Pra Group, Inc. · NASDAQ:PRAA
Pra — Q1 2024 Earnings Presentation
19 slides from Pra's earnings presentation, May 6, 2024
Slide 1: PRA Group Q1 2024 Conference Call Presentation
PRA Group Q1 2024 Conference Call Presentation Nasdaq: PRAA
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements in this presentation, other than statements of historical fact, are forward-looking statements, which are based on our current beliefs, projections, assumptions and expectations concerning future operations and financial performance. Such statements involve unce
Slide 3: Our Imperatives
Our Imperatives 2023 2024 Drive the Turnaround Stabilize Performance 2 Nasdaq: PRAA
Slide 4: Roadmap to Enhanced Profitability
Roadmap to Enhanced Profitability Value Creation from Higher Cash Collections While Reducing Marginal Costs Driving Optimizing Managing Enhanced Investments + Operational + Expenses = Profitability Execution Increase ERC and portfolio Maximize cash collected Optimize cost structure returns per dolla
Slide 5: Capitalizing on Strong U.S. Supply and Improving Prices Globally
Capitalizing on Strong U.S. Supply and Improving Prices Globally $ in millions Optimizing Investments $200 $187 5% $250 $220 $172 $146 $141 4% $200 $150 $161 $111 $109 $144 $96 $97 3% $150 $125 $123 $100 $79 $78 $88 $106 $98 Avg: $65 2% $100 $90 $79 $110 $73 $50 $48 $49 1% $50 $0 0% $0 Q2 Q3 Q4 Q1 Q
Slide 6: Generating Momentum in U.S. Legal Collections Activities
Generating Momentum in U.S. Legal Collections Activities Driving Operational Execution Wage Garnishment Filings (indexed to 2019 levels) 200%+ 200% 166% • >$100 million estimated cash impact 150% from post-judgment legal optimization, starting in 1H 2024, with majority realized by year-end 2026 107%
Slide 7: Driving Efficiencies and Cost Savings
Driving Efficiencies and Cost Savings Expenses Expected to Grow Slower Than Cash Collections, Driving Cash Efficiency in the Low 60% Range Managing Expenses Building flexibility into the business Restructure and Re-examine and Rebalance eliminate non- simplify resources to essential processes levera
Slide 8: Portfolio Investments Up 7% Year-over-Year
Portfolio Investments Up 7% Year-over-Year Q1 U.S. Portfolio Investments Up 71% Year-over-Year to $187 Million $ in millions Portfolio Purchases $450 $400 $392 +7% $350 $328 $311 $300 $288 $285 $220 $79 $144 $246 $250 $231 $230 $220 $202 $123 $49 $200 $161 $183 $98 $106 $147 $125 $150 $90 $73 $48 $2
Slide 9: The Two Components of Portfolio Revenue
The Two Components of Portfolio Revenue $ in millions Portfolio Income Changes in Expected Recoveries Portfolio Income Growing YoY Last Three Quarters Changes in Expected Recoveries Trend Positive Over Time $300 +7% $80 $248 +5% $64 $250 $240 $233 $60 $57 $232 $50 $52 $219 $213 $212 +2% $48 $208 $44
Slide 10: Q1 2024 Financial Results
Q1 2024 Financial Results $ in millions, except per share amounts Q1 2023 vs Q1 2024 Total Revenues Portfolio Income Operating Expenses +64% +7% 0% Total Revenues: • Increase driven by higher portfolio income and $256 $188 $202 $189 $189 changes in expected recoveries $155 Portfolio Income: • Increa
Slide 11: Cash Collections Increased 9% Year-Over-Year
Cash Collections Increased 9% Year-Over-Year $ in millions Cash Collections $600 -13% -18% -16% -17% -14% -6% +2% +5% +9% $544 +9% $500 $488 $474 $481 $444 $450 $412 $411 $419 $420 $410 $400 $392 $363 Americas and Australia: $314 $295 $305 $300 $279 $282 • 11% increase driven primarily $258 $254 $24
Slide 12: ERC Increased 15% Year-over-Year
ERC Increased 15% Year-over-Year ERC Increased $100 Million Sequentially $ in billions ERC $8.0 +15% $7.0 $6.4 $6.5 $6.1 $6.1 $6.0 $6.0 $0.5 $6.0 $5.7 $5.9 $0.6 $0.5 $0.3 $0.4 $0.4 $5.6 $5.7 $5.7 $0.4 $5.3 $0.6 $0.6 $0.4 $0.5 $0.5 $5.0 $0.5 $2.5 $2.4 $2.6 $2.7 $2.5 $2.1 $2.3 $2.2 $2.1 $2.3 $4.0 $2.3
Slide 13: Leverage Remains Moderate & Within Target Range
Leverage Remains Moderate & Within Target Range $ in billions Total Borrowings and Debt to Adjusted EBITDA* $2.9 $2.9 $3.0 4.5x $3.0 $2.8 $2.7 $2.5 $2.6 $2.5 $2.5 $2.4 $2.5 $2.5 $2.5 $2.4 4.0x $2.0 3.5x $1.5 2.89x 2.84x 2.89x 2.83x 3.0x 2.76x $1.0 2.25x 2.5x 1.94x 2.03x 2.04x $0.5 1.81x 1.89x 2.0x 1
Slide 14: Strong Capital Structure With No Maturities Until Sept. 2025
Strong Capital Structure With No Maturities Until Sept. 2025 Well-Positioned to Continue Taking Advantage of Increasing Portfolio Supply $ in millions Debt Maturity Profile (Amount Outstanding) • $1.2 billion availability under our credit $1,429 facilities North American • $367 million available bas
Slide 15: 2024 Outlook
2024 Outlook On Track to Meaningful Profitability and Substantially Improved Results 6-8% Double-digit Strong 60%+ cash return on growth in Modest portfolio efficiency average cash expense investment ratio1 in tangible collections growth levels 2024 equity2 in in 2024 2024 • Largely due to increase
Slide 16: Q&A
Q&A 15 Nasdaq: PRAA
Slide 17: Reconciliation of Non-GAAP Financial Measures to GAAP
Reconciliation of Non-GAAP Financial Measures to GAAP $ in millions Use of Non-GAAP Financial Measures The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management uses certain non-GAAP financial measures, including Adjusted E
Slide 18: Reconciliation of Non-GAAP Financial Measures to GAAP (Cont.)
Reconciliation of Non-GAAP Financial Measures to GAAP (Cont.) Use of Non-GAAP Financial Measures (Cont.) In addition, the Company uses return on average tangible equity (ROATE), which is a supplemental measure of performance that is not required by, or presented in accordance with, GAAP, to monitor
Slide 19: Najim Mostamand, CFA
Najim Mostamand, CFA VP, Investor Relations (757) 431-7913 IR@pragroup.com IR.PRAGROUP.COM