PRA Group Reports Third Quarter 2019 Results

NORFOLK, Va., Nov. 7, 2019 /PRNewswire/ -- PRA Group, Inc. (Nasdaq: PRAA), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the third quarter of 2019.  Net income attributable to PRA Group, Inc. was $25.0 million compared to $9.9 million in the third quarter of 2018. Diluted earnings per share were $0.55 compared to $0.22 in the third quarter of 2018.  For the nine months ended September 30, 2019, net income attributable to PRA Group, Inc. was $58.8 million, or diluted earnings per share of $1.29, compared to $50.6 million, or diluted earnings per share of $1.11, for the same period in 2018. 

Third Quarter Highlights

• Global cash collections of $453.2 million increased 16%, or 18% on a currency adjusted basis, compared to the third quarter of 2018.
• Estimated Remaining Collections (ERC) of $6.4 billion which increased $584.0 million, or 10% compared to the third quarter of 2018. 
• Total investment for the quarter of $279.0 million, a 17% increase compared to the third quarter of 2018 driven primarily by an improving investment environment in Europe. 
• Income recognized on finance receivables of $247.5 million, an 11% increase compared to the third quarter of 2018. 
• Income from operations of $64.7 million, an increase of 47% compared to the third quarter of 2018. 
• Cash efficiency ratio of 60.2% during the quarter, compared to 55.7% in the third quarter of 2018. 

"PRA continued to benefit from our long-term focus and disciplined approach to the business.  We were patient and waited for significant changes in pricing across Europe to occur and are now investing strongly in most geographies.  It has been our long-held philosophy that to be successful, we must be both an accurate and disciplined investor as well as an efficient and compliant collector," said Kevin Stevenson, president and chief executive officer.  "In the U.S., we are benefiting from the results of our past investments in the legal channel and increasing operating leverage through advancements in collection technologies and processes including the continued build out of digital capabilities.  In Europe, we had a similar operational focus that ensured we were prepared to efficiently capitalize on this improving market.  As a result, global cash collections, total revenues, and income from operations grew at double digit rates."      

Cash Collections and Revenues

• The following table presents cash collections by quarter and by source on an as reported and currency-adjusted basis:

• Cash collections in the quarter increased $63.9 million compared to the third quarter of 2018.  The increase was primarily due to a 35% increase in U.S. legal collections, a 16% increase in Europe Core collections and a 9% increase in U.S. call center and other cash collections.  Investments in the legal collections channel and operational efficiencies continue to generate positive results driving cash collections in the U.S. higher.  Increased portfolio investment over the trailing twelve months, as the result of an improving investment environment, contributed to the increase in cash collections in Europe. For the nine months ended September 30, 2019, cash collections increased $162.2 million compared to the same period last year. 
• For the quarter, cash collections on fully amortized pools were $11.3 million and cash collections on nonaccrual pools were $2.8 million.
• Income recognized on finance receivables increased $24.2 million compared to the third quarter of 2018 primarily due to yield raises and increased portfolio investment.  For the nine months ended September 30, 2019, income recognized on finance receivables increased $74.7 million compared to the same period last year. 

Expenses

• Operating expenses in the quarter increased $7.7 million compared to the third quarter of 2018 largely due to an increase in legal collection fees and agency fees, partially offset by a decrease in compensation and employee benefits in the U.S.  The increase in legal collection fees is directly related to the significant increase in external legal cash collections.  Agency fees increased primarily due to an increase in cash collections in areas where the Company utilizes third party collection firms. 
• For the nine months ended September 30, 2019, operating expenses increased $53.2 million compared to the same period last year. 
• Interest expense increased $5.2 million compared to the third quarter of 2018 mainly due to higher levels of average borrowings primarily from increased portfolio investment.
• The effective tax rate for the nine months ended September 30, 2019 was 19.0%.

Portfolio Acquisitions

• The Company invested $279.0 million in finance receivables in the third quarter.     
• At the end of the third quarter, the Company had in place forward flow commitments of $725.1 million.

Conference Call Information PRA 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 until November 14, 2019, call 877-344-7529 in the U.S. or 412-317-0088 outside the U.S. and use access code 10131995.                         

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 and Europe. 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 which 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 but not limited to 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 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.

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

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

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SOURCE PRA Group