PRA Group Inc. Files 10-Q for Q1 2024

TL;DR

<b>PRA Group Inc. has filed its Q1 2024 10-Q report, detailing financial performance and corporate information.</b>

AI Summary

PRA GROUP INC (PRAA) filed a Quarterly Report (10-Q) with the SEC on May 8, 2024. PRA Group Inc. filed its quarterly report on Form 10-Q for the period ending March 31, 2024. The filing covers the first quarter of fiscal year 2024. The company's principal executive offices are located at 120 Corporate Blvd Ste 100, Norfolk, VA 23502. PRA Group Inc. was formerly known as Portfolio Recovery Associates Inc., with a name change date of September 3, 2002. The filing includes financial data related to various equity and retained earnings accounts for the periods ending March 31, 2024, December 31, 2023, and March 31, 2023.

Why It Matters

For investors and stakeholders tracking PRA GROUP INC, this filing contains several important signals. This filing provides investors with the latest financial snapshot of PRA Group Inc., crucial for understanding the company's performance in the first quarter of 2024. The detailed financial data, including segment information and equity accounts, allows for analysis of trends and financial health compared to previous periods.

Risk Assessment

Risk Level: low — PRA GROUP INC shows low risk based on this filing. The filing is a standard quarterly report (10-Q) and does not contain immediate, significant new risks or disclosures beyond routine financial reporting.

Analyst Insight

Review the detailed financial statements and segment performance within the 10-Q to assess PRA Group Inc.'s operational and financial health for Q1 2024.

Key Numbers

• 2024-03-31 — Period End Date (CONFORMED PERIOD OF REPORT)
• 2024-05-08 — Filing Date (FILED AS OF DATE)
• 2024 — Fiscal Year (FISCAL YEAR END)
• 6153 — SIC Code (STANDARD INDUSTRIAL CLASSIFICATION)

Key Players & Entities

• PRA GROUP INC (company) — FILER
• PRAA (company) — ticker symbol
• 10-Q (filing) — FORM TYPE
• 2024-05-08 (date) — FILED AS OF DATE
• 2024-03-31 (date) — CONFORMED PERIOD OF REPORT
• 120 CORPORATE BLVD STE 100, NORFOLK, VA 23502 (address) — BUSINESS ADDRESS
• PORTFOLIO RECOVERY ASSOCIATES INC (company) — FORMER COMPANY
• 2002-09-03 (date) — DATE OF NAME CHANGE

FAQ

Industry Context

PRA Group Inc. operates in the financial services sector, specifically within credit institutions, focusing on the acquisition and collection of non-performing loans.

Regulatory Implications

The company is subject to SEC regulations for public filings, including the requirement to submit quarterly reports on Form 10-Q.

What Investors Should Do

1. Analyze the balance sheet and equity accounts for changes from the previous quarter and year.
2. Examine any disclosures related to debt or financing, if present in the full filing.
3. Compare the reported financial data against analyst expectations and historical performance.

Key Dates

• 2024-03-31: Quarterly Period End — End of the reporting period for the 10-Q filing.
• 2024-05-08: Filing Date — Date the 10-Q report was officially filed with the SEC.

Year-Over-Year Comparison

This filing represents the Q1 2024 update, providing the latest financial data compared to the previous quarter (Q4 2023) and the same quarter last year (Q1 2023).

Key Financial Figures

• $0.01 — ange on which registered Common Stock, $0.01 par value per share PRAA NASDAQ Global

Filing Documents

• praa-20240331.htm (10-Q) — 1811KB
• exhibit101_eighthamendment.htm (EX-10.1) — 118KB
• exhibit102amendmenttocredi.htm (EX-10.2) — 73KB
• q12024exhibit311.htm (EX-31.1) — 11KB
• q12024exhibit312.htm (EX-31.2) — 10KB
• q12024exhibit321.htm (EX-32.1) — 11KB
• image_1.jpg (GRAPHIC) — 129KB
• image_11.jpg (GRAPHIC) — 324KB
• image_12.jpg (GRAPHIC) — 5KB
• image_2.jpg (GRAPHIC) — 56KB
• image_3.jpg (GRAPHIC) — 135KB
• image_7.jpg (GRAPHIC) — 15KB
• image_9.jpg (GRAPHIC) — 799KB
• praa-20240331_g1.jpg (GRAPHIC) — 79KB
• praa-20240331_g2.jpg (GRAPHIC) — 99KB
• praa-20240331_g3.jpg (GRAPHIC) — 102KB
• 0001185348-24-000026.txt (&nbsp;) — 9917KB
• praa-20240331.xsd (EX-101.SCH) — 36KB
• praa-20240331_cal.xml (EX-101.CAL) — 71KB
• praa-20240331_def.xml (EX-101.DEF) — 222KB
• praa-20240331_lab.xml (EX-101.LAB) — 512KB
• praa-20240331_pre.xml (EX-101.PRE) — 392KB
• praa-20240331_htm.xml (XML) — 883KB

