PR Newswire | Aug 5, 2021 04:06PM EDT

08/05 15:05 CDT

PRA Group Reports Second Quarter 2021 Results NORFOLK, Va., Aug. 5, 2021

NORFOLK, Va., Aug. 5, 2021 /PRNewswire/ -- PRA Group, Inc. (Nasdaq: PRAA), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the second quarter of 2021. The Company reported net income attributable to PRA Group, Inc. of $56.0 million in the second quarter, compared with $57.9 million in the prior year period. Diluted earnings per share were $1.22 versus $1.26 in the second quarter of 2020. For the six months ended June 30, 2021, net income attributable to PRA Group, Inc. was $114.4 million, or $2.48 per diluted share, compared with $77.0 million, or $1.68 per diluted share, during the same period in 2020.

Second Quarter Highlights (compared to the second quarter of 2020, unless otherwise indicated)

* Total cash collections increased 7% to $543.8 million. * Total revenues increased 5% to $285.6 million. * Cash efficiency ratio1 of 66.8%. * Diluted earnings per share were $1.22. * Debt to Adjusted EBITDA2 for the last 12 months improved to 1.69x from 1.99x at December 31, 2020. * Total portfolio purchases of $219.7 million, an increase of $61 million, or 38%, from the first quarter of 2021. * Estimated remaining collections (ERC) of $6.1 billion. * $1.2 billion available for portfolio purchases.

"This quarter's strong performance is yet another in a line of outstanding results that we have delivered in the past year and a half. Global cash collections were only $12 million behind our record setting first quarter and Europe delivered the largest quarter ever. Portfolio purchases during the quarter increased on a sequential basis, with the Americas registering its largest quarter since the second quarter of 2020, and Europe recording its second best Q2 since PRA became a global enterprise in July 2014," said Kevin Stevenson, president and chief executive officer. "Based on our strong results and capital position, the Board of Directors approved a $150 million share repurchase program."

* Calculated by dividing cash receipts less operating expense by cash receipts. * 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 2021 2020

($ in thousands) Q2 Q1 Q4 Q3 Q2

Americas and Australia Core$324,845$347,638$286,524$336,322$343,269

Americas Insolvency 37,768 35,253 36,048 37,344 38,685

Europe Core 157,637 149,486 141,471 131,702 115,145

Europe Insolvency 23,579 23,510 17,830 13,971 12,841

Total Cash Collections $543,829$555,887$481,873$519,339$509,940







Cash Collection Source -

Constant Currency Adjusted 2021 2020

($ in thousands) Q2 Q2

Americas and Australia Core$324,845 $344,539

Americas Insolvency 37,768 38,732

Europe Core 157,637 128,859

Europe Insolvency 23,579 14,393

Total Cash Collections $543,829 $526,523

* Cash collections in the quarter increased $33.9 million compared to the second quarter of 2020. The increase was primarily due to a 42% increase in Europe cash collections and a 20% increase in Other Americas & Australia Core cash collections. This increase was partially offset by a decrease in U.S. call centers and U.S. legal cash collections. For the six months ended June 30, 2021, cash collections increased $95.2 million compared to the same period last year. * Total portfolio revenue was $282.7 million, an increase of $14.6 million, compared to $268.1 million during the second quarter of 2020. The Company has assumed that the majority of the current quarter overperformance was acceleration of future collections and made adjustments in some geographies to increase near term expected collections, bringing them in line with recent performance and trends in collections, with the corresponding reductions later in the forecast period.

Expenses

* Operating expenses in the quarter increased $20.8 million compared to the second quarter of 2020. The increase is primarily driven by: * an increase in compensation and employee services primarily due to medical benefits, unfavorable foreign exchange and the timing of performance based compensation accruals; * an increase in agency fees due to increased fees outside the U.S.; and * an increase in other operating expenses primarily due to investments in digital and data.

* For the six months ended June 30, 2021, operating expenses increased $8.3 million compared to the same period last year. * Interest expense, net decreased $4.6 million compared to the second quarter of 2020 primarily due to lower average borrowings this year and a change in accounting for convertible notes. * The effective tax rate for the six months ended June 30, 2021 was 19.3%.

Portfolio Acquisitions

* The Company purchased $219.7 million in finance receivables in the second quarter of 2021. * At the end of the second quarter, the Company had in place forward flow commitments of up to $521.1 million with $377.2 million in the Americas and Australia and $143.9 million in Europe.



