NORFOLK, Va., Feb. 25, 2016 (GLOBE NEWSWIRE) -- PRA Group (Nasdaq:PRAA), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the fourth quarter and full year of 2015. The company reported diluted earnings per share of $0.86 and non-GAAP diluted earnings per share of $1.03 for the fourth quarter of 2015. For the full year, the company reported diluted earnings per share of $3.47 and non-GAAP diluted earnings per share of $4.30. Non-GAAP financial results are presented in constant currency with the third and fourth quarter of 2014 and exclude items unrelated to normal operations. A reconciliation of all non-GAAP financial measures to the most directly comparable GAAP financial measure can be found at the end of this press release.
The company also announced the acquisition of certain assets of Recovery Management Systems Corporation (RMSC). The transaction also includes the hiring of most RMSC employees. Mike Petit, president of PRA Insolvency Investment Services, said, “We are extremely impressed with RMSC’s technology platform supporting its bankrupt account processing and recovery management business. This acquisition strengthens and broadens our ability to offer bankruptcy processing services to our clients and complements our existing Insolvency business.”
Fourth Quarter Highlights
- Cash collections of $369.4 million, non-GAAP cash collections of $380.3 million.
- Revenues of $230.2 million, non-GAAP revenues of $236.7 million.
- Income from operations of $71.2 million, non-GAAP income from operations of $87.4 million.
- Net income of $41.0 million, non-GAAP net income of $49.0 million.
- Return on average equity, annualized, of 19.8%, non-GAAP return on average equity, annualized, of 27.5%.
- $225.9 million in investments.
Full Year Highlights
- Cash collections of $1.54 billion, non-GAAP cash collections of $1.56 billion.
- Revenues of $942.0 million, non-GAAP revenues of $954.4 million.
- Income from operations of $310.3 million, non-GAAP income from operations of $363.0 million.
- Net income of $167.9 million, non-GAAP net income of $207.9 million.
- Return on average equity of 19.9%, non-GAAP return on average equity of 24.6%.
- $963.8 million in investments.
“One thing remains evident for our future long term results, the industry consolidation in the U.S. Core market remains a critical positive for us,” said Steve Fredrickson, chairman and chief executive officer, PRA Group. “When any of the events decreasing supply in the U.S. change, PRA will be there to win our fair share and our results should begin to show the effects soon thereafter. We feel confident that with our industry low leverage, we will be ready and able to purchase portfolios that are within our return profile both now and when volume inevitably picks up. In the meantime, we are highly profitable, producing strong results for shareholders, while we grow rapidly in Europe and South America, and improve our operating effectiveness consistently.”
REVENUES AND CASH COLLECTIONS
- Total revenues of $230.2 million in the fourth quarter included finance receivables income net of principal amortization and net allowance charges. Non-GAAP total revenues for the quarter were $236.7 million versus $250.7 million in year-ago quarter. For the full year, total revenues were $942.0 million. Non-GAAP total revenues for the full year were $954.4 million versus $881.0 million in 2014.