Financial Information

Part I. Financial Information

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) 3 Consolidated Balance Sheets 3 Consolidated Income Statements 4 Consolidated Statements of Comprehensive Income 5 Consolidated Statements of Changes in Equity 6 Consolidated Statements of Cash Flows 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8 1. Organization and Business 8 2. Finance Receivables, net 8 3. Investments 11 4. Goodwill 11 5. Borrowings 12 6. Derivatives 12 7. Fair Value 13 8. Accumulated Other Comprehensive Loss 15 9. Earnings per Share 16 1 0 . Commitments and Contingencies 16 1 1 . Recently Issued Accounting Standards 17

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 18

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 38

Controls and Procedures

Item 4. Controls and Procedures 39

Other Information

Part II. Other Information

Legal Proceedings

Item 1. Legal Proceedings 40

Risk Factors

Item 1A. Risk Factors 40

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 40

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 40

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 40

Other Information

Item 5. Other Information 40

Exhibits

Item 6. Exhibits 40 Signatures 42 2

Financial Information

Part I. Financial Information

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) PRA Group, Inc. Consolidated Balance Sheets March 31, 2024 and December 31, 2023 (Amounts in thousands) (unaudited) March 31, 2024 December 31, 2023 Assets Cash and cash equivalents $ 108,100 $ 112,528 Investments 58,879 72,404 Finance receivables, net 3,650,195 3,656,598 Income taxes receivable 32,067 27,713 Deferred tax assets, net 78,883 74,694 Right-of-use assets 44,187 45,877 Property and equipment, net 34,054 36,450 Goodwill 411,846 431,564 Other assets 63,971 67,526 Total assets $ 4,482,182 $ 4,525,354 Liabilities and Equity Liabilities: Accounts payable $ 10,814 $ 6,325 Accrued expenses 98,902 131,893 Income taxes payable 23,541 17,912 Deferred tax liabilities, net 16,888 17,051 Lease liabilities 48,557 50,300 Interest-bearing deposits 113,259 115,589 Borrowings 2,953,048 2,914,270 Other liabilities 20,855 32,638 Total liabilities 3,285,864 3,285,978 Equity: Preferred stock, $ 0.01 par value, 2,000 shares authorized, no shares issued and outstanding — — Common stock, $ 0.01 par value; 100,000 shares authorized, 39,345 shares issued and outstanding as of March 31, 2024; 100,000 shares authorized, 39,247 shares issued and outstanding as of December 31, 2023 393 392 Additional paid-in capital 8,928 7,071 Retained earnings 1,493,023 1,489,548 Accumulated other comprehensive loss ( 373,018 ) ( 329,899 ) Total stockholders' equity - PRA Group, Inc. 1,129,326 1,167,112 Noncontrolling interests 66,992 72,264 Total equity 1,196,318 1,239,376 Total liabilities and equity $ 4,482,182 $ 4,525,354 The accompanying notes are an integral part of these Consolidated Financial Statements. 3 PRA Group, Inc. Consolidated Income Statements For the Three Months Ended March 31, 2024 and 2023 (Amounts in thousands, except per share amounts) (unaudited) Three Months Ended March 31, 2024 2023 Revenues: Portfolio income $ 202,056 $ 188,242 Changes in expected recoveries 51,674 ( 36,91

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 1. Organization and Business: Nature of operations : As used herein, the terms "PRA Group," the "Company," or similar terms refer to PRA Group, Inc. and its subsidiaries. PRA Group, Inc., a Delaware corporation, is a global financial and business services company with operations in the Americas, Europe and Australia. The Company's primary business is the purchase, collection and management of portfolios of nonperforming loans. The Company also provides fee-based services on class action claims recoveries in the United States ("U.S."). Basis of presentation : The Consolidated Financial Statements of the Company are prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The accompanying interim financial statements have been prepared in accordance with the instructions for Quarterly Reports on Form 10-Q, and therefore, do not include all information and Notes to the Consolidated Financial Statements necessary for a complete presentation of financial position, results of operations, comprehensive income/(loss) and cash flows in conformity with GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the Company's Consolidated Balance Sheets as of March 31, 2024, and the Consolidated Income Statements, Statements of Comprehensive Income, Statements of Changes in Equity and Statements of Cash Flows for the three months ended March 31, 2024 and 2023, have been included. The Consolidated Financial Statements include the accounts of PRA Group and other entities in which the Company has a controlling interest. All significant intercompany accounts and transactions have been eliminated. These unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (t

