PRA Group Reports Second Quarter 2025 Results Strong Portfolio Purchases at Attractive Returns Driving Record ERC; Double-Digit Cash Collections Growth with 60%+ Cash Efficiency Ratio Net Income Attributable to PRA Group, Inc. of $42 Million Includes Approximately $30 million After- tax Gain from Previously Announced Sale of RCB Equity Interest in Brazil; $10 Million of Shares Repurchased 16% Adjusted EBITDA Growth Outpaces 13% Cash Collections Growth "More importantly, we have hit the ground running since ...

Core Insights - PRA Group, Inc. reported a net income of $42.4 million for Q2 2025, a significant increase of 96.9% compared to $21.5 million in Q2 2024, driven by strong portfolio purchases and cash collections growth [3][6][15] - The company achieved a record estimated remaining collections (ERC) of $8.3 billion, reflecting a 21.9% increase year-over-year [6] - Adjusted EBITDA grew by 16.4% to $1.2 billion for the 12 months ended June 30, 2025, outpacing cash collections growth of 13.2% [6][15] Financial Performance - Total cash collections for Q2 2025 reached $536.3 million, up 13.2% from $473.9 million in Q2 2024 [4][6] - Portfolio income increased by 19.9% to $250.9 million in Q2 2025 compared to $209.3 million in Q2 2024 [15] - Total revenues for Q2 2025 were $287.7 million, a slight increase of 1.6% from $284.2 million in Q2 2024 [14][15] Portfolio and Investment Activity - The company made total portfolio purchases of $346.5 million in Q2 2025, an 8.7% decrease from $379.4 million in Q2 2024 [6][16] - The company has forward flow commitments of $311.2 million over the next 12 months, with $210.6 million in the Americas and Australia and $100.5 million in Europe [16] - The cash efficiency ratio improved to 62.4%, an increase of 355 basis points year-over-year, indicating better management of cash collections and expenses [6] Operational Strategy - The CEO emphasized a focus on transforming the U.S. business while leveraging the company's strong European performance [3] - The company is prioritizing high-return opportunities and optimizing investments, operational execution, and expense management as part of its strategic pillars [3][6] - The company aims to enhance its financial and operational results over the long term, building on its global scale and strong foundation [3]

Core Viewpoint - PRA Group, Inc. is set to report its second quarter 2025 financial results on August 4, 2025, after market close, followed by a conference call and webcast [1] Company Overview - PRA Group, Inc. is a global leader in acquiring and collecting nonperforming loans, aiming to return capital to banks and other creditors to enhance financial services for consumers across the Americas, Europe, and Australia [4] - The company employs thousands of individuals worldwide and collaborates with customers to assist them in resolving their debt [4] Upcoming Financial Reports - The company plans to report its third quarter 2025 results after market close on November 3, 2025 [3]

Core Insights - PRA Group, Inc. has promoted Owen James to president of PRA Group Europe, succeeding Martin Sjolund [2][3] - James will oversee portfolio investments across Europe and lead operations in 15 markets, aiming to enhance profitability [1][4] - The European business has successfully invested over $3 billion in portfolios in the past seven years, becoming a key performance driver for the company [4][5] Leadership and Experience - Owen James has over 30 years of experience in financial services, including 13 years at PRA Group [5] - He has held various leadership roles within PRA Group's European business and previously worked at Intrum for over 15 years [5][6] - Martin Sjolund expressed confidence in James's ability to lead PRA Group Europe, highlighting his investment experience and operational expertise [6] Company Overview - PRA Group is a global leader in acquiring and collecting nonperforming loans, helping to return capital to banks and creditors [7] - The company operates in the Americas, Europe, and Australia, employing thousands of staff to assist customers in resolving debt [7]

Group 1 - The article introduces JDN Research as a new contributing analyst for Seeking Alpha, emphasizing the opportunity for individuals to share investment ideas and get published [1] - The focus is on identifying mispriced opportunities within the financial and technology sectors, highlighting a strategy that capitalizes on market overreactions and business model shifts [2] - The analyst expresses a beneficial long position in PRAA shares, indicating personal investment and research commitment without external compensation [3]

