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PRA Group Reports First Quarter 2024 Results
Accelerated Turnaround of U.S. Business Continuing to Gain Momentum
NORFOLK, Va., May 6, 2024 /PRNewswire/ -- PRA Group, Inc. (NASDAQ:PRAA) (the "Company"), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the first quarter of 2024 ("Q1 2024").
Q1 2024 Highlights
Total portfolio purchases of $245.8 million.
Total cash collections of $449.5 million.
Estimated remaining collections (ERC)1 of $6.5 billion.
Cash efficiency ratio2 of 58.0%.
Diluted earnings per share of $0.09.
Debt to Adjusted EBITDA3 for the 12 months ended March 31, 2024 was 2.83x.
Total availability under the Company's credit facilities as of March 31, 2024 was $1.2 billion, comprised of $366.9 million based on current ERC and $855.2 million of additional availability subject to borrowing base and debt covenants, including advance rates.
Three Months Ended March 31,
($ in thousands, except per share amounts)
2024
2023
Net income/(loss) attributable to PRA Group, Inc.
$ 3,475
$ (58,629)
Diluted earnings per share
$ 0.09
$ (1.50)
1.
Refers to the sum of all future projected cash collections on the Company's nonperforming loan portfolios.
2.
Calculated by dividing cash receipts less operating expenses by cash receipts. Cash receipts refers to cash collections on the Company's nonperforming loan portfolios, fees and revenue recognized from the Company's class action claims recovery services.
3.
A reconciliation of net income, the most directly comparable financial measure calculated and reported in accordance with GAAP, to Adjusted EBITDA can be found at the end of this press release.
"We began 2024 on a positive note, and are well-positioned to achieve our financial and operational targets for the full year. Building on the momentum from last year, the first quarter demonstrated continued progress as we drive the turnaround and deliver substantially improved results," said Vikram Atal, president and chief executive officer. "Total cash collections of $450 million were up 9% year-over-year, reflecting higher portfolio purchases and the impact of our cash-generating and operational initiatives. Looking ahead, we are keenly focused on expanding profitability and delivering shareholder value."
Cash Collections and Revenues
The following table presents cash collections by quarter and by source on an as reported and constant currency-adjusted basis:
Cash Collection Source
2024
2023
($ in thousands)
Q1
Q4
Q3
Q2
Q1
Americas and Australia Core
$ 256,861
$ 220,127
$ 223,714
$ 220,886
$ 227,960
Americas Insolvency
25,209
24,293
27,809
26,384
25,751
Europe Core
145,933
144,361
144,402
149,324
134,005
Europe Insolvency
21,515
21,502
23,639
22,725
23,568
Total Cash Collections
$ 449,518
$ 410,283
$ 419,564
$ 419,319
$ 411,284
Cash Collection Source -
Constant Currency-Adjusted
2024
2023
($ in thousands)
Q1
Q1
Americas and Australia Core
$ 256,861
$ 230,382
Americas Insolvency
25,209
25,752
Europe Core
145,933
138,330
Europe Insolvency
21,515
24,580
Total Cash Collections
$ 449,518
$ 419,044
Total cash collections in Q1 2024 increased 9.3%, or 7.3% on a constant currency-adjusted basis, to $449.5 million compared to $411.3 million in the first quarter of 2023 ("Q1 2023"). The increase was driven by higher cash collections in our U.S., Europe, and Brazil Core portfolios.
Total portfolio revenue in Q1 2024 was $253.7 million compared to $151.3 million in Q1 2023.
Three Months Ended March 31,
($ in thousands)
2024
2023
Portfolio income
$ 202,056
$ 188,242
Changes in expected future recoveries
$ 15,836
$ (40,750)
Recoveries received in excess of forecast
35,838
3,838
Changes in expected recoveries
$ 51,674
$ (36,912)
Total portfolio revenue
$ 253,730
$ 151,330
Expenses
Operating expenses in Q1 2024 increased $0.1 million, or 0.1%, to $189.2 million compared to $189.1 million in Q1 2023.
Compensation and employee services expenses decreased $8.8 million, primarily due to $7.5 million in severance expenses in Q1 2023.