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements Changes in the negative allowance for expected recoveries by portfolio segment for the three months ended March 31, 2024 and 2023 were as follows (amounts in thousands): Three Months Ended March 31, 2024 Core Insolvency Total Balance at beginning of period $ 3,295,214 $ 361,384 $ 3,656,598 Initial negative allowance for expected recoveries - portfolio acquisitions (1) 218,657 27,160 245,817 Foreign currency translation adjustment ( 50,127 ) ( 2,107 ) ( 52,234 ) Recoveries applied to negative allowance (2) ( 215,216 ) ( 36,444 ) ( 251,660 ) Changes in expected recoveries (3) 49,564 2,110 51,674 Balance at end of period $ 3,298,092 $ 352,103 $ 3,650,195 Three Months Ended March 31, 2023 Core Insolvency Total Balance at beginning of period $ 2,936,207 $ 358,801 $ 3,295,008 Initial negative allowance for expected recoveries - portfolio acquisitions (1) 207,322 22,903 230,225 Foreign currency translation adjustment 19,835 4,050 23,885 Recoveries applied to negative allowance (2) ( 186,386 ) ( 39,323 ) ( 225,709 ) Changes in expected recoveries (3) ( 41,128 ) 4,216 ( 36,912 ) Balance at end of period $ 2,935,850 $ 350,647 $ 3,286,497 (1) Initial negative allowance for expected recoveries - portfolio acquisitions Portfolio acquisitions for the three months ended March 31, 2024 and 2023 were as follows (amounts in thousands): Three Months Ended March 31, 2024 Core Insolvency Total Face value $ 1,708,631 $ 114,216 $ 1,822,847 Noncredit discount ( 231,385 ) ( 13,442 ) ( 244,827 ) Allowance for credit losses at acquisition ( 1,258,589 ) ( 73,614 ) ( 1,332,203 ) Purchase price $ 218,657 $ 27,160 $ 245,817 Three Months Ended March 31, 2023 Core Insolvency Total Face value $ 1,507,965 $ 104,809 $ 1,612,774 Noncredit discount ( 150,511 ) ( 8,042 ) ( 158,553 ) Allowance for credit losses at acquisition ( 1,150,132 ) ( 73,864 ) ( 1,223,996 ) Purchase price $ 207,322 $ 22,903 $ 230,225 The initial

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements Three Months Ended March 31, 2023 Core Insolvency Total Allowance for credit losses at acquisition $ ( 1,150,132 ) $ ( 73,864 ) $ ( 1,223,996 ) Writeoffs, net 1,150,132 73,864 1,223,996 Expected recoveries 207,322 22,903 230,225 Initial negative allowance for expected recoveries $ 207,322 $ 22,903 $ 230,225 (2) Recoveries applied to negative allowance Recoveries applied to the negative allowance for the three months ended March 31, 2024 and 2023 were as follows (amounts in thousands): Three Months Ended March 31, 2024 Core Insolvency Total Recoveries (a) $ 406,313 $ 47,403 $ 453,716 Less - amounts reclassified to portfolio income 191,097 10,959 202,056 Recoveries applied to negative allowance $ 215,216 $ 36,444 $ 251,660 Three Months Ended March 31, 2023 Core Insolvency Total Recoveries (a) $ 364,236 $ 49,715 $ 413,951 Less - amounts reclassified to portfolio income 177,850 10,392 188,242 Recoveries applied to negative allowance $ 186,386 $ 39,323 $ 225,709 (a) Recoveries include cash collections, buybacks and other cash-based adjustments. (3) Changes in expected recoveries Changes in expected recoveries for the three months ended March 31, 2024 and 2023 were as follows (amounts in thousands): Three Months Ended March 31, 2024 Core Insolvency Total Changes in expected future recoveries $ 15,646 $ 190 $ 15,836 Recoveries received in excess of forecast 33,919 1,919 35,838 Changes in expected recoveries $ 49,565 $ 2,109 $ 51,674 Three Months Ended March 31, 2023 Core Insolvency Total Changes in expected future recoveries $ ( 41,414 ) $ 664 $ ( 40,750 ) Recoveries received in excess of forecast 286 3,552 3,838 Changes in expected recoveries $ ( 41,128 ) $ 4,216 $ ( 36,912 ) In order to estimate future cash collections, the Company considers factors such as historical collections performance and its view of economic conditions and consumer habits in the various geographies in which the C

