PRA (PRAA) - 2025 Q2 - Quarterly Results

Q2 2025 Financial and Operational Highlights PRA Group delivered strong Q2 2025 results, with significant net income and EPS growth, record ERC, and strategic focus on high-return opportunities Q2 2025 Key Financial Highlights PRA Group achieved strong Q2 2025 results, with significant net income and diluted EPS growth, record ERC, and robust cash collections | Indicator | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :------- | | Net Income attributable to PRA Group, Inc. | 42,374 | 21,516 | 96.9% | | Diluted Earnings Per Share | 1.08 | 0.54 | 100.0% | - Total portfolio purchases were $346.5 million, down 8.7% year-over-year, reflecting a lower full-year target of $1.2 billion for 2025 compared to $1.4 billion in 2024[4] - Estimated Remaining Collections (ERC) reached a record $8.3 billion, up 21.9% year-over-year[4] - Total cash collections were $536.3 million, up 13.2% year-over-year[4] - Cash efficiency ratio was 62.4%, an improvement of 355 basis points[4] - Adjusted EBITDA (LTM as of June 30, 2025) was $1.2 billion, up 16.4% year-over-year[4] - Net income included a $29.7 million (after-tax) gain from the sale of RCB equity in Brazil[4] CEO Commentary and Strategic Focus CEO highlighted positive progress in portfolio investments, ERC, and income, affirming focus on high-return opportunities and US business transformation - The company made positive progress in portfolio investments, record ERC, and improved portfolio income, maintaining focus on high-return opportunities[3] - Improved cash efficiency ratio reflects efforts in increasing cash collections and managing expenses, leading to Adjusted EBITDA growth exceeding cash collections growth[3] - The company is accelerating its US business transformation, focusing on three strategic pillars: optimizing investments, operational execution, and expense management[6] Detailed Financial Performance Detailed Q2 2025 financial performance covers cash collections, revenues, expenses, and portfolio purchases Cash Collections and Revenues Total cash collections increased by 13.2% to $536.3 million in Q2 2025, driven by strong European core performance and significant portfolio income growth - Total cash collections in Q2 2025 increased by 13.2% to $536.3 million, compared to $473.9 million in Q2 2024[7] | Cash Collections Source | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | Change (%) | | :--------------------- | :----------------------------- | :----------------------------- | :------- | | Americas and Australia Core | 301,698 | 263,828 | 14.3% | | Americas Bankruptcy | 24,329 | 26,971 | -9.7% | | Europe Core | 185,652 | 156,739 | 18.4% | | Europe Bankruptcy | 24,609 | 26,344 | -6.6% | | Total Cash Collections | 536,288 | 473,882 | 13.2% | - Portfolio income in Q2 2025 increased by 19.9% to $250.9 million, compared to $209.3 million in Q2 2024[8] - Total portfolio revenue in Q2 2025 increased by 0.6% to $284.2 million, compared to $282.6 million in Q2 2024[8] Expenses Operating expenses increased by 3.9% in Q2 2025 due to strategic investments in call center offshoring and US legal collections, with rising interest expense - Operating expenses in Q2 2025 increased by 3.9% to $202.6 million, compared to $195.0 million in Q2 2024[9] - The increase in expenses is primarily attributed to investments in call center offshoring for greater operational flexibility and continued investment in US legal collection channels to drive future cash collections growth[9][10] - Net interest expense in Q2 2025 increased by 12.6% to $62.4 million, compared to $55.4 million in Q2 2024, primarily reflecting increased debt balances supporting portfolio investments[17] Portfolio Purchases The company purchased $346.5 million in nonperforming loan portfolios in Q2 2025, an 8.7% decrease, aligning with lower targets, and has $311.2 million in forward commitments - In Q2 2025, the company purchased $346.5 million in nonperforming loan portfolios, a decrease of 8.7% year-over-year[18] | Portfolio Purchase Source | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | Change (%) | | :--------------------- | :----------------------------- | :----------------------------- | :------- | | Americas and Australia Core | 177,097 | 198,761 | -10.9% | | Americas Bankruptcy | 22,186 | 26,627 | -16.7% | | Europe Core | 142,465 | 127,991 | 11.3% | | Europe Bankruptcy | 4,757 | 25,990 | -81.7% | | Total Portfolio Acquisitions | 346,505 | 379,369 | -8.7% | - As of the end of Q2 2025, the company has $311.2 million in estimated forward purchase commitments over the next 12 months, with $210.6 million in the Americas and Australia and $100.5 million in Europe[18] Credit Availability As of June 30, 2025, PRA Group had $840.7 million in total credit facility availability, including $521.6 million based on current ERC - As of June 30, 2025, the company's total credit facility availability was $840.7 million[12] - Availability includes $521.6 million based on current ERC and an additional $319.1 million subject to borrowing base and debt covenants[12] Consolidated Financial Statements Unaudited consolidated income statements and balance sheets detail Q2 2025 revenue, net income, assets, liabilities, and equity Unaudited Consolidated Income Statements Total revenue slightly increased to $287.7 million in Q2 2025, with net income attributable to PRA Group, Inc. significantly rising to $42.4 million due to equity investment sales | Indicator | Q2 2025 ($ in thousands) | Q2 2024 ($ in thousands) | Change (%) | | :------------------------------------ | :----------------------------- | :----------------------------- | :------- | | Total Revenue | 287,688 | 284,229 | 1.2% | | Total Operating Expenses | 202,577 | 195,007 | 3.9% | | Operating Income | 85,111 | 89,222 | -4.6% | | Gain on Sale of Equity Investment | 38,403 | — | N/A | | Income Before Income Taxes | 61,128 | 33,816 | 80.7% | | Net Income attributable to PRA Group, Inc. | 42,374 | 21,516 | 96.9% | | Diluted Earnings Per Share | 1.08 | 0.54 | 100.0% | Consolidated Balance Sheets Total assets