Pra Group, Inc. · NASDAQ:PRAA
Pra — Investor Presentation (February 2025)
41 slides from Pra's investor presentation, February 2025
Slide 1: February 2025 Investor Presentation
February 2025 Investor Presentation A Global Leader in Acquiring and Collecting Nonperforming Loans
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: Agenda
Agenda Company Overview Market Opportunity Growth Strategy Financial Performance Appendix 2 Nasdaq: PRAA
Slide 4: Who We Are
Who We Are A Global Leader in Acquiring and Collecting Nonperforming Loans 25+ $1.4B Europe ERC of $3.6B Years in Business 2024 Portfolio Americas & Australia ERC Purchases of $3.8B 3,000+ $1.9B Employees 2024 Cash Worldwide Collections 18 $7.5B Headquartered in Countries Estimated Remaining Norfolk
Slide 5: Business Overview
Business Overview Working with Consumers to Collect on Nonperforming Loans Purchased at a Discount Assets We Purchase: Creditor1 extends credit Steps 2-3: • Credit Cards to consumers • Creditor's lending Consumers become delinquent • Auto Loans behavior is affected • Personal Loans • Consumer’s cred
Slide 6: Business Overview (Cont.)
Business Overview (Cont.) Purchase Portfolios at Attractive Returns & Collect as Efficiently As Possible The Collections Journey 2024 Core Cash Collections by Channel and Geography1 Underwrite Assess Collect & Purchase (ongoing) • Leverage deep • Determine • Execute on seller consumer collections ac
Slide 7: One of the Largest and Most Established Debt Buyers
One of the Largest and Most Established Debt Buyers Disciplined Organic and Inorganic Growth Through Multiple Credit Cycles 2004 2008 2023 1996 Diversified U.S. Navigated Vik Atal Founded by portfolio into Global Financial 2014 2018 appointed CEO, Steve acquisition and Crisis (GFC) Strengthened Ente
Slide 8: Strong Track Record Through Credit & Economic Cycles
Strong Track Record Through Credit & Economic Cycles Higher Portfolio Supply, Improved Pricing, and Resilient Collections $ in millions Global Financial Crisis1 COVID-192 $1,408 $1,241 $1,154 $1,109 $1,118 $964 $905 $905 $972 $850 $657 $705 $367 $408 $470 Portfolio $264 $280 $289 $112 Purchases3 $2,
Slide 9: PRA Europe
PRA Europe A Growing and Differentiated Business with Consistent ERC & Collections Growth PRA Europe ERC1 $5.0 CAGR: +9% ✓ Experienced and tenured management $4.0 $3.4 $3.6 $2.9 $3.2 $3.1 $3.0 $3.0 $2.4 $2.5 $2.0 $2.1 $2.0 $1.5 ✓ Diversified presence across 13 countries $1.0 $0.0 2014 2015 2016 2017
Slide 10: Seasoned Management Team
Seasoned Management Team Leveraging Deep Expertise and Industry Experience to Drive Next Stage of Profitable Growth 40+ 25+ 25+ 25+ 30+ Vikram Atal Rakesh Sehgal LaTisha Tarrant Martin Sjölund Owen James President, Chief Financial Officer General Counsel and President, Global Investments Chief Execu
Slide 11: Agenda
Agenda Company Overview Market Opportunity Growth Strategy Financial Performance Appendix 10 Nasdaq: PRAA
Slide 12: Favorable Industry and Market Tailwinds for PRA
Favorable Industry and Market Tailwinds for PRA Current Environment Near-Term Outlook PRA’s Positioning • Improved supply and pricing • Supply anticipated to remain • Key buyer in the world’s largest NPL dynamics after declines in 2020- elevated market 2022 • Portfolio pricing continues to be • Stro
Slide 13: Expecting Elevated U.S. Portfolio Supply in 2025
Expecting Elevated U.S. Portfolio Supply in 2025, Driven by Rising Credit Card Balances & Charge-Off Rates $ in billions U.S. Credit Card Balances1 and Charge-Off Rates2 $1,200 10% $1,000 8% $800 6% $600 4% $400 2% $200 $0 0% 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 U.S. Credit Card Balances1
Slide 14: Agenda
Agenda Company Overview Market Opportunity Growth Strategy Financial Performance Appendix 13 Nasdaq: PRAA
Slide 15: Transformation in U.S. Business Is Well Underway, Supported by Three Pillars
Transformation in U.S. Business Is Well Underway, Supported by Three Pillars 1 Optimizing Investments Increase ERC and portfolio returns Enhanced Profitability Operational Execution ✓ Higher cash collections 2 Maximize cash collected per dollar invested ✓ Lower marginal costs ✓ Higher returns on new