Portfolio Purchase Source 2021 2020

($ in thousands) Q2 Q1 Q4 Q3 Q2

Americas and Australia Core $98,901 $88,912 $67,460 $84,139 $110,474

Americas Insolvency 14,642 9,486 12,504 14,328 14,527

Europe Core 106,134 44,095 137,647 74,930 34,247

Europe Insolvency - 16,468 72,171 4,203 5,251

Total Portfolio Acquisitions$219,677$158,961$289,782$177,600$164,499



Conference Call InformationPRA Group, Inc. will hold a conference call today at 5:00 p.m. ET to discuss results with institutional investors and stock analysts. 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 for the PRA Group conference call. To listen to a replay of the call, either visit the same website until August 5, 2022, or call 877-344-7529 in the U.S. or 412-317-0088 outside the U.S. and use access code 10158082 until August 12, 2021.

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 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,

2021 2020 2021 2020

Revenues:

Portfolio income $ 219,137 $248,284 $ 450,809 $510,306

Changes in expected recoveries 63,548 19,801 113,684 6,985

Total portfolio revenue 282,685 268,085 564,493 517,291

Fee income 2,453 2,639 4,634 4,848

Other revenue 491 1,186 5,971 1,555

Total revenues 285,629 271,910 575,098 523,694

Operating expenses:

Compensation and employee services 79,632 70,472 153,616 145,643

Legal collection fees 12,289 13,742 25,215 28,314

Legal collection costs 18,469 19,507 39,781 53,954

Agency fees 15,908 10,343 31,499 23,719

Outside fees and services 20,973 18,683 41,733 38,077

Communication 10,594 8,812 23,257 22,323

Rent and occupancy 4,643 4,471 9,123 8,955

Depreciation and amortization 3,815 4,109 7,796 8,193

Other operating expenses 15,092 10,491 28,110 22,696

Total operating expenses 181,415 160,630 360,130 351,874

Income from operations 104,214 111,280 214,968 171,820

Other income and (expense):

Interest expense, net (30,836) (35,416) (62,388) (72,627)

Foreign exchange (loss)/gain (1,079) 683 (1,105) 2,966

Other 183 (1,582) 209 (1,658)

Income before income taxes 72,482 74,965 151,684 100,501

Income tax expense 11,921 14,137 29,243 17,237

Net income 60,561 60,828 122,441 83,264

Adjustment for net income attributable to noncontrolling 4,565 2,914 8,039 6,215 interests

Net income attributable to PRA Group, Inc. $ 55,996 $57,914 $ 114,402 $77,049

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

Basic $ 1.22 $1.27 $ 2.50 $1.69

Diluted $ 1.22 $1.26 $ 2.48 $1.68

Weighted average number of shares outstanding:

Basic 45,807 45,548 45,738 45,500

Diluted 46,059 45,987 46,051 45,886

PRA Group, Inc.

Consolidated Balance Sheets

(Amounts in thousands)

(unaudited)

June 30, 2021December 31, 2020

Assets

Cash and cash equivalents $ 76,013 $108,613

Restricted cash 4,631 12,434

Investments 87,631 55,759

Finance receivables, net 3,349,038 3,514,788

Other receivables, net 7,096 13,194

Income taxes receivable 21,366 21,928

Deferred tax assets, net 78,935 83,205

Right-of-use assets 50,068 52,951

Property and equipment, net 54,895 58,356

Goodwill 492,843 492,989

Other assets 38,777 38,844

Total assets $ 4,261,293$4,453,061

Liabilities and Equity

Liabilities:

Accounts payable $ 5,229 $5,294

Accrued expenses 86,634 97,320

Income taxes payable 27,872 29,692

Deferred tax liabilities, net 35,682 40,867

Lease liabilities 54,506 57,348

Interest-bearing deposits 131,221 132,739

Borrowings 2,408,875 2,661,289

Other liabilities 36,334 54,986

Total liabilities 2,786,353 3,079,535

Equity:

Preferred stock, $0.01 par value, 2,000 shares authorized, 0 shares issued and - - outstanding

Common stock, $0.01 par value, 100,000 shares authorized, 45,837 shares issued and outstanding at June 30, 2021; 100,000 shares authorized, 45,585 shares 458 456 issued and outstanding at December 31, 2020

Additional paid-in capital 51,206 75,282

Retained earnings 1,638,380 1,511,970

Accumulated other comprehensive loss (235,359) (245,791)