Legal collection fees increased $3.3 million, primarily due to higher external legal collections within our U.S. Core portfolio.
Legal collection costs increased $2.8 million, primarily due to higher volumes of lawsuits filed in Europe, as well as the costs associated with our legal cash-generating initiatives in the U.S.
Agency fees increased $2.3 million, primarily due to higher cash collections in Brazil.
Communication expenses increased $2.1 million, primarily due to higher account volumes.
Interest expense, net in Q1 2024 was $52.3 million, an increase of $14.0 million, or 36.6%, compared to $38.3 million in Q1 2023, primarily reflecting a higher average debt balance and increased interest rates.
The effective tax rate for Q1 2024 was 16.9%.
Portfolio Acquisitions
The Company purchased $245.8 million in portfolios of nonperforming loans in Q1 2024.
At the end of Q1 2024, the Company had in place estimated forward flow commitments1 of $473.9 million over the next 12 months, comprised of $375.8 million in the Americas and Australia and $98.1 million in Europe.
Portfolio Purchase Source
2024
2023
($ in thousands)
Q1
Q4
Q3
Q2
Q1
Americas & Australia Core
$ 174,660
$ 143,052
$ 187,554
$ 171,440
$ 116,867
Americas Insolvency
22,156
18,608
44,279
12,189
15,701
Europe Core
43,997
110,780
60,628
136,834
90,454
Europe Insolvency
5,004
12,476
18,722
7,296
7,203
Total Portfolio Acquisitions
$ 245,817
$ 284,916
$ 311,183
$ 327,759
$ 230,225
2024 Financial and Operational Targets
The Company reiterates its expectation to achieve the following financial and operational targets for full year 2024:
Strong portfolio investment levels
Double-digit cash collections growth
Modest expense growth
60%+ cash efficiency ratio
6% - 8% return on average tangible equity2
Conference Call InformationPRA Group, Inc. will hold a conference call today at 5:00 p.m. ET to discuss its financial and operational results. To listen to a webcast of the call and view the accompanying slides, visit https://ir.pragroup.com/events-and-presentations. To listen by phone, call 646-357-8785 in the U.S. or 1-800-836-8184 outside the U.S. and ask for the PRA Group conference call. To listen to a replay of the call, either visit the same website until May 6, 2025, or call 646-517-4150 in the U.S. or 1-888-660-6345 outside the U.S. and use access code 41062# until May 13, 2024.
About PRA Group, Inc.As a global leader in acquiring and collecting nonperforming loans, PRA Group, Inc. returns capital to banks and other creditors to help expand financial services for consumers in the Americas, Europe, and Australia. With thousands of employees worldwide, PRA Group, Inc. companies collaborate with customers to help them resolve their debt. For more information, please visit www.pragroup.com.
About Forward Looking StatementsStatements made herein that are not historical in nature, including PRA Group, Inc.'s or its management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
The forward-looking statements in this press release are based upon management's current beliefs, estimates, assumptions and expectations of PRA Group, Inc.'s future operations and financial and economic performance, taking into account currently available information. These statements are not statements of historical fact or guarantees of future performance, and there can be no assurance that anticipated events will transpire or that the Company's expectations will prove to be correct. Forward-looking statements involve risks and uncertainties, some of which are not currently known to PRA Group, Inc. Actual events or results may differ materially from those expressed or implied in any such forward-looking statements as a result of various factors, including risk factors and other risks that are described from time to time in PRA Group, Inc.'s filings with the Securities and Exchange Commission, including PRA Group, Inc.'s annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, which are available through PRA Group, Inc.'s website and contain a detailed discussion of PRA Group, Inc.'s business, including risks and uncertainties that may affect future results.
Due to such uncertainties and risks, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of today. Information in this press release may be superseded by more recent information or statements, which may be disclosed in later press releases, subsequent filings with the Securities and Exchange Commission or otherwise. Except as required by law, PRA Group, Inc. assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA Group, Inc.'s expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part.
1.
Contractual agreements with sellers of nonperforming loans that allow for the purchase of nonperforming portfolios at pre-established prices. These amounts represent our estimated forward flow purchases over the next 12 months based on projections and other factors, including sellers' estimates of future flows sales, and are dependent on actual delivery by the sellers. Accordingly, amounts purchased under these agreements may vary significantly.