Slide 16: Optimizing Investments
1 Optimizing Investments Capitalizing on Strong U.S. Supply & Attractive Pricing Globally $ in millions Quarterly Investments Annual Investments +22% Americas and Australia Core PPM1 increased from 1.75x as of 3/31/23 to 2.11x as of 12/31/24 $1,408 $433 $1,289 $379 $1,154 $350 $328 $311 $972 $288 $2
Slide 17: Operational Execution
Operational Execution 2 Enhancing Legal Channel Processes to Drive Higher Cash Collections Stages of the U.S. Legal Collections Process U.S. Legal Cash Collections $ in millions 1 2 5 Account Pre-litigation selection for and attorney Post-judgment +48% legal eligibility placement enforcement $96 $98
Slide 18: Managing Expenses
3 Managing Expenses Reducing Marginal Costs Through Offshoring and Call Center Right-Sizing 6 U.S. Call Centers → 3 by Mid-2025 Third-Party Offshore Collectors as % of Total Collectors Supporting U.S. Collections Approaching 50% in 2H 2025 30%+ 25%+ 3 hybrid call centers (in-office + work-from-home)
Slide 19: Agenda
Agenda Company Overview Market Opportunity Growth Strategy Financial Performance Appendix 18 Nasdaq: PRAA
Slide 20: Q4 and Full Year 2024 Financial Results
Q4 and Full Year 2024 Financial Results $ in millions, except per share amounts Q4 2023 vs Q4 2024 2023 vs 2024 Total Revenues Portfolio Income Operating Expenses Total Revenues Portfolio Income Operating Expenses +32% +18% +13% +39% +13% +10% $293 $230 $199 $1,115 $857 $775 $195 $176 $757 $702 $221
Slide 21: 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 Recent Periods Exceed Three-Year Average $300 $80 $73 $61 $250 $60 $57 $55 $230 $52 Avg: $216 $48 $37 $
Slide 22: Q4 Cash Collections Increased 14% Year-Over-Year
Q4 Cash Collections Increased 14% Year-Over-Year Annual Collections Up 13% Year-Over-Year $ in millions Quarterly Cash Collections Annual Cash Collections -13% -18% -16% -17% -14% -6% +2% +5% +9% +13% +14% +14% +13% $2,006 $2,062 $481 $1,841 $1,869 $474 $477 $468 $444 $450 $1,729 $1,660 $412 $411 $4
Slide 23: ERC Increased 17% Year-Over-Year to a Record $7.5 Billion
ERC Increased 17% Year-Over-Year to a Record $7.5 Billion Up $167 Million Sequentially Amid Strengthening Dollar and FX Headwinds $ in billions ERC +17% $8.0 $7.3 $7.5 $6.8 $0.5 $0.5 $7.0 $6.5 $6.4 $0.5 $5.9 $6.0 $0.6 $0.5 $6.0 $5.7 $5.6 $5.7 $5.7 $0.4 $5.3 $0.6 $0.6 $0.4 $0.5 $0.5 $3.3 $0.5 $3.2 $5
Slide 24: Leverage in Target Range Supports Higher Portfolio Purchases
Leverage in Target Range Supports Higher Portfolio Purchases $ in billions Debt to Total Total Borrowings and Debt to Adjusted EBITDA* Adjusted Borrowings EBITDA $3.5 $3.3 $3.3 4.0x $3.1 $2.9 $2.9 $3.0 $3.0 $2.7 $2.8 $2.5 3.5x $2.5 $2.4 $2.5 $2.5 $2.0 3.0x 2.92x 3.00x 2.92x 2.89x 2.76x 2.84x 2.89x 2
Slide 25: Strong Capital Structure
Strong Capital Structure Well-Positioned to Continue Capitalizing on Elevated Portfolio Supply $ in millions Debt Maturity Profile • $1.0 billion available under our credit facilities as of December 31, 2024 $1,834 • $564 million available based on current ERC • $462 million of additional availabili
Slide 26: 2024 Accomplishments
2024 Accomplishments1 Executed on our cash- Achieved financial Capitalized on Further Expanded senior generating and Strengthened our targets and drove rebound in U.S. differentiated our leadership team operational initiatives capital structure business turnaround portfolio supply European business
Slide 27: Financial Outlook
Financial Outlook Delivered 2024 Targets and Updated 2025 Targets 2025 TARGETS1 Portfolio Purchases • $1.2 billion of portfolio investments • High single-digit cash collections growth due to strong portfolio purchases and Cash Collections impact from cash-generating initiatives • 60%+ cash efficienc
Slide 28: Well-Positioned for the Future