Total stockholders' equity - PRA Group, Inc. 1,454,685 1,341,917

Noncontrolling interest 20,255 31,609

Total equity 1,474,940 1,373,526

Total liabilities and equity $ 4,261,293$4,453,061

Select Expenses (Income) Amounts in thousands, pre-tax

Three Months Ended

June 30,March 31,December 31,September 30,June 30,March 31,December 31,September 30, 2021 2021 2020 2020 2020 2020 2019 2019



Acquisition/divestiture-related expenses - - - - - - - -

Legal costs not associated with normal operations - - - - - - - -

Noncash interest expense - amortization of debt discount - - 1,959 2,388 3,247 3,217 3,157 3,128

Noncash interest expense - amortization of debt issuance costs2,391 2,256 2,393 2,476 2,743 2,640 2,649 2,649

Change in fair value of derivatives 2,911 3,102 3,875 3,701 3,284 2,039 1,247 1,126

Amortization of intangibles 105 181 1,792 360 351 349 407 400

Stock-based compensation expense 4,040 4,113 5,370 3,097 3,063 2,857 2,809 2,974

Purchase Price Multiples as of June 30, 2021 Amounts in thousands

Total Estimated Estimated Current EstimatedOriginal EstimatedPurchase Period Purchase Price ^(1)(2)Collections^ (3)Remaining Purchase Price Purchase Price Collections ^(4)Multiple Multiple ^(5)

Americas and Australia Core

1996-2010 $ 1,078,219 $ 3,399,742 $ 22,911 315% 240%

2011 209,602 719,746 13,914 343% 245%

2012 254,076 652,359 15,602 257% 226%

2013 390,826 894,134 24,948 229% 211%

2014 404,117 859,490 39,040 213% 204%

2015 443,114 908,215 90,848 205% 205%

2016 455,767 1,101,515 185,065 242% 201%

2017 532,851 1,213,368 292,041 228% 193%

2018 653,975 1,405,115 413,129 215% 202%

2019 581,476 1,245,056 555,835 214% 206%

2020 435,668 931,600 639,764 214% 213%

2021 187,751 372,447 351,984 198% 198%

Subtotal 5,627,442 13,702,787 2,645,081

Americas Insolvency

1996-2010 606,395 1,382,687 753 228% 180%

2011 180,432 370,168 428 205% 155%

2012 251,395 392,828 132 156% 136%

2013 227,834 355,056 545 156% 133%

2014 148,420 218,441 1,370 147% 124%

2015 63,170 87,122 562 138% 125%

2016 91,442 117,355 4,647 128% 123%

2017 275,257 349,729 40,051 127% 125%

2018 97,879 131,541 50,765 134% 127%

2019 123,077 158,965 95,913 129% 128%

2020 62,130 84,971 71,527 137% 136%

2021 24,133 33,183 32,819 138% 138%

Subtotal 2,151,564 3,682,046 299,512

Total Americas and Australia7,779,006 17,384,833 2,944,593

Europe Core

2012 20,409 41,917 - 205% 187%

2013 20,334 25,881 - 127% 119%

2014 773,811 2,240,702 552,490 290% 208%

2015 411,340 724,135 238,174 176% 160%

2016 333,090 561,788 274,769 169% 167%

2017 252,174 353,405 175,394 140% 144%

2018 341,775 528,763 331,552 155% 148%

2019 518,610 775,304 560,752 149% 152%

2020 324,119 554,083 468,618 171% 172%

2021 148,907 262,529 254,428 176% 176%

Subtotal 3,144,569 6,068,507 2,856,177

Europe Insolvency

2014 10,876 18,258 79 168% 129%

2015 18,973 29,005 1,539 153% 139%

2016 39,338 56,883 7,124 145% 130%

2017 39,235 49,255 15,447 126% 128%

2018 44,908 52,080 29,309 116% 123%

2019 77,218 101,982 66,492 132% 130%

2020 105,440 135,895 113,782 129% 129%

2021 16,705 20,633 19,137 124% 124%

Subtotal 352,693 463,991 252,909

Total Europe 3,497,262 6,532,498 3,109,086

Total PRA Group $ 11,276,268 $ 23,917,331 $ 6,053,679

(1) Includes the acquisition date finance receivables portfolios that were acquired through our business acquisitions.

For our non-U.S. amounts, purchase price is presented at the exchange rate at the end of the year in which the portfolio was purchased. In addition,(2) any purchase price adjustments that occur throughout the life of the portfolio are presented at the year-end exchange rate for the respective year of purchase.