increased to $5.43 billion as of June 30, 2025, driven by higher net finance receivables, with total liabilities and equity also rising | Indicator | June 30, 2025 ($ in thousands) | December 31, 2024 ($ in thousands) | Change (%) | | :------------------------------------ | :----------------------------- | :----------------------------- | :------- | | Total Assets | 5,434,767 | 4,931,155 | 10.2% | | Net Finance Receivables | 4,562,576 | 4,140,742 | 10.2% | | Goodwill | 439,449 | 396,357 | 10.9% | | Total Liabilities | 4,038,156 | 3,737,548 | 8.0% | | Borrowings | 3,614,208 | 3,326,621 | 8.6% | | Total Stockholders' Equity | 1,396,611 | 1,193,607 | 17.0% | Select Expenses (Income) In Q2 2025, the company reported $1,962 thousand in non-cash interest expense and $4,465 thousand in share-based compensation expense - Non-cash interest expense (amortization of debt premium and issuance costs) in Q2 2025 was $1,962 thousand[26] - Share-based compensation expense in Q2 2025 was $4,465 thousand[26] - Fair value changes in derivatives in Q2 2025 were negative $1,748 thousand[26] Portfolio Performance Metrics Detailed portfolio performance metrics include purchase price multiples, financial information, and historical cash collections Purchase Price Multiples This section details purchase price multiples for various portfolio segments, including current and original multiples, with total estimated remaining collections at $8.29 billion - As of June 30, 2025, PRA Group's total Estimated Remaining Collections (ERC) were $8,294,310 thousand[28] | Segment | Current Purchase Price Multiple | Original Purchase Price Multiple | | :--------------------- | :------------------- | :------------------- | | Americas and Australia Core | 214% | 214% | | Americas Bankruptcy | 159% | 159% | | Europe Core | 182% | 182% | | Europe Bankruptcy | 151% | 151% | Portfolio Financial Information This section details cash collections, portfolio income, and expected recovery changes by purchase period and region, with year-to-date total cash collections of $1.03 billion | Indicator | Amount ($ in thousands) | | :------------------------ | :-------------------- | | Cash Collections | 1,033,724 | | Portfolio Income | 491,892 | | Change in Expected Recoveries | 61,214 | | Total Portfolio Revenue | 553,106 | | Net Finance Receivables | 4,562,576 | - Year-to-date cash collections for Americas and Australia Core business were $589,858 thousand[31] - Year-to-date cash collections for Europe Core business were $350,023 thousand[31] Cash Collections by Year, By Year of Purchase This table provides a comprehensive breakdown of cash collections by region and purchase period, illustrating long-term recovery performance, with total cash collections across all periods reaching $24.89 billion - PRA Group's total cash collections across all purchase periods were $24,886.5 million[33] - Cash collections for Americas and Australia Core business purchased between 1996-2014 were $6,587.4 million[33] - Cash collections for Europe Core business purchased between 1996-2014 were $2,036.7 million[33] Non-GAAP Financial Measures Reconciliation Reconciliations for non-GAAP financial measures, including Adjusted EBITDA and ROATE, are provided to GAAP equivalents Adjusted EBITDA Reconciliation The company provides a reconciliation of net income to Adjusted EBITDA, a non-GAAP metric, with LTM Adjusted EBITDA as of June 30, 2025, at $1.24 billion, up from $1.14 billion - Last Twelve Months (LTM) Adjusted EBITDA as of June 30, 2025, was $1,240,092 thousand[37] - Adjusted EBITDA for the year ended December 31, 2024, was $1,137,552 thousand[37] - Adjustments include income tax expense, net interest expense, depreciation and amortization, and collections recovered and applied to net finance receivables less change in expected recoveries[37] Return on Average Tangible Equity (ROATE) Reconciliation The company reconciles total stockholders' equity to average tangible equity and net income to adjusted net income to present ROATE and Adjusted ROATE, with Q2 2025 ROATE at 20.0% and Adjusted ROATE at 6.0% - Q2 2025 ROATE was 20.0%, higher than 11.9% in Q2 2024[39] - Q2 2025 Adjusted ROATE was 6.0%, lower than 11.9% in Q2 2024, excluding the $29,686 thousand (after-tax) gain from the sale of equity investment[39] - Average tangible equity in Q2 2025 was $846,419 thousand[39] Additional Information Conference call details, an overview of PRA Group, Inc., and forward-looking statement disclosures are provided Conference Call Details PRA Group, Inc. held a conference call on August 4, 2025, to discuss financial and operational results, offering webcast and replay options - The conference call was held on August 4, 2025, at 5:00 p.m. ET[13] - Webcast and replay options are available via the company's investor relations website or a designated phone number[13] About PRA Group, Inc. PRA Group, Inc. is a global leader in acquiring and collecting nonperforming loans, returning capital to creditors and helping consumers resolve debt - PRA Group, Inc. is a global leader in acquiring and collecting nonperforming loans[14] - The company operates across the Americas, Europe, and Australia[14] - Committed to returning capital to banks and other creditors and working with customers to help them resolve their debt[14] Forward-Looking Statements The report contains forward-looking statements based on management's current beliefs and expectations, subject to risks and uncertainties, with no obligation for the company to update them - Statements in this report that are not historical in nature, including intentions, hopes, beliefs, expectations, representations, predictions, plans, or projections of PRA Group, Inc. or its management for the future, constitute forward-looking statements[15] - Forward-looking statements involve risks and uncertainties, and actual events or results could differ materially from those expressed or implied in any such forward-looking statements[19] - PRA Group, Inc. undertakes no obligation to publicly update or revise its forward-looking statements, except as required by law[20]