PRA Group Inc. Files Q2 2024 10-Q

TL;DR

PRA Group's Q2 2024 10-Q is in: financials updated, check for performance details.

AI Summary

PRA Group Inc. filed its 10-Q for the period ending June 30, 2024. The filing details the company's financial performance and position, including its assets and liabilities. Specific financial figures and operational details for the second quarter of 2024 are presented.

Why It Matters

This filing provides investors and analysts with the latest financial data for PRA Group, crucial for understanding the company's performance in the debt collection industry.

Risk Assessment

Risk Level: medium — 10-Q filings are standard financial reports, but the specific details within can reveal significant financial health or risks for the company.

Key Numbers

• 2024 Q2 — Reporting Period (Indicates the financial quarter covered by the report.)
• 20240630 — Period End Date (The specific date up to which financial information is reported.)
• 20240807 — Filing Date (The date the report was officially submitted to the SEC.)

Key Players & Entities

• PRA GROUP INC (company) — Filer of the 10-Q
• 20240630 (date) — End of the reporting period
• 20240807 (date) — Filing date
• NORFOLK (location) — Company's business address city
• VA (location) — Company's business address state

FAQ

Key Financial Figures

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

Filing Documents

• praa-20240630.htm (10-Q) — 2326KB
• exhibit101pra-austrianrece.htm (EX-10.1) — 106KB
• exhibit102executedninthame.htm (EX-10.2) — 1737KB
• q22024exhibit311.htm (EX-31.1) — 11KB
• q22024exhibit312.htm (EX-31.2) — 10KB
• q22024exhibit321.htm (EX-32.1) — 11KB
• praa-20240630_g1.jpg (GRAPHIC) — 80KB
• 0001185348-24-000043.txt ( ) — 10945KB
• praa-20240630.xsd (EX-101.SCH) — 39KB
• praa-20240630_cal.xml (EX-101.CAL) — 71KB
• praa-20240630_def.xml (EX-101.DEF) — 233KB
• praa-20240630_lab.xml (EX-101.LAB) — 534KB
• praa-20240630_pre.xml (EX-101.PRE) — 402KB
• praa-20240630_htm.xml (XML) — 1405KB

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 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 1. Organization and Business 9 2. Finance Receivables, net 9 3. Investments 13 4. Goodwill 13 5. Borrowings 13 6. Derivatives 15 7. Fair Value 16 8. Accumulated Other Comprehensive Loss 18 9. Earnings per Share 18 10. Commitments and Contingencies 19 11. Recently Issued Accounting Standards 20

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 21

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 40

Controls and Procedures

Item 4. Controls and Procedures 41

Other Information

Part II. Other Information

Legal Proceedings

Item 1. Legal Proceedings 42

Risk Factors

Item 1A. Risk Factors 42

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 42

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 42

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 42

Other Information

Item 5. Other Information 42

Exhibits

Item 6. Exhibits 42 Signatures 44 2

Financial Information

Part I. Financial Information

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) PRA Group, Inc. Consolidated Balance Sheets June 30, 2024 and December 31, 2023 (Amounts in thousands) (unaudited) June 30, 2024 December 31, 2023 Assets Cash and cash equivalents $ 118,865 $ 112,528 Investments 59,619 72,404 Finance receivables, net 3,820,186 3,656,598 Income taxes receivable 34,813 27,713 Deferred tax assets, net 76,486 74,694 Right-of-use assets 42,374 45,877 Property and equipment, net 32,827 36,450 Goodwill 415,646 431,564 Other assets 61,124 67,526 Total assets $ 4,661,940 $ 4,525,354 Liabilities and Equity Liabilities: Accounts payable $ 10,198 $ 6,325 Accrued expenses 114,260 131,893 Income taxes payable 23,583 17,912 Deferred tax liabilities, net 18,423 17,051 Lease liabilities 46,746 50,300 Interest-bearing deposits 114,991 115,589 Borrowings 3,113,777 2,914,270 Other liabilities 16,684 32,638 Total liabilities 3,458,662 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, 39,417 shares issued and outstanding as of June 30, 2024; 100,000 shares authorized, 39,247 shares issued and outstanding as of December 31, 2023 394 392 Additional paid-in capital 12,339 7,071 Retained earnings 1,514,539 1,489,548 Accumulated other comprehensive loss ( 381,809 ) ( 329,899 ) Total stockholders' equity - PRA Group, Inc. 1,145,463 1,167,112 Noncontrolling interests 57,815 72,264 Total equity 1,203,278 1,239,376 Total liabilities and equity $ 4,661,940 $ 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 and Six Months Ended June 30, 2024 and 2023 (Amounts in thousands, except per share amounts) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenues: Portfolio income $ 209,290 $ 184,290 $ 411