(3) For our non-U.S. amounts, TEC is presented at the year-end exchange rate for the respective year of purchase.

(4) For our non-U.S. amounts, ERC is presented at the June 30, 2021 exchange rate.

(5) The Original Estimated Purchase Price Multiple represents the purchase price multiple at the end of the year of acquisition.

Portfolio Financial Information Year-to-date as of June 30, 2021 Amounts in thousands

Cash Portfolio IncomeChange in ExpectedTotal PortfolioNet Finance Purchase Period ^(1) Recoveries ^(1) Revenue^ (1)(2)Receivables as of Collections^ (1) June 30, 2021^ (3)

Americas and Australia Core

1996-2010 $7,190 $ 4,282 $1,944 $6,226 $5,173

2011 4,371 2,586 1,146 3,732 2,503

2012 5,310 2,364 1,042 3,406 4,857

2013 9,565 4,580 (493) 4,087 10,810

2014 13,130 6,135 (2,361) 3,774 15,970

2015 21,951 11,424 (8,717) 2,707 36,653

2016 45,983 22,459 3,354 25,813 72,898

2017 77,310 34,297 7,802 42,099 130,286

2018 141,054 47,049 24,688 71,737 216,883

2019 166,716 65,539 18,558 84,097 299,328

2020 159,431 67,614 35,441 103,055 341,846

2021 20,472 13,641 148 13,789 180,575

Subtotal 672,483 281,970 82,552 364,522 1,317,782

Americas Insolvency

1996-2010 357 352 5 357 -

2011 126 138 (12) 126 -

2012 347 124 225 349 -

2013 421 287 134 421 -

2014 633 652 (117) 535 125

2015 795 383 (167) 216 319

2016 5,031 867 447 1,314 3,707

2017 23,539 4,792 1,113 5,905 34,136

2018 16,125 3,380 932 4,312 43,837

2019 18,361 4,768 (1,467) 3,301 82,243

2020 6,920 3,755 637 4,392 55,112

2021 366 566 (92) 474 24,153

Subtotal 73,021 20,064 1,638 21,702 243,632

Total Americas and Australia745,504 302,034 84,190 386,224 1,561,414

Europe Core

2012 604 - 604 604 -

2013 363 - 363 363 -

2014 77,988 50,288 15,601 65,889 153,921

2015 26,926 14,276 (7,091) 7,185 124,109

2016 24,620 12,632 (597) 12,035 158,984

2017 18,839 6,259 (3,049) 3,210 119,645

2018 36,684 12,439 5,101 17,540 217,182

2019 63,968 19,814 7,106 26,920 376,028

2020 48,947 18,892 6,322 25,214 282,525

2021 8,184 2,474 1,680 4,154 144,787

Subtotal 307,123 137,074 26,040 163,114 1,577,181

Europe Insolvency

2014 171 79 36 115 34

2015 989 406 64 470 1,115

2016 3,449 1,012 295 1,307 5,454

2017 4,874 754 298 1,052 13,865

2018 5,962 1,224 (655) 569 25,789

2019 12,523 3,017 880 3,897 55,338

2020 17,618 4,713 1,545 6,258 92,948

2021 1,503 496 991 1,487 15,900

Subtotal 47,089 11,701 3,454 15,155 210,443

Total Europe 354,212 148,775 29,494 178,269 1,787,624

Total PRA Group $1,099,716 $ 450,809 $113,684 $564,493 $3,349,038

(1) For our non-U.S. amounts, amounts are presented using the average exchange rates during the current reporting period.

(2) Total Portfolio Revenue refers to Portfolio Income and Changes in Expected Recoveries combined.

(3) For our non-U.S. amounts, Net Finance Receivables are presented at the June 30, 2021 exchange rate.