- Cash collections were $369.4 million. Non-GAAP cash collections were $380.3 million, an increase of 2% over the year-ago quarter. Cash collections for the year were $1.54 billion and non-GAAP cash collections were $1.56 billion. Both GAAP and non-GAAP cash collections are reported below and included collections from these finance receivables sources:
| Cash Collection Source ($ in thousands) | Q4-2015 | Q3-2015 | Q2-2015 | Q1-2015 | Q4-2014 | ||||||||||
| Americas-Core | $ | 195,834 | $ | 210,725 | $ | 218,838 | $ | 219,371 | $ | 185,921 | |||||
| Americas-Insolvency | 73,843 | 81,865 | 92,974 | 95,533 | 103,104 | ||||||||||
| Europe-Core | 97,149 | 85,635 | 76,602 | 83,876 | 84,398 | ||||||||||
| Europe-Insolvency | 2,545 | 2,528 | 1,210 | 967 | 5 | ||||||||||
| Total Cash Collections | $ | 369,371 | $ | 380,753 | $ | 389,624 | $ | 399,747 | $ | 373,428 | |||||
| Cash Collection Source - Constant Currency Adjusted ($ in thousands) | Q4-2015 | YTD-2015 | Q4-2014 | YTD-2014 | |||||||||||
| Americas-Core | $ | 196,967 | $ | 846,703 | $ | 185,921 | $ | 752,995 | |||||||
| Americas-Insolvency | 73,843 | 344,215 | 103,104 | 458,451 | |||||||||||
| Europe-Core | 106,899 | 363,557 | 84,398 | 167,361 | |||||||||||
| Europe-Insolvency | 2,546 | 7,252 | 5 | 5 | |||||||||||
| Total Cash Collections | $ | 380,255 | $ | 1,561,727 | $ | 373,428 | $ | 1,378,812 | |||||||
- Principal amortization of finance receivables in the fourth quarter was $160.9 million or 43.6% of cash collections, compared with 40.4% in the year-ago quarter. Principal amortization included a net allowance charge of $11.5 million recorded against certain pools of finance receivables in the quarter, compared with a net allowance charge of $1.0 million recorded in the year-ago quarter. Non-GAAP principal amortization was $166.5 million in the fourth quarter of 2015. Full year principal amortization of finance receivables was $674.4 million or 43.8% of cash collections, including a net allowance charge of $29.4 million. Non-GAAP principal amortization for the full year was $685.4 million.
- Revenues in the fourth quarter also included income from PRA Group’s fee-based businesses of $19.6 million, compared with $22.8 million in the year-ago quarter, and other income of $2.1 million compared with $5.3 million in the year-ago quarter. For the full year, fee revenue was $64.4 million and other income was $12.5 million.
EXPENSES AND OPERATING INCOME
- Operating expenses were $159.0 million in the fourth quarter, compared with $140.9 million a year ago. Operating expenses include an accrual to reflect the fact that the company has signed an agreement in principle with the opposing parties in its TCPA lawsuit and is seeking final judicial approvals. Non-GAAP operating expenses were $149.4 million versus $137.8 million a year ago. For the full year, operating expenses were $631.7 million, compared with $538.9 million in 2014. Non-GAAP operating expenses for the full year were $591.5 million versus $520.6 million in 2014.
- Operating income in the fourth quarter was $71.2 million, compared with $109.9 million in the year-ago quarter. Non-GAAP operating income was $87.4 million in the fourth quarter versus $112.9 million a year ago. For the full year, operating income was $310.3 million versus $342.1 million in 2014. Non-GAAP operating income for the full year was $363.0 million versus $360.4 million in 2014. The operating margin was 30.9% in the fourth quarter and the non-GAAP operating margin was 36.9%. For the full year, the operating margin was 32.9% and the non-GAAP operating margin was 38.0%.
- The provision for income taxes was $15.2 million in the fourth quarter compared to $46.5 million in the year-ago quarter. PRA Group’s provision for income taxes was 27.0% of income before taxes in the fourth quarter, compared with 49.7% in the year-ago quarter. Non-GAAP provision for income taxes in the fourth quarter was $20.3 million versus $47.5 million a year ago. For the full year, the provision for income taxes was $89.4 million or 34.7% of income before taxes. Non-GAAP provision for income taxes for the full year was $105.2 million or 33.6% of income before taxes.
PORTFOLIO ACQUISITIONS
- PRA Group invested $225.9 million in new finance receivables in the fourth quarter.
