Pra Group, Inc. · NASDAQ:PRAA
Pra — Q3 2024 Earnings Presentation
21 slides from Pra's earnings presentation, Nov 4, 2024
Slide 1: PRA Group Q3 2024 Conference Call Presentation
PRA Group Q3 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: Transformation in U.S. Business Is Well Underway
Transformation in U.S. Business Is Well Underway In Flight 2025+ Optimize & Grow the Business Visible 2024 Driving the Complete Turnaround 2023 Stabilized Performance 2 Nasdaq: PRAA
Slide 4: Q3 2024 Investments of $350 Million, Up 12% YoY
Q3 2024 Investments of $350 Million, Up 12% YoY Record Year-to-Date 2024 Investments of $975 Million $ in millions Quarterly Investments Year-to-Date Investments1 $975 +12% $887 $869 $379 $350 $771 $328 $311 $288 $154 $76 $285 $615 $79 $562 $144 $246 $231 $230 $123 $49 $183 $161 $98 $147 $125 $73 $2
Slide 5: PRA Europe
PRA Europe A Growing and Differentiated Business with Consistent ERC & Collections Growth PRA Europe ERC1 PRA Europe Cash Collections2 $5.0 $1,000 $4.5 $900 $4.0 CAGR: +9% $800 $3.6 $708 $700 $3.4 CAGR: +15% $3.5 $3.2 $700 $654 $664 $3.1 $3.0 $3.0 $2.9 $600 $579 $519 $2.5 $2.4 $2.5 $500 $472 $2.0 $2
Slide 6: The Two Components of Portfolio Revenue
The Two Components of Portfolio Revenue Both Represent an Important Part of Revenue & Profitability $ in millions Portfolio Income Changes in Expected Recoveries Portfolio Income Continues to Grow Changes in Expected Recoveries Trend Positive Over Time $300 $80 $73 $64 $61 $250 $60 $57 $232 $50 $52
Slide 7: Q3 2024 Financial Results
Q3 2024 Financial Results $ in millions, except per share amounts Q3 2023 vs Q3 2024 Total Revenues Portfolio Income Operating Expenses +30% +14% +10% Total Revenues: • Increase driven by higher changes in expected $281 $216 $191 $190 $173 recoveries and portfolio income $216 Portfolio Income: • Inc
Slide 8: Cash Collections Increased 14% Year-Over-Year
Cash Collections Increased 14% Year-Over-Year $ in millions Cash Collections $600 -13% -18% -16% -17% -14% -6% +2% +5% +9% +13% +14% $556 $544 $500 $488 $474 $481 $474 $477 $173 $444 $450 $181 $419 $420 $412 $411 $410 $400 $174 $392 $179 $175 $183 $184 $165 $167 $155 $158 $172 $168 $166 $300 $158 $2
Slide 9: Select U.S. Economic Indicators
Select U.S. Economic Indicators 1 2 3 Unemployment Rate1 Inflation2 and Interest Rates3 Gas Prices4 Inflation Interest Rates 15% 10% $5.50 9.1% 8% $4.50 10% 6% 5.1% $3.48 $3.50 4% $2.60 5% 4.0% 4.1% 2.5% 2.1% $2.50 2% 1.4% 0% 0% $1.50 Jan Sept Jan Sept Jan Sept 2018 2024 2018 2024 2018 2024 1. U.S.
Slide 10: ERC Increased 22% Year-over-Year to a Record $7.3 Billion
ERC Increased 22% Year-over-Year to a Record $7.3 Billion Up $491 Million Sequentially $ in billions ERC +22% $8.0 $7.3 $7.0 $6.8 $0.5 $6.4 $6.5 $6.1 $6.1 $0.5 $6.1 $6.0 $5.9 $6.0 $0.5 $6.0 $0.3 $0.4 $5.7 $5.7 $5.7 $0.6 $0.3 $0.4 $5.6 $0.4 $5.3 $0.6 $0.6 $0.4 $0.5 $0.5 $0.5 $3.2 $5.0 $2.9 $2.8 $2.5
Slide 11: Increased Leverage to Support Higher Portfolio Purchases
Increased Leverage to Support Higher Portfolio Purchases $ in billions Debt to Total Total Borrowings and Debt to Adjusted EBITDA* Adjusted Borrowings EBITDA $3.5 $3.3 4.0x $3.1 $2.9 $2.9 $3.0 $3.0 $2.7 $2.8 $2.5 $2.6 $2.5 3.5x $2.5 $2.4 $2.5 $2.5 $2.5 $2.4 $2.0 3.0x 2.92x 3.00x 2.89x 2.76x 2.84x 2.
Slide 12: Strong Capital Structure
Strong Capital Structure Well-Positioned to Continue Capitalizing on Strong Portfolio Supply $ in millions Pro Forma Debt Maturity Profile1 • $1.0 billion available under our credit facilities as of September 30, 2024 $1,975 • $412 million available based on current ERC • $587 million of additional
Slide 13: Driving the Business Forward Through Multiple Initiatives
Driving the Business Forward Through Multiple Initiatives 1 Capitalize on improved U.S. supply at 2 Turn around U.S. Business 3 Leverage third parties to launch 4 Leverage strengths of European 5 Stabilize the business and rebuild attractive offshore franchise profitability returns collection capabi
Slide 14: Roadmap to Enhanced Profitability
Roadmap to Enhanced Profitability Value Creation from Higher Cash Collections While Reducing Marginal Costs Q3 2024 Update • Taking advantage of strong U.S. portfolio Optimizing Investments supply and attractive pricing Increase ERC and portfolio returns • Expecting elevated levels of U.S. portfolio
Slide 15: Expecting Elevated U.S. Portfolio Supply Levels in 2025
Expecting Elevated U.S. Portfolio Supply Levels in 2025 $ in billions U.S. Credit Card Balances1 and Charge-Off Rates2 $1,200 10% $1,069 $1,000 8% $800 6% $600 4.5% 4% $400 2% $200 $0 0% 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Q1 24 Q2 24 Q3 24 U.S. Credit Card Balances1 U.S. Credit Card Charge
Slide 16: Elements of the U.S. Legal Collections Process
Elements of the U.S. Legal Collections Process Successfully Reducing Cycle Time, Increasing Wage Garnishments & Driving Cash $ in millions Stages of the U.S. Legal Collections Process U.S. Legal Cash Collections 1 2 5 Account Pre-litigation selection for and attorney Post-judgment +51% legal eligibi
Slide 17: Financial Outlook
Financial Outlook On Track to Deliver 2024 Targets and Accelerating Progress in 2025 2024 TARGETS 2025 TARGETS Portfolio • Portfolio investments to exceed $1 billion at Purchases attractive pricing Double- Strong digit Modest portfolio growth in expense investment Cash • 8% - 10% cash collections gr
Slide 18: Q&A
Q&A 17 Nasdaq: PRAA
Slide 19: 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 20: 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 21: Najim Mostamand, CFA
Najim Mostamand, CFA VP, Investor Relations (757) 431-7913 IR@pragroup.com IR.PRAGROUP.COM