Cash Collections by Year, By Year of Purchase ^(1) as of June 30, 2021 Amounts in millions

Cash Collections

Purchase Period Purchase 1996-2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total Price ^(2)(3)

Americas and Australia Core

1996-2010 $1,078.2 $1,990.5$367.1$311.5$228.4 $157.7 $109.3 $70.2 $46.0 $34.4 $28.4 $18.8 $7.2 $3,369.5

2011 209.6 - 62.0 174.5 152.9 108.5 73.8 48.7 32.0 21.6 16.6 10.9 4.4 705.9

2012 254.1 - - 56.9 173.6 146.2 97.3 60.0 40.0 27.8 17.9 11.8 5.3 636.8

2013 390.8 - - - 101.6 247.8 194.0 120.8 78.9 56.4 36.9 23.2 9.6 869.2

2014 404.1 - - - - 92.7 253.4 170.3 114.2 82.2 55.3 31.9 13.1 813.1

2015 443.1 - - - - - 117.0 228.4 185.9 126.6 83.6 57.2 22.0 820.7

2016 455.8 - - - - - - 138.7 256.5 194.6 140.6 105.9 46.0 882.3

2017 532.9 - - - - - - - 107.3 278.7 256.5 192.5 77.3 912.3

2018 654.0 - - - - - - - - 122.7 361.9 337.7 141.1 963.4

2019 581.5 - - - - - - - - - 143.8 349.0 166.7 659.5

2020 435.7 - - - - - - - - - - 133.0 159.4 292.4

2021 187.8 - - - - - - - - - - - 20.4 20.4

Subtotal 5,627.6 1,990.5 429.1 542.9 656.5 752.9 844.8 837.1 860.8 945.0 1,141.5 1,271.9 672.5 10,945.5

Americas Insolvency

1996-2010 606.4 390.9 261.2 270.4 231.0 158.9 51.2 8.6 4.6 2.5 1.4 0.8 0.4 1,381.9

2011 180.4 - 15.2 66.4 82.8 85.8 76.9 36.0 3.7 1.6 0.7 0.5 0.1 369.7

2012 251.4 - - 17.4 103.6 94.1 80.1 60.7 29.3 4.3 1.9 0.9 0.3 392.6

2013 227.8 - - - 52.5 82.6 81.7 63.4 47.8 21.9 2.9 1.3 0.4 354.5

2014 148.4 - - - - 37.0 50.9 44.3 37.4 28.8 15.8 2.2 0.6 217.0

2015 63.2 - - - - - 3.4 17.9 20.1 19.8 16.7 7.9 0.8 86.6

2016 91.4 - - - - - - 18.9 30.4 25.0 19.9 14.4 5.0 113.6

2017 275.3 - - - - - - - 49.1 97.3 80.9 58.8 23.6 309.7

2018 97.9 - - - - - - - - 6.7 27.4 30.5 16.1 80.7

2019 123.1 - - - - - - - - - 13.3 31.4 18.4 63.1

2020 62.1 - - - - - - - - - - 6.6 6.9 13.5

2021 24.1 - - - - - - - - - - - 0.4 0.4

Subtotal 2,151.5 390.9 276.4 354.2 469.9 458.4 344.2 249.8 222.4 207.9 180.9 155.3 73.0 3,383.3

Total Americas and Australia7,779.1 2,381.4 705.5 897.1 1,126.4 1,211.3 1,189.0 1,086.9 1,083.2 1,152.9 1,322.4 1,427.2 745.5 14,328.8

Europe Core

2012 20.4 - - 11.6 9.0 5.6 3.2 2.2 2.0 2.0 1.5 1.2 0.6 38.9

2013 20.3 - - - 7.1 8.5 2.3 1.3 1.2 1.3 0.9 0.7 0.4 23.7

2014 773.8 - - - - 153.2 292.0 246.4 220.8 206.3 172.9 149.8 78.0 1,519.4

2015 411.3 - - - - - 45.8 100.3 86.2 80.9 66.1 54.3 26.9 460.5

2016 333.1 - - - - - - 40.4 78.9 72.6 58.0 48.3 24.6 322.8

2017 252.2 - - - - - - - 17.9 56.0 44.1 36.1 18.8 172.9

2018 341.8 - - - - - - - - 24.3 88.7 71.2 36.7 220.9

2019 518.6 - - - - - - - - - 47.9 125.7 64.0 237.6

2020 324.1 - - - - - - - - - - 32.4 48.9 81.3

2021 148.9 - - - - - - - - - - - 8.2 8.2

Subtotal 3,144.5 - - 11.6 16.1 167.3 343.3 390.6 407.0 443.4 480.1 519.7 307.1 3,086.2