| Portfolio Purchase Source ($ in thousands) | Q42015 | Q32015 | Q22015 | Q12015 | Q42014 | ||||||||||
| Americas-Core | $ | 120,554 | $ | 90,912 | $ | 98,317 | $ | 138,498 | $ | 119,714 | |||||
| Americas-Insolvency | 20,589 | 9,300 | 19,111 | 16,437 | 24,949 | ||||||||||
| Europe-Core (1) | 79,735 | 240,385 | 88,499 | 21,579 | 123,194 | ||||||||||
| Europe-Insolvency | 4,976 | 3,959 | 2,450 | 8,510 | 11,625 | ||||||||||
| Total Portfolio Purchasing | $ | 225,854 | $ | 344,556 | $ | 208,377 | $ | 185,024 | $ | 279,482 | |||||
| (1) Excludes the $27.9 million and $34.7 million investment in the securitized fund in Poland during the three months ended March 31, 2015 and December 31, 2014, respectively. | |||||||||||||||
BALANCE SHEET
- Borrowings totaled $1,723.3 million as of December 31, 2015, consisting of $541.8 million drawn on the domestic and Canadian revolver, $576.4 million drawn on the multi-currency revolver, $265.1 million in convertible senior notes, $170.0 million in other long-term debt and $169.9 million in notes payable. Total borrowings were $1,482.5 million as of December 31, 2014.
- Cash and cash equivalents were $71.4 million as of December 31, 2015, compared with $39.7 million as of December 31, 2014.
- Net deferred tax liabilities were $261.5 million as of December 31, 2015, compared with $255.6 million as of December 31, 2014.
- Equity was $800.5 million as of December 31, 2015, compared with $902.2 million as of December 31, 2014.
Conference Call Information
PRA Group will hold a conference call today at 5:00 p.m. ET to discuss results with institutional investors and stock analysts. To listen to a webcast of the call, visit http://ir.pragroup.com/events.cfm. To listen by phone, call 888-695-7639 in the U.S. or 970-315-0482 outside the U.S. The conference ID is 50970357. A question-and-answer session on the call will be open only to analysts or investors. To listen to a replay of the call until March 3, 2016, call 855-859-2056 in the U.S. or 404-537-3406 outside the U.S. and use conference ID 50970357.
About PRA Group
As a global leader in acquiring and collecting nonperforming loans, PRA Group (Nasdaq:PRAA) returns capital to banks and other creditors to help expand financial services for consumers in the Americas and Europe. PRA Group companies collaborate with customers to help them resolve their debt and provide a broad range of additional revenue and recovery services to business and government clients.
PRA has been recognized as one of Fortune's 100 Fastest-Growing Companies for three years and one of Forbes' Best Small Companies in America for eight consecutive years since 2007. For more information, please visit www.pragroup.com.
About Forward Looking Statements
Statements made herein which are not historical in nature, including PRA Group’s or its management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
The forward-looking statements in this press release are based upon management's current beliefs, estimates, assumptions and expectations of PRA Group’s future operations and economic performance, taking into account currently available information. These statements are not statements of historical fact or guarantees of future performance, and there can be no assurance that anticipated events will transpire or that our expectations will prove to be correct. Forward-looking statements involve risks and uncertainties, some of which are not currently known to PRA Group. Actual events or results may differ materially from those expressed or implied in any such forward-looking statements as a result of various factors, including risk factors and other risks that are described from time to time in PRA Group’s filings with the Securities and Exchange Commission including but not limited to PRA Group’s annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, filed with the Securities and Exchange Commission and available through PRA Group's website, which contain a detailed discussion of PRA Group's business, including risks and uncertainties that may affect future results.
Due to such uncertainties and risks, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of today. Information in this press release may be superseded by recent information or statements, which may be disclosed in later press releases, subsequent filings with the Securities and Exchange Commission or otherwise. Except as required by law, PRA assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA Group’s expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part.