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 June 30, 2024, its Consolidated Income Statements and Statements of Comprehensive Income for the three and six months ended June 30, 2024 and 2023, and its Consolidated Statements of Changes in Equity and Statements of Cash Flows for the six months ended June 30, 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 Co

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements Changes in the negative allowance for expected recoveries by portfolio segment for the three and six months ended June 30, 2024 and 2023 were as follows (amounts in thousands): Three Months Ended June 30, 2024 2023 Core Insolvency Total Core Insolvency Total Balance at beginning of period $ 3,298,092 $ 352,103 $ 3,650,195 $ 2,935,850 $ 350,647 $ 3,286,497 Initial negative allowance for expected recoveries - portfolio acquisitions (1) 326,752 52,617 379,369 308,274 19,485 327,759 Foreign currency translation adjustment ( 13,623 ) 205 ( 13,418 ) 23,380 4,034 27,414 Recoveries applied to negative allowance (2) ( 226,247 ) ( 43,033 ) ( 269,280 ) ( 198,897 ) ( 39,361 ) ( 238,258 ) Changes in expected recoveries (3) 65,747 7,573 73,320 17,798 3,338 21,136 Balance at end of period $ 3,450,721 $ 369,465 $ 3,820,186 $ 3,086,405 $ 338,143 $ 3,424,548 Six Months Ended June 30, 2024 2023 Core Insolvency Total Core Insolvency Total Balance at beginning of period $ 3,295,214 $ 361,384 $ 3,656,598 $ 2,936,207 $ 358,801 $ 3,295,008 Initial negative allowance for expected recoveries - portfolio acquisitions (1) 545,409 79,777 625,186 515,595 42,389 557,984 Foreign currency translation adjustment ( 63,750 ) ( 1,902 ) ( 65,652 ) 43,216 8,082 51,298 Recoveries applied to negative allowance (2) ( 441,463 ) ( 79,477 ) ( 520,940 ) ( 385,283 ) ( 78,683 ) ( 463,966 ) Changes in expected recoveries (3) 115,311 9,683 124,994 ( 23,330 ) 7,554 ( 15,776 ) Balance at end of period $ 3,450,721 $ 369,465 $ 3,820,186 $ 3,086,405 $ 338,143 $ 3,424,548 (1) Initial negative allowance for expected recoveries - portfolio acquisitions Portfolio acquisitions for the three and six months ended June 30, 2024 and 2023 were as follows (amounts in thousands): Three Months Ended June 30, 2024 2023 Core Insolvency Total Core Insolvency Total Face value $ 2,402,148 $ 279,417 $ 2,681,565 $ 2,217,262 $ 91,940 $ 2,309,202 Noncredit discou

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements The initial negative allowance recorded on portfolio acquisitions for the three and six months ended June 30, 2024 and 2023 was as follows (amounts in thousands): Three Months Ended June 30, 2024 2023 Core Insolvency Total Core Insolvency Total Allowance for credit losses at acquisition $ ( 1,758,462 ) $ ( 203,614 ) $ ( 1,962,076 ) $ ( 1,668,456 ) $ ( 65,713 ) $ ( 1,734,169 ) Writeoffs, net 1,758,462 203,614 1,962,076 1,668,456 65,713 1,734,169 Expected recoveries 326,752 52,617 379,369 308,274 19,485 327,759 Initial negative allowance for expected recoveries $ 326,752 $ 52,617 $ 379,369 $ 308,274 $ 19,485 $ 327,759 Six Months Ended June 30, 2024 2023 Core Insolvency Total Core Insolvency Total Allowance for credit losses at acquisition $ ( 3,017,051 ) $ ( 277,228 ) $ ( 3,294,279 ) $ ( 2,818,588 ) $ ( 139,577 ) $ ( 2,958,165 ) Writeoffs, net 3,017,051 277,228 3,294,279 2,818,588 139,577 2,958,165 Expected recoveries 545,409 79,777 625,186 515,595 42,389 557,984 Initial negative allowance for expected recoveries $ 545,409 $ 79,777 $ 625,186 $ 515,595 $ 42,389 $ 557,984 (2) Recoveries applied to negative allowance Recoveries applied to the negative allowance for the three and six months ended June 30, 2024 and 2023 were as follows (amounts in thousands): Three Months Ended June 30, 2024 2023 Core Insolvency Total Core Insolvency Total Recoveries (a) $ 423,659 $ 54,911 $ 478,570 $ 373,178 $ 49,370 $ 422,548 Less - amounts reclassified to portfolio income 197,412 11,878 209,290 174,281 10,009 184,290 Recoveries applied to negative allowance $ 226,247 $ 43,033 $ 269,280 $ 198,897 $ 39,361 $ 238,258 Six Months Ended June 30, 2024 2023 Core Insolvency Total Core Insolvency Total Recoveries (a) $ 829,972 $ 102,314 $ 932,286 $ 737,414 $ 99,084 $ 836,498 Less - amounts reclassified to portfolio income 388,509 22,837 411,346 352,131 20,401 372,532 Recoveries applied to negative allowance $ 441,463