Europe Insolvency

2014 10.9 - - - - - 4.3 3.9 3.2 2.6 1.5 0.8 0.2 16.5

2015 19.0 - - - - - 3.0 4.4 5.0 4.8 3.9 2.9 1.0 25.0

2016 39.3 - - - - - - 6.2 12.7 12.9 10.7 7.9 3.4 53.8

2017 39.2 - - - - - - - 1.2 7.9 9.2 9.8 4.9 33.0

2018 44.9 - - - - - - - - 0.6 8.4 10.3 6.0 25.3

2019 77.2 - - - - - - - - - 5.1 21.1 12.5 38.7

2020 105.4 - - - - - - - - - - 6.1 17.6 23.7

2021 16.7 - - - - - - - - - - - 1.5 1.5

Subtotal 352.6 - - - - - 7.3 14.5 22.1 28.8 38.8 58.9 47.1 217.5

Total Europe 3,497.1 - - 11.6 16.1 167.3 350.6 405.1 429.1 472.2 518.9 578.6 354.2 3,303.7

Total PRA Group $11,276.2 $2,381.4$705.5$908.7$1,142.5$1,378.6$1,539.6$1,492.0$1,512.3$1,625.1$1,841.3$2,005.8$1,099.7$17,632.5

(1) For our non-U.S. amounts, cash collections are presented using the average exchange rates during the cash collection period.

(2) Includes the finance receivables portfolios that were acquired through our business acquisitions.

For our non-U.S. amounts, purchase price is presented at the exchange rate at the end of the year in which the portfolio was purchased. In addition,(3) any purchase price adjustments that occur throughout the life of the pool are presented at the year-end exchange rate for the respective year of purchase.

Use of Non-GAAP Financial Measures

PRA Group, Inc. reports financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management uses certain non-GAAP financial measures, including Adjusted EBITDA, internally to evaluate the Company's performance and to set performance goals. Adjusted EBITDA is calculated as net income attributable to PRA Group, Inc. plus income tax expense; less foreign exchange gain (or plus foreign exchange loss); plus interest expense, net; plus other expense; plus depreciation and amortization; plus adjustment for net income attributable to noncontrolling interests; and plus recoveries applied to negative allowance less changes in expected recoveries. Adjusted EBITDA is a supplemental measure of performance that is not required by, or presented in accordance with, GAAP. PRA Group, Inc. presents Adjusted EBITDA because the Company considers it an important supplemental measure of operations and financial performance. Management believes Adjusted EBITDA helps provide enhanced period-to-period comparability of operations and financial performance and is useful to investors as other companies in the industry report similar financial measures. Adjusted EBITDA should not be considered as an alternative to net income determined in accordance with GAAP. Set forth below is a reconciliation of Adjusted EBITDA for the last twelve months (LTM) ended June 30, 2021 and for the year ended December 31, 2020, to net income, the most directly comparable financial measure calculated and reported in accordance with GAAP. The calculation of Adjusted EBITDA below may not be comparable to the calculation of similarly titled measures reported by other companies.

Reconciliation of Non-GAAP Financial Measures

LTM For the Year Ended

Adjusted EBITDA for PRA Group ($ in millions) June 30, 2021December 31, 2020

Net income attributable to PRA Group, Inc. $ 187 $ 149

Adjustments:

Income tax expense 53 41

Foreign exchange losses/(gains) 2 (2)

Interest expense, net 131 142

Other expense (1) 1

Depreciation and amortization 18 18

Adjustment for net income attributable to noncontrolling interests 20 18

Recoveries applied to negative allowance less Changes in expected recoveries 1,017 968

Adjusted EBITDA $ 1,428 $ 1,337

Additionally, management evaluates the Company's business using certain ratios that use Adjusted EBITDA, including Debt to Adjusted EBITDA, which is calculated by dividing borrowings by Adjusted EBITDA. The following table reflects our Debt to Adjusted EBITDA for LTM as of June 30, 2021 and for the year ended December 31, 2020 (amounts in millions):

Debt to Adjusted EBITDA

LTM For the Year Ended

June 30, 2021December 31, 2020

Borrowings $2,409 $ 2,661

LTM Adjusted EBITDA 1,428 1,337

Debt to LTM Adjusted EBITDA1.69 1.99

Investor Contact:Darby Schoenfeld, CPAVice President, Investor Relations(757) 431-7913Darby.Schoenfeld@PRAGroup.com

News Media Contact:Elizabeth KerseySenior Vice President, Communications and Public Policy(757) 431-3398Elizabeth.Kersey@PRAGroup.com

View original content: https://www.prnewswire.com/news-releases/pra-group-reports-second-quarter-2021-results-301349658.html

SOURCE PRA Group