It has been about a month since the last earnings report for PRA Group (PRAA) . Shares have added about 6.3% in that time frame, underperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is PRA Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.How Have Estimates Been Moving Since Then?It turns ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section details the company's financial statements, notes, and management's analysis of financial condition and results [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited Consolidated Financial Statements for Q1 2025, including key financial statements and detailed explanatory notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $5.15 billion as of March 31, 2025, from $4.93 billion at year-end 2024, primarily driven by a rise in Finance receivables, net Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total assets** | **$5,148,069** | **$4,931,155** | | Finance receivables, net | $4,308,334 | $4,140,742 | | Goodwill | $420,715 | $396,357 | | **Total liabilities** | **$3,867,551** | **$3,737,548** | | Borrowings | $3,466,075 | $3,326,621 | | **Total equity** | **$1,280,518** | **$1,193,607** | [Consolidated Income Statements](index=5&type=section&id=Consolidated%20Income%20Statements) For the three months ended March 31, 2025, total revenues increased by 5.5% year-over-year to $269.6 million, while net income remained relatively flat at $3.7 million Q1 2025 vs Q1 2024 Income Statement (in thousands, except per share) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenues | $269,619 | $255,586 | | Income from operations | $74,577 | $66,396 | | Interest expense, net | ($60,970) | ($52,278) | | Net income attributable to PRA Group, Inc. | $3,659 | $3,475 | | Diluted EPS | $0.09 | $0.09 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities improved to $52.6 million in Q1 2025, while net cash provided by financing activities increased to $85.6 million Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($52,580) | ($72,999) | | Net cash (used in)/provided by investing activities | ($24,385) | $15,211 | | Net cash provided by financing activities | $85,630 | $52,822 | | Net increase/(decrease) in cash | $22,881 | ($4,105) | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's operations, accounting policies, and financial instrument balances, including increased finance receivables and borrowings - The company's primary business is the purchase, collection, and management of nonperforming loan portfolios across the Americas, Europe, and Australia[21](index=21&type=chunk) - Finance receivables, net, increased to **$4.31 billion** at March 31, 2025, from **$4.14 billion** at year-end 2024, driven by **$291.7 million** in new purchases and positive foreign currency adjustments, partially offset by **$265.1 million** in recoveries[25](index=25&type=chunk) - Changes in expected recoveries for Q1 2025 were **$27.9 million**, a significant decrease from **$51.7 million** in Q1 2024, with the 2025 amount including **$16.5 million** from collections overperformance, mainly in Europe and Brazil[30](index=30&type=chunk)[31](index=31&type=chunk) - The company has one reportable segment: **Accounts Receivable Management (ARM)**[52](index=52&type=chunk) - Subsequent to the quarter end, in April 2025, the company completed the sale of its **11.7%** interest in RCB Investimentos S.A. and expects to record a pre-tax gain of approximately **$38.0 million** in Q2 2025[58](index=58&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Q1 2025 results, highlighting an 18.7% increase in portfolio purchases and a 10.7% rise in cash collections year-over-year [Executive Overview](index=21&type=section&id=EXECUTIVE%20OVERVIEW) Q1 2025 saw significant growth in portfolio purchases and cash collections, leading to a record Estimated Remaining Collections (ERC) of $7.8 billion Q1 2025 Key Metrics vs. Q1 2024 | Metric | Q1 2025 | Change vs. Q1 2024 | | :--- | :--- | :--- | | Portfolio purchases | $291.7 million | +18.7% | | Cash collections | $497.4 million | +10.7% | | Estimated remaining collections (ERC) | $7.8 billion | +20.1% | | Net income attributable to PRA Group, Inc. | $3.7 million | +5.3% | | Diluted EPS | $0.09 | Unchanged | - In the U.S., portfolio purchases were **$161.0 million**, and U.S. legal collections increased **32.6%** YoY to **$111.2 million**, driven by optimization efforts and higher purchasing levels[72](index=72&type=chunk) - In Europe, portfolio purchases increased significantly by **$64.2 million** YoY to **$113.2 million**, and cash collections overperformed expectations, rising **10.8%** to **$185.6 million**[74](index=74&type=chunk) [Results of Operations](index=22&type=section&id=RESULTS%20OF%20OPERATIONS) Comparing Q1 2025 to Q1 2024, total portfolio purchases rose 18.7% to $291.7 million, and total cash collections grew 10.7% to $497.4 million Portfolio Purchases by Region (in thousands) | Region | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Americas and Australia | $178,456 | $196,816 | (9.3)% | | Total Europe | $113,246 | $49,001 | 131.1% | | **Total** | **$291,702** | **$245,817** | **18.7%** | Cash Collections by Region (in thousands) | Region | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Americas and Australia | $311,860 | $282,070 | 10.6% | | Total Europe | $185,576 | $167,448 | 10.8% | | **Total** | **$497,436** | **$449,518** | **10.7%** | - Total portfolio revenue increased by **6.0%** YoY, driven by a **19.3%** increase in portfolio income, but tempered by a **46.0%** decrease in 'Changes in expected recoveries'[80](index=80&type=chunk) - Legal collection costs and fees increased by **25.1%** and **25.7%** respectively, due to increased activity in the U.S. legal collections channel[82](index=82&type=chunk)[83](index=83&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company manages liquidity through cash on hand, borrowings, and operational cash flow, with $918.9 million in total borrowing availability as of March 31, 2025 Borrowing Availability as of March 31, 2025 (in thousands) | Facility | Borrowings | Total Availability | | :--- | :--- | :--- | | North American revolving credit facility | $621,495 | $453,505 | | UK revolving credit facility | $474,091 | $250,909 | | European revolving credit facility | $615,133 | $214,508 | | **Total** | **$3,466,075** | **$918,922** | - The company has forward flow agreements with an estimated purchase price of approximately **$347.0 million** over the next 12 months[127](index=127&type=chunk) - As of March 31, 2025, **$67.7 million** remained available for share repurchases under the existing program, though no repurchases were made in Q1 2025[132](index=132&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate and foreign currency exposure, with no material changes reported since December 31, 2024 - As of March 31, 2025, **58%** of the company's **$3.5 billion** in total borrowings was either fixed rate or hedged to a fixed rate[147](index=147&type=chunk) - Revenues from non-U.S. operations totaled **$133.2 million** in Q1 2025, highlighting the company's exposure to foreign currency fluctuations[148](index=148&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[149](index=149&type=chunk) - No changes occurred during Q1 2025 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[150](index=150&type=chunk) [PART II. OTHER INFORMATION](index=41&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information on legal proceedings, risk factors, and equity security sales [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 11 of the Consolidated Financial Statements for information regarding legal proceedings, indicating no material developments as of March 31, 2025 - For information on legal proceedings, the report refers to Note 11 of the financial statements[152](index=152&type=chunk) - As of March 31, 2025, there were no material developments in any of the previously disclosed legal proceedings[51](index=51&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) The company states that there have been no material changes to its risk factors from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes in risk factors from those disclosed in the 2024 Form 10-K[153](index=153&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[154](index=154&type=chunk)