| PRA Group, Inc. | ||||||||||||
| Unaudited Consolidated Income Statements | ||||||||||||
| (in thousands, except per share amounts) | ||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||
| December 31, | December 31, | |||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||
| Revenues: | ||||||||||||
| Income recognized on finance receivables, net | $ | 208,471 | $ | 222,660 | $ | 865,122 | $ | 807,474 | ||||
| Fee income | 19,649 | 22,800 | 64,383 | 65,675 | ||||||||
| Other revenue | 2,065 | 5,271 | 12,513 | 7,820 | ||||||||
| Total revenues | 230,185 | 250,731 | 942,018 | 880,969 | ||||||||
| Operating expenses: | ||||||||||||
| Compensation and employee services | 68,670 | 65,448 | 268,345 | 234,531 | ||||||||
| Legal collection fees | 11,873 | 15,125 | 53,393 | 51,107 | ||||||||
| Legal collection costs | 16,774 | 15,725 | 76,063 | 88,054 | ||||||||
| Agency fees | 8,182 | 7,497 | 32,188 | 16,399 | ||||||||
| Outside fees and services | 27,309 | 15,707 | 65,155 | 55,821 | ||||||||
| Communication | 6,601 | 7,715 | 33,113 | 33,085 | ||||||||
| Rent and occupancy | 3,991 | 3,477 | 14,714 | 11,509 | ||||||||
| Depreciation and amortization | 4,935 | 5,307 | 19,874 | 18,414 | ||||||||
| Other operating expenses | 10,678 | 4,870 | 68,829 | 29,981 | ||||||||
| Total operating expenses | 159,013 | 140,871 | 631,674 | 538,901 | ||||||||
| Income from operations | 71,172 | 109,860 | 310,344 | 342,068 | ||||||||
| Other income and (expense): | ||||||||||||
| Interest expense | (15,321 | ) | (13,493 | ) | (60,336 | ) | (35,226 | ) | ||||
| Foreign exchange gain/(loss) | 301 | (2,898 | ) | 7,514 | (5,829 | ) | ||||||
| Income before income taxes | 56,152 | 93,469 | 257,522 | 301,013 | ||||||||
| Provision for income taxes | 15,164 | 46,478 | 89,391 | 124,508 | ||||||||
| Net income | $ | 40,988 | $ | 46,991 | $ | 168,131 | $ | 176,505 | ||||
| Adjustment for net income attributable to noncontrolling interest | 18 | - | 205 | - | ||||||||
| Net income attributable to PRA Group, Inc. | $ | 40,970 | $ | 46,991 | $ | 167,926 | $ | 176,505 | ||||
| Net income per common share attributable to PRA Group, Inc.: | ||||||||||||
| Basic | $ | 0.87 | $ | 0.94 | $ | 3.49 | $ | 3.53 | ||||
| Diluted | $ | 0.86 | $ | 0.93 | $ | 3.47 | $ | 3.50 | ||||
| Weighted average number of shares outstanding: | ||||||||||||
| Basic | 47,197 | 49,892 | 48,128 | 49,990 | ||||||||
| Diluted | 47,539 | 50,444 | 48,405 | 50,421 | ||||||||
| PRA Group, Inc. | ||||||
| Unaudited Consolidated Balance Sheets | ||||||
| (in thousands) | ||||||
| December 31, | ||||||
| ASSETS | 2015 | 2014 | ||||
| Cash and cash equivalents | $ | 71,372 | $ | 39,661 | ||
| Investments | 73,799 | 89,703 | ||||
| Finance receivables, net | 2,202,113 | 2,001,790 | ||||
| Other receivables, net | 30,771 | 12,959 | ||||
| Income taxes receivable | 1,717 | - | ||||
| Net deferred tax asset | 13,068 | 6,126 | ||||
| Property and equipment, net | 45,394 | 48,258 | ||||
| Goodwill | 495,156 | 527,445 | ||||
| Intangible assets, net | 23,788 | 10,933 | ||||
| Other assets | 39,528 | 41,876 | ||||
| Total assets | $ | 2,996,706 | $ | 2,778,751 | ||
| LIABILITIES AND EQUITY | ||||||
| Liabilities: | ||||||
