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PRA Group Reports Second Quarter 2022 Results

·10 min read

NORFOLK, Va., Aug. 8, 2022 /PRNewswire/ -- PRA Group, Inc. (Nasdaq: PRAA) (the "Company"), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the second quarter of 2022 ("Q2 2022").

(PRNewsfoto/PRA Group)
(PRNewsfoto/PRA Group)

Q2 2022 Highlights

  • Total portfolio purchases of $231.3 million.

  • Total cash collections were $444.1 million.

  • Estimated remaining collections (ERC)1 of $5.6 billion.

  • Cash efficiency ratio2 of 61.3%.

  • Diluted earnings per share were $0.91.

  • Common stock repurchases3 of $34.9 million, or 0.8 million shares.

  • Debt to Adjusted EBITDA4 for the 12 months ended June 30, 2022 was 2.03x.

  • Available capacity under the Company's credit facilities of $1.6 billion; $452.9 million after considering borrowing base restrictions.













Three Months Ended June 30,


Six Months Ended June 30,

($ in thousands, except per share amount)


2022


2021


2022


2021


Net income attributable to PRA Group, Inc.


$          36,484


$          55,996


$          76,456


$        114,402


Diluted earnings per share


$              0.91


$              1.22


$              1.88


$              2.48












     

"We had a solid purchasing quarter, driven by increased portfolio acquisitions in Europe, specifically in Northern Europe," said Kevin Stevenson, president and chief executive officer. "We continue to see deterioration in consumer savings, higher credit card balances, and rising delinquency rates, which we believe suggests that more supply will be available in the coming months. Our strong balance sheet and geographic diversity provide us with a significant competitive advantage in capitalizing on what appears to be an increasingly favorable purchasing environment, and permit us to be disciplined in our capital allocation strategy. During the quarter, we repurchased nearly $35 million of shares of our common stock, underscoring our commitment to deploy capital in the areas that can generate the highest returns for our shareholders. Looking ahead, we will continue executing this measured strategy, while remaining active in the market and preparing to ramp up our purchasing as supply increases."

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 expense by cash receipts.

3.

Share repurchases are subject to market conditions and other factors, and the share repurchase program remains subject to the discretion of PRA Group, Inc.'s board of directors.

4.

A reconciliation of this non-GAAP financial measure to the most comparable GAAP measure can be found at the end of this press release.

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


2022


2021

($ in thousands)


Q2


Q1


Q4


Q3


Q2

Americas and Australia Core


$       244,377


$       270,284


$       257,705


$       276,691


$       324,845

Americas Insolvency


34,278


35,209


36,851


37,464


37,768

Europe Core


142,470


151,162


155,853


151,625


157,637

Europe Insolvency


22,935


24,325


23,262


22,574


23,579

Total Cash Collections


$       444,060


$       480,980


$       473,671


$       488,354


$       543,829


































Cash Collection Source -











Constant Currency Adjusted


2022








2021

($ in thousands)


Q2








Q2

Americas and Australia Core


$       244,377








$       325,895

Americas Insolvency


34,278








37,744

Europe Core


142,470








140,199

Europe Insolvency


22,935








21,227

Total Cash Collections


$       444,060








$       525,065












 

  • Total cash collections in Q2 2022 decreased 18.3%, or 15.4% on a constant currency adjusted basis, to $444.1 million compared to $543.8 million in the second quarter of 2021 ("Q2 2021"). The decrease was driven primarily by a 32.5% decrease in U.S. call center and other collections, and a 15.8% decrease in U.S. legal collections. The overall decrease in U.S. cash collections was due to excess consumer liquidity in 2021, which generated high levels of collections then, as well as lower levels of portfolio purchases. Europe cash collections decreased by 8.7%; however, on a currency adjusted basis, they increased by 2.5%. For the six months ended June 30, 2022, cash collections decreased $174.7 million compared to the same period last year.

  • Total portfolio revenue in Q2 2022 was $250.6 million compared to $282.7 million in Q2 2021.

Expenses

  • Operating expenses in Q2 2022 decreased by $6.9 million, or 3.8%, compared to Q2 2021. The decrease was primarily driven by:

  • For the six months ended June 30, 2022, operating expenses decreased $17.0 million to $343.2 million compared to $360.1 million in the same period last year.

  • The effective tax rate for the six months ended June 30, 2022 was 20.3%.