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements Changes in expected recoveries for the three months ended June 30, 2024 and 2023 were as follows (amounts in thousands): Three Months Ended June 30, 2024 2023 Core Insolvency Total Core Insolvency Total Recoveries received in excess of forecast $ 46,830 $ 7,430 $ 54,260 $ 21,536 $ 3,812 $ 25,348 Changes in expected future recoveries 18,917 143 19,060 ( 3,738 ) ( 474 ) ( 4,212 ) Changes in expected recoveries $ 65,747 $ 7,573 $ 73,320 $ 17,798 $ 3,338 $ 21,136 Changes in expected recoveries for the three months ended June 30, 2024 were $ 73.3 million, which included $ 54.3 million in recoveries received in excess of forecast (cash collections overperformance), due mainly to collections performance in the U.S., driven in large part by the Company's cash-generating initiatives, coupled with collections performance in Europe. Changes in expected future recoveries of $ 19.1 million mainly reflect the Company's assessment of certain pools in the U.S. and Europe, resulting in an increase to the expected cash flows based primarily on overperformance in recent periods. The increase in expected cash flows was driven in large part by forecast increases to the 2013 to 2019 U.S. Core pools, as well as increases to a number of pools in Europe. Changes in expected recoveries for the three months ended June 30, 2023 were a net positive $ 21.1 million. This included $ 25.3 million in recoveries received in excess of forecast (cash collections overperformance) and a $ 4.2 million negative adjustment to changes in expected future recoveries. The $ 25.3 million in recoveries received in excess of forecast was largely due to overperformance generated from larger than expected one-time payments in Europe and performance on new vintages in South America. Changes in expected recoveries for the six months ended June 30, 2024 and 2023 were as follows (amounts in thousands): Six Months Ended June 30, 2024 2023 Core Insolvency Total C

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 3. Investments: Investments consisted of the following as of June 30, 2024 and December 31, 2023 (amounts in thousands): June 30, 2024 December 31, 2023 Debt securities Available-for-sale $ 47,918 $ 59,470 Equity securities Private equity funds 2,281 2,451 Equity method investment 9,420 10,483 Total investments $ 59,619 $ 72,404 Debt Securities Government securities: As of June 30, 2024, the Company's available-for-sale debt securities consisted of Swedish treasury securities maturing within one year. As of June 30, 2024 and December 31, 2023, the amortized cost and fair value of these investments were as follows (amounts in thousands): June 30, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Aggregate Fair Value Available-for-sale Government securities $ 47,741 $ 177 $ — $ 47,918 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 annual review of goodwill as of October 1 of each year, or more frequently if indicators of impairment exist, with the most recent annual review performed as of October 1, 2023 . The Company performed a quarterly assessment by evaluating whether any triggering events had occurred as of June 30, 2024 , which included considering current market conditions, and determined that goodwill was not more-likely-than-not impaired. C hanges in goodwill for the three and six months ended June 30, 2024 and 2023, were as follows (amounts in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Balance as of beginning of period $ 411,846 $ 420,647 $ 431,564 $ 435,921 Foreign curr

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 5. Borrowings: Borrowings consisted of the following as of June 30, 2024 and December 31, 2023 (amounts in thousands): June 30, 2024 December 31, 2023 North American revolving credit facility (1) $ 219,305 $ 396,303 United Kingdom revolving credit facility (2) 495,665 502,847 European revolving credit facility (3) 533,653 538,565 North American term loan (4) 435,000 442,500 Credit facility borrowings 1,683,623 1,880,215 Senior Notes due 2025 (the "2025 Notes") 298,000 298,000 Senior Notes due 2028 (the "2028 Notes") 398,000 398,000 Senior Notes due 2029 (the "2029 Notes") 350,000 350,000 Senior Notes

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