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements Changes in expected recoveries for the three months ended March 31, 2023 were a net negative $ 36.9 million. This included $ 3.8 million in recoveries received in excess of forecast (cash collections overperformance) and a $ 40.8 million negative adjustment to changes in expected future recoveries. Overperformance decreased by $ 19.8 million as a result of reduced cash collections primarily in the U.S. due to a slower tax season. The changes in expected future recoveries reflected the Company's assessment of certain pools resulting in a reduction of expected cash flows as a result of slowing collection performance in the U.S. call centers resulting from weak economic conditions. 3. Investments: Investments consisted of the following as of March 31, 2024 and December 31, 2023 (amounts in thousands): March 31, 2024 December 31, 2023 Debt securities Available-for-sale $ 47,149 $ 59,470 Equity securities Private equity funds 2,243 2,451 Equity method investment 9,487 10,483 Total investments $ 58,879 $ 72,404 Debt Securities Government securities: As of March 31, 2024, the Company's available-for-sale debt securities consisted of Swedish treasury securities, all of which mature within one year. A s of March 31, 2024 and December 31, 2023, the amortized cost and fair value of these investments were as follows (amounts in thousands): March 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Aggregate Fair Value Available-for-sale Government securities $ 47,037 $ 112 $ — $ 47,149 December 31, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Aggregate Fair Value Available-for-sale Government securities $ 59,404 $ 66 $ — $ 59,470 Equity Method Investment The Company ha s an 11.7 % interest in RC B Investimentos S.A. ("RCB"), a servicing platform for nonperforming loans in Brazil, accounted for under the equity method . 4. Goodwill: The Company performs an ann

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 5. Borrowings: Borrowings consisted of the following as of March 31, 2024 and December 31, 2023 (amounts in thousands): March 31, 2024 December 31, 2023 North American revolving credit facility (1) $ 504,180 $ 396,303 United Kingdom revolving credit facility (2) 487,065 502,847 European revolving credit facility (3) 489,391 538,565 North American term loan (4) 437,500 442,500 Senior notes (5) 1,046,000 1,046,000 Total gross borrowings 2,964,136 2,926,215 Less: Debt discount and issuance costs ( 11,088 ) ( 11,945 ) Borrowings $ 2,953,048 $ 2,914,270 (1) Revolving credit facility under the Company's North American Revolving Credit and Term Loan (the "North American Credit Agreement"), which includes an aggregate principal amount of $ 1.5 billion (subject to compliance with a borrowing base and applicable debt covenants), consisting of (i) a fully-funded $ 437.5 million term loan (the "Term Loan"), (ii) a $ 1.0 billion domestic revolving credit facility, and (iii) a $ 75.0 million Canadian revolving credit facility, maturing on July 30, 2026. (2) Revolving credit facility under the Company's United Kingdom ("UK") Credit Agreement (the "UK Credit Agreement"), consisting of an $ 800.0 million revolving credit facility (subject to a borrowing base), a nd an accordion f eature for up to $ 200.0 million in additional commitments, subject to certain conditions, maturing on July 30, 2026. (3) Revolving credit facility under the Company's European Credit Agreement (the "European Credit Agreement"), providing revolving borrowings for an aggregate amount of approximately 730.0 million (subject to the borrowing base and applicable debt covenants), and an accordion feature for up to 500.0 million, subject to certain conditions, maturing on November 23, 2027. During the three months ended March 31, 2024, the lenders under the European Credit Agreement consented to an increase in the limit for interest bearing deposit

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements cash flow hedging instruments remained highly effective as of March 31, 2024, and have remaining ter ms from eight months to four years . As of March 31, 2024, t he Company estimat es that $ 12.8 million of net derivative gains included in OCI w ill be reclassified into earnings within the next 12 months. The following tables summarize the effects of derivatives designated as cash flow hedging instruments for the three months ended March 31, 2024 and 2023 (amounts in thousands): Gain/(loss) recognized in OCI, net of tax Three Months Ended March 31, Hedging instrument 2024 2023 Interest rate contracts $ 7,070 $ ( 629 ) Gain/(loss) reclassified from OCI into income Three Months Ended March 31, Income statement account 2024 2023 Interest expense, net $ 5,674 $ ( 5,498 ) Derivatives Not Designated as Hedging Instruments: The Company enters into foreign currency contracts to economically hedge foreign currency remeasurement exposure related to certain balances denominated in currencies other than the functional currency of the Company or its international subsidiaries. Changes in fair value of derivative contracts not designated as hedging instruments are recognized in earnings. As of March 31, 2024 and December 31, 2023, the notional amount of foreign currency contracts w as $ 307.4 million and $ 368.5 mi

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