Well-Positioned for the Future Strong and Established Platform Positioned to Drive Profitable Growth Supportive Conservative Plan for Strong Track Strong Capital Industry Diversification Investing / Enhancing Record Through Structure and Fundamentals Underwriting Profitability Recessions Liquidity ✓
Slide 29: Agenda
Agenda Company Overview Market Opportunity Financial Performance Growth Strategy Appendix 28 Nasdaq: PRAA
Slide 30: Strong Vintage Performance Vs Original Purchase Price Multiple (PPM)
Strong Vintage Performance Vs Original Purchase Price Multiple (PPM)1 Americas and Australia Core 300% Underperform 250% Global Vintage Performance Original PPM 2020 2024 2019 300% 2021 2016 200% 2018 Underperform 2023 2015 2017 2022 250% 150% Original PPM Outperform Current 100% 2020 2024 PPM 200%
Slide 31: Growth in Adjusted EBITDA Over Time
Growth in Adjusted EBITDA Over Time $ in millions, except per share amounts; Adjusted EBITDA per share = Adjusted EBITDA/average diluted shares outstanding during the applicable period Adjusted EBITDA* Global Financial Crisis1 COVID-192 $1,600 $35 $1,400 $30 $1,200 $25 $1,000 $20 $800 $15 $600 $400
Slide 32: Our Mission & Core Values
Our Mission & Core Values OUR MISSION To deliver nonperforming loan solutions that drive success through a long-term focus and customer care to always doing for our actions in our in every because we our best work interactions situation work together with each other as a team 31 Nasdaq: PRAA
Slide 33: Components of Portfolio Revenue
Components of Portfolio Revenue Total Portfolio Revenue has two components: Total Portfolio Revenue • Portfolio Income is the yield component • Changes in Expected Recoveries is current period over/underperformance + NPV of ERC changes Portfolio Income Changes in Expected Recoveries Effective intere
Slide 34: The Basis of Portfolio Income
The Basis of Portfolio Income If Cash is Collected as Expected in Original Underwriting 1. Purchase of Portfolio • Purchase Price of $1,000 with Total Estimated Collections of $2,200 = Purchase Price Multiple of 2.20x • Effective Interest Rate (EIR) = 28.8% (Gross IRR of purchase price and projected
Slide 35: What Happens When Cash IS NOT Collected As Expected
What Happens When Cash IS NOT Collected As Expected There is Always Some Level of Changes in Expected Recoveries Collecting More Cash Than Expected Collecting Less Cash Than Expected (Overperformance) (Underperformance) • Cash in excess of expectations is recognized as an increase • Cash lower than
Slide 36: How Cash Overperformance Can Lead to Same Lifetime Collections
How Cash Overperformance Can Lead to Same Lifetime Collections as Portfolio With No Overperformance Total Cash Collected Over the Entire Collections Curve Per $1,000 Invested $2,400 $2,400 $0 $400 Original Final Original Final PPM PPM $2,400 PPM PPM 2.4x 2.4x $2,000 2.0x 2.4x No Overperformance 20%
Slide 37: Reconciliation of Non-GAAP Financial Measures to GAAP
Reconciliation of Non-GAAP Financial Measures to GAAP $ in millions Use of Non-GAAP Financial Measures PRA Group, Inc. reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management uses certain non-GAAP financial measures, including Adjust
Slide 38: Reconciliation of Non-GAAP Financial Measures to GAAP (Cont.)
Reconciliation of Non-GAAP Financial Measures to GAAP (Cont.) $ in millions Use of Non-GAAP Financial Measures (Cont.) The Company also evaluates its business using certain ratios that use Adjusted EBITDA. Debt to Adjusted EBITDA is calculated by dividing borrowings by Adjusted EBITDA. The following
Slide 39: 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 40: U.S. Portfolio Acquisitions by Major Asset Type & Delinquency Category
U.S. Portfolio Acquisitions by Major Asset Type & Delinquency Category $ in thousands 1. Fresh accounts are typically past due 120 to 270 days, charged-off by the credit originator and sold prior to any post-charge-off collection activity. 2. Primary accounts are typically 240 to 450 days past due,
Slide 41: Najim Mostamand, CFA
Najim Mostamand, CFA VP, Investor Relations (757) 431-7913 [email protected] IR.PRAGROUP.COM