2.
A reconciliation of total stockholders' equity – PRA Group, Inc., the most directly comparable financial measure calculated and reported in accordance with GAAP, to average tangible equity can be found at the end of this press release.
PRA Group, Inc.
Unaudited Consolidated Income Statements
(Amounts in thousands, except per share amounts)
Three Months Ended March 31,
2024
2023
Revenues:
Portfolio income
$ 202,056
$ 188,242
Changes in expected recoveries
51,674
(36,912)
Total portfolio revenue
253,730
151,330
Other revenue
1,856
4,140
Total revenues
255,586
155,470
Operating expenses:
Compensation and employee services
73,597
82,403
Legal collection fees
12,112
8,838
Legal collection costs
26,691
23,945
Agency fees
19,723
17,378
Outside fees and services
25,050
24,944
Communication
12,578
10,527
Rent and occupancy
4,144
4,448
Depreciation and amortization
2,720
3,589
Other operating expenses
12,575
13,042
Total operating expenses
189,190
189,114
Income/(loss) from operations
66,396
(33,644)
Other income and (expense):
Interest expense, net
(52,278)
(38,283)
Foreign exchange gain/(loss), net
227
(9)
Other
(206)
(650)
Income/(loss) before income taxes
14,139
(72,586)
Income tax expense/(benefit)
2,386
(18,683)
Net income/(loss)
11,753
(53,903)
Adjustment for net income attributable to noncontrolling interests
8,278
4,726
Net income/(loss) attributable to PRA Group, Inc.
$ 3,475
$ (58,629)
Net income/(loss) per common share attributable to PRA Group, Inc.:
Basic
$ 0.09
$ (1.50)
Diluted
$ 0.09
$ (1.50)
Weighted average number of shares outstanding:
Basic
39,274
39,033
Diluted
39,448
39,033
PRA Group, Inc.
Consolidated Balance Sheets
(Amounts in thousands)
(unaudited)
March 31,2024
December 31,2023
Assets
Cash and cash equivalents
$ 108,100
$ 112,528
Investments
58,879
72,404
Finance receivables, net
3,650,195
3,656,598
Income taxes receivable
32,067
27,713
Deferred tax assets, net
78,883
74,694
Right-of-use assets
44,187
45,877
Property and equipment, net
34,054
36,450
Goodwill
411,846
431,564
Other assets
63,971
67,526
Total assets
$ 4,482,182
$ 4,525,354
Liabilities and Equity
Liabilities:
Accounts payable
$ 10,814
$ 6,325
Accrued expenses
98,902
131,893
Income taxes payable
23,541
17,912
Deferred tax liabilities, net
16,888
17,051
Lease liabilities
48,557
50,300
Interest-bearing deposits
113,259
115,589
Borrowings
2,953,048
2,914,270
Other liabilities
20,855
32,638
Total liabilities
3,285,864
3,285,978
Equity:
Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued and outstanding
—
—
Common stock, $0.01 par value, 100,000 shares authorized, 39,345 shares issued andoutstanding as of March 31, 2024; 100,000 shares authorized, 39,247 shares issued andoutstanding as of December 31, 2023
393
392
Additional paid-in capital
8,928
7,071
Retained earnings
1,493,023
1,489,548
Accumulated other comprehensive loss
(373,018)
(329,899)
Total stockholders' equity - PRA Group, Inc.
1,129,326
1,167,112
Noncontrolling interests
66,992
72,264
Total equity
1,196,318
1,239,376
Total liabilities and equity
$ 4,482,182
$ 4,525,354
Select Expenses (Income)
Amounts in thousands, pre-tax
Three Months Ended
March 31,2024
December 31,2023
September 30,2023
June 30,2023
March 31,2023
December 31,2022
September 30,2022
June 30,2022
Noncash interest expense - amortization of debt issuance costs
2,200
2,177
2,220
2,384
2,441
2,444
2,555
2,471
Change in fair value of derivatives
(5,930)
(6,734)
(6,545)
(6,960)
(5,470)