Core Insights - PRA Group, Inc. (PRAA) shares fell 30.8% following the release of first-quarter 2025 results, primarily due to increased operating costs and a significant drop in other revenues [1][4] - The company reported earnings per share of nine cents, missing the Zacks Consensus Estimate by 78.1%, while total revenues increased by 5.5% year over year to $269.6 million, but still fell short of expectations by 4.6% [2][3] Financial Performance - Cash collections reached $497.4 million, a 10.7% year-over-year increase, but missed the consensus estimate of $519.2 million [3] - Portfolio income rose 19.3% year over year to $241 million, although it did not meet the consensus mark of $249 million [3] - Other revenues plummeted 60.2% year over year to $0.7 million, missing the consensus estimate of $1.2 million [3] Operating Expenses - Total operating expenses increased by 3.1% year over year to $195 million, driven by higher legal collection costs and fees [4] - Net income for the first quarter was $9.1 million, reflecting a 22.9% decline year over year [4] Asset and Cash Position - The company purchased nonperforming loan portfolios valued at $291.7 million, an 18.7% increase year over year [5] - Cash and cash equivalents at the end of the first quarter were $128.7 million, up 21.4% from the end of 2024 [6] - Total assets increased by 4.4% year over year to $5.1 billion, with borrowings rising 4.2% to $3.5 billion [6] Future Outlook - Management projects portfolio investments of $1.2 billion for 2025 and anticipates high-single-digit growth in cash collections due to strong portfolio purchases [7] - The cash efficiency ratio is expected to exceed 60% in 2025, with a forecasted return on average tangible equity of around 12% [7] Market Position - PRAA currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook in the market [8]