| Accounts payable | $ | 4,190 | $ | 4,446 | ||
| Accrued expenses | 95,380 | 89,361 | ||||
| Income taxes payable | 21,236 | 11,020 | ||||
| Net deferred tax liability | 261,498 | 255,587 | ||||
| Interest-bearing deposits | 46,991 | 27,704 | ||||
| Borrowings | 1,723,268 | 1,482,456 | ||||
| Other liabilities | 4,396 | 5,962 | ||||
| Total liabilities | 2,156,959 | 1,876,536 | ||||
| Equity: | ||||||
| Preferred stock, par value $0.01, authorized shares, 2,000, issued and outstanding shares, 0 | - | - | ||||
| Common stock, par value $0.01, authorized shares, 100,000, issued and outstanding shares, 46,173 at December 31, 2015; 100,000 authorized shares, 49,577 issued and outstanding shares at December 31, 2014 | 462 | 496 | ||||
| Additional paid-in capital | 64,622 | 111,659 | ||||
| Retained earnings | 964,270 | 906,010 | ||||
| Accumulated other comprehensive loss | (228,861 | ) | (115,950 | ) | ||
| Total stockholders' equity - PRA Group, Inc. | 800,493 | 902,215 | ||||
| Noncontrolling interest | 39,254 | - | ||||
| Total equity | 839,747 | 902,215 | ||||
| Total liabilities and total equity | $ | 2,996,706 | $ | 2,778,751 | ||
| PRA Group, Inc. | ||||||||||||||||||
| FINANCIAL HIGHLIGHTS | ||||||||||||||||||
| As of and for the | As of and for the | |||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||
| 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||
| EARNINGS (in thousands) | ||||||||||||||||||
| Income recognized on finance receivables, net | $ | 208,471 | $ | 222,660 | -6 | % | $ | 865,122 | $ | 807,474 | 7 | % | ||||||
| Fee income | 19,649 | 22,800 | -14 | % | 64,383 | 65,675 | -2 | % | ||||||||||
| Other revenue | 2,065 | 5,271 | -61 | % | 12,513 | 7,820 | 60 | % | ||||||||||
| Total revenues | 230,185 | 250,731 | -8 | % | 942,018 | 880,969 | 7 | % | ||||||||||
| Operating expenses | 159,013 | 140,871 | 13 | % | 631,674 | 538,901 | 17 | % | ||||||||||
| Income from operations | 71,172 | 109,860 | -35 | % | 310,344 | 342,068 | -9 | % | ||||||||||
| Net interest expense | 15,321 | 13,493 | 14 | % | 60,336 | 35,226 | 71 | % | ||||||||||
| Net income | 40,988 | 46,991 | -13 | % | 168,131 | 176,505 | -5 | % | ||||||||||
| Net income attributable to PRA Group, Inc. | 40,970 | 46,991 | -13 | % | 167,926 | 176,505 | -5 | % | ||||||||||
| PERIOD-END BALANCES (in thousands) | ||||||||||||||||||
| Cash and cash equivalents | $ | 71,372 | $ | 39,661 | 80 | % | $ | 71,372 | $ | 39,661 | 80 | % | ||||||
| Finance receivables, net | 2,202,113 | 2,001,790 | 10 | % | 2,202,113 | 2,001,790 | 10 | % | ||||||||||
| Goodwill and intangible assets, net | 518,944 | 538,378 | -4 | % | 518,944 | 538,378 | -4 | % | ||||||||||
| Total assets | 2,996,706 | 2,778,751 | 8 | % | 2,996,706 | 2,778,751 | 8 | % | ||||||||||
| Borrowings | 1,723,268 | 1,482,456 | 16 | % | 1,723,268 | 1,482,456 | 16 | % | ||||||||||
| Total liabilities | 2,156,959 | 1,876,536 | 15 | % | 2,156,959 | 1,876,536 | 15 | % | ||||||||||
| Total equity - PRA Group, Inc. | 800,493 | 902,215 | -11 | % | 800,493 | 902,215 | -11 | % | ||||||||||
| FINANCE RECEIVABLE INCOME (dollars in thousands) | ||||||||||||||||||
| Cash collections | $ | 369,371 | $ | 373,428 | -1 | % | $ | 1,539,495 | $ | 1,378,812 | 12 | % | ||||||