Portfolio Acquisitions

  • The Company purchased $231.3 million in portfolios of nonperforming loans in Q2 2022.

  • At the end of Q2 2022, the Company had in place maximum forward flow commitments1 of up to $960.2 million, comprised of $300.9 million in the Americas and Australia and $659.3 million in Europe.



1.

Contractual agreements with sellers of nonperforming loans that allow for the purchase of nonperforming portfolios at pre-established prices.

 












Portfolio Purchase Source


2022


2021

($ in thousands)


Q2


Q1


Q4


Q3


Q2

Americas and Australia Core


$         99,962


$           90,639


$           90,263


$         162,451


$           98,901

Americas Insolvency


6,369


9,118


21,183


9,878


14,642

Europe Core


123,814


38,764


60,430


212,194


106,134

Europe Insolvency


1,202


8,929


29,820


7,424


Total Portfolio Acquisitions


$       231,347


$         147,450


$         201,696


$         391,947


$         219,677












Share Repurchases

  • The Company repurchased $34.9 million, or 0.8 million shares, with $92.7 million remaining under its current share repurchase plan as of June 30, 2022.

  • At June 30, 2022, the Company has repurchased more than 14% of its common stock since it began its share repurchases in 2021.

Conference Call Information

PRA Group, Inc. will hold a conference call today at 5:00 p.m. Eastern time 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 844-835-9982 in the U.S. or 412-317-5267 outside the U.S., and ask the operator for the PRA Group conference call.  To listen to a replay of the call, either visit the same website until August 8, 2023, or call 877-344-7529 in the U.S. or 412-317-0088 outside the U.S. and use access code 6057434 until August 15, 2022.

The Company plans to report its third quarter 2022 results after market close on November 3, 2022.       

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 Statements

Statements 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 our 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.

 

PRA Group, Inc.

Unaudited Consolidated Income Statements

(Amounts in thousands, except per share amounts)



Three Months Ended June 30,


Six Months Ended June 30,


2022


2021


2022


2021

Revenues:








Portfolio income

$                194,009


$                219,137


$          401,541


$          450,809

Changes in expected recoveries

56,567


63,548


86,481


113,684

Total portfolio revenue

250,576


282,685


488,022


564,493

Fee income

6,467


2,453


8,297


4,634

Other revenue

1,219


491


2,548


5,971

Total revenues

258,262


285,629


498,867


575,098

Operating expenses:








Compensation and employee services

74,137


79,632


145,233


153,616

Legal collection fees

9,554


12,289


20,427


25,215

Legal collection costs

17,746


18,469


34,303


39,781

Agency fees

14,826


15,908


32,214


31,499

Outside fees and services

27,493


20,973


46,871


41,733

Communication

9,528


10,594


22,111


23,257

Rent and occupancy

4,633


4,643


9,620


9,123

Depreciation and amortization

3,865


3,815


7,643


7,796

Other operating expenses

12,743


15,092


24,741


28,110

Total operating expenses

174,525


181,415


343,163


360,130

   Income from operations

83,737


104,214


155,704


214,968

Other income and (expense):








Interest expense, net

(31,562)


(30,836)


(63,310)


(62,388)

Foreign exchange gain/(loss)

1,319


(1,079)


787


(1,105)

Other

(181)


183


(671)


209

Income before income taxes

53,313


72,482


92,510


151,684

Income tax expense

14,177


11,921


18,756


29,243

Net income

39,136


60,561


73,754


122,441

Adjustment for net income/(loss) attributable to noncontrolling interests

2,652


4,565


(2,702)


8,039

Net income attributable to PRA Group, Inc.

$                  36,484


$                  55,996


$            76,456


$          114,402

Net income per common share attributable to PRA Group, Inc.:








Basic

$                       0.92


$                       1.22


$                 1.90


$                 2.50

Diluted

$                       0.91


$                       1.22


$                 1.88


$                 2.48

Weighted average number of shares outstanding:








Basic

39,779


45,807


40,278


45,738

Diluted

39,900


46,059


40,602


46,051

 

PRA Group, Inc.

Consolidated Balance Sheets

(Amounts in thousands)



(unaudited)




June 30, 2022


December 31,
2021

Assets




Cash and cash equivalents

$                       67,974


$                       87,584

Investments

86,386


92,977

Finance receivables, net

3,183,632


3,428,285

Income taxes receivable

42,207


41,146

Deferred tax assets, net

63,810


67,760

Right-of-use assets

55,877


56,713

...