Core Insights - PRA Group reported quarterly earnings of $0.09 per share, missing the Zacks Consensus Estimate of $0.41 per share, representing an earnings surprise of -78.05% [1] - The company posted revenues of $269.62 million for the quarter, missing the Zacks Consensus Estimate by 4.61%, compared to year-ago revenues of $255.59 million [2] - PRA Group shares have declined approximately 7.6% since the beginning of the year, underperforming the S&P 500's decline of -3.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.67 on revenues of $290.32 million, and for the current fiscal year, it is $2.26 on revenues of $1.17 billion [7] - The estimate revisions trend for PRA Group is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Financial - Miscellaneous Services industry, to which PRA Group belongs, is currently in the top 35% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Another company in the same industry, Upstart Holdings, is expected to report quarterly earnings of $0.19 per share, reflecting a year-over-year change of +161.3% [9]

Financial Data and Key Metrics Changes - The company reported a 19% growth in portfolio purchases and a 13% growth in trailing twelve months adjusted EBITDA, marking the seventh consecutive quarter of adjusted EBITDA growth [6][7][29] - Net income attributable to the company was $4 million, or $0.09 in diluted earnings per share, which was lower than in recent quarters due to moderated changes in expected recoveries [29][31] - Total revenues for the quarter were $270 million, up 5% year over year, while operating expenses increased by 3% to $195 million [27][29] Business Line Data and Key Metrics Changes - In the U.S. legal collections channel, cash collections increased by 33% year over year to $111 million [8] - Portfolio income was $241 million for the quarter, reflecting a 19% increase due to higher portfolio investments and improved returns [24][29] - The company purchased $292 million of portfolios during the quarter, with $161 million in the U.S. and $113 million in Europe [21][22] Market Data and Key Metrics Changes - The company grew its Estimated Remaining Collections (ERC) to a record $7.8 billion, up 20% year over year and 5% sequentially [22][29] - Cash collections for the quarter were $497 million, an 11% increase from the prior year, with U.S. core cash collections up 20% [23][25] - Approximately half of total collections in Q1 came from outside the U.S., with nearly half of U.S. collections coming from the legal collections channel [23][25] Company Strategy and Development Direction - The company is focused on optimizing investments, operational execution, and managing expenses as part of its three strategic pillars [7][10] - The leadership transition to Martin Sjolund is expected to leverage successful strategies from the European business to enhance global operations [11][15] - The company aims to maintain a disciplined investment approach, avoiding aggressive M&A and focusing on attractive opportunities [17][19] Management's Comments on Operating Environment and Future Outlook - Management noted that while net income was lower, the company maintained profitability and cash efficiency improved by nearly 300 basis points [6][7] - The company remains cautious about the macroeconomic environment but sees continued engagement from customers, reflected in the establishment of payment plans [26][36] - The company expects portfolio supply to remain elevated in the U.S. and stable in Europe, indicating a positive outlook for future cash collections [23][30] Other Important Information - The company completed the sale of its equity interest in Brazil, generating an estimated after-tax gain of approximately $28 million [31][69] - The debt to adjusted EBITDA ratio was 2.93 times as of March 31, within the long-term target range [29][30] - The company has $3.1 billion in total committed capital under credit facilities, with $919 million available for investment [30] Q&A Session Summary Question: What is the state of the consumer and tax refund season? - Management indicated that tax refunds were normal compared to prior years, and consumer engagement remains positive, with no signs of a decline in consumer activity [35][36] Question: Does the reduction in earnings guidance reflect first-quarter performance? - Management clarified that the first quarter's performance was lower than expected, prompting a cautious outlook for the remainder of the year due to macroeconomic uncertainties [42][43] Question: Will legal collection costs continue to be elevated? - Management expects legal collection costs to increase but at a much lower rate than in the previous year, indicating a moderation in spending [66][67] Question: How should noncontrolling interest be modeled? - Noncontrolling interest is primarily from investments in Brazil, with gains recognized from exiting a stake in a servicing company [68][69]