no repurchases were made during the fourth quarter of 2022[102]. - The company repurchased 2,331,364 shares of common stock for approximately $99.4 million during the year ended December 31, 2022, with $67.7 million remaining for future repurchases[183].

PRA Group, Inc. (NASDAQ:PRAA) Q3 2022 Earnings Conference Call November 3, 2022 5:00 PM ET Company Participants Najim Mostamand - Vice President of Investor Relations Kevin Stevenson - President & Chief Executive Officer Pete Graham - Executive Vice President & Chief Financial Officer Conference Call Participants Operator Good afternoon, and welcome to the PRA Group's Third Quarter 2022 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note that this event is be ...

PRA Group Q3 2022 Conference Call Presentation 1 Forward-Looking Statements 2 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 fro ...