| Cash collections on fully amortized pools | 8,280 | 17,785 | -53 | % | 52,202 | 68,349 | -24 | % | ||||||||||
| Principal amortization without allowance (reversals)/charges | 149,381 | 149,753 | 0 | % | 645,004 | 576,273 | 12 | % | ||||||||||
| Allowance (reversal)/charge | 11,519 | 1,015 | 1035 | % | 29,369 | (4,935 | ) | -695 | % | |||||||||
| Principal amortization with allowance (reversals)/charges | 160,900 | 150,768 | 7 | % | 674,373 | 571,338 | 18 | % | ||||||||||
| Principal amortization w/ allowance charges as % of cash collections: | ||||||||||||||||||
| Including fully amortized pools | 43.6 | % | 40.4 | % | 8 | % | 43.8 | % | 41.4 | % | 6 | % | ||||||
| Excluding fully amortized pools | 44.6 | % | 42.4 | % | 5 | % | 45.3 | % | 43.6 | % | 4 | % | ||||||
| Allowance (reversal)/charge to period-end net finance receivables | 0.5 | % | 0.1 | % | 932 | % | 1.3 | % | (0.2 | %) | -641 | % | ||||||
| PURCHASES OF FINANCE RECEIVABLES (dollars in thousands) | ||||||||||||||||||
| Purchase price - Americas core | $ | 120,554 | $ | 119,714 | 1 | % | $ | 448,281 | $ | 408,721 | 10 | % | ||||||
| Purchase price - Americas insolvency | 20,589 | 24,949 | -17 | % | 65,437 | 151,674 | -57 | % | ||||||||||
| Purchase price - Europe core | 79,735 | 123,194 | -35 | % | 430,198 | 860,744 | -50 | % | ||||||||||
| Purchase price - Europe insolvency | 4,976 | 11,625 | -57 | % | 19,895 | 11,625 | 71 | % | ||||||||||
| Purchase price - total | 225,854 | 279,482 | -19 | % | 963,811 | 1,432,764 | -33 | % | ||||||||||
| Number of portfolios - total | 139 | 142 | -2 | % | 542 | 456 | 19 | % | ||||||||||
| ESTIMATED REMAINING COLLECTIONS (in thousands) | ||||||||||||||||||
| Estimated remaining collections - Americas core | $ | 2,558,529 | $ | 2,229,403 | 15 | % | $ | 2,558,529 | $ | 2,229,403 | 15 | % | ||||||
| Estimated remaining collections - Americas insolvency | 448,652 | 642,552 | -30 | % | 448,652 | 642,552 | -30 | % | ||||||||||
| Estimated remaining collections - Europe core | 1,964,763 | 1,478,738 | 33 | % | 1,964,763 | 1,478,738 | 33 | % | ||||||||||
| Estimated remaining collections - Europe insolvency | 34,878 | 15,021 | 132 | % | 34,878 | 15,021 | 132 | % | ||||||||||
| Estimated remaining collections - total | 5,006,822 | 4,365,714 | 15 | % | 5,006,822 | 4,365,714 | 15 | % | ||||||||||
| Adjusted estimated remaining collections (7) | 5,114,923 | 4,437,264 | 15 | % | 5,114,923 | 4,437,264 | 15 | % | ||||||||||
| SHARE DATA (share amounts in thousands) | ||||||||||||||||||
| Net income per common share - diluted | $ | 0.86 | $ | 0.93 | -7 | % | $ | 3.47 | $ | 3.50 | -1 | % | ||||||
| Weighted average number of shares outstanding - diluted | 47,539 | 50,444 | -6 | % | 48,405 | 50,421 | -4 | % | ||||||||||
| Shares repurchased | 2,072 | 574 | 261 | % | 3,683 | 574 | 542 | % | ||||||||||
| Average price paid per share repurchased (including acquisitions costs) | $ | 38.60 | $ | 57.79 | -33 | % | $ | 44.94 | 57.79 | -22 | % | |||||||
| Closing market price | $ | 34.69 | $ | 57.93 | -40 | % | $ | 34.69 | $ | 57.93 | -40 | % | ||||||
| RATIOS AND OTHER DATA (dollars in thousands) | ||||||||||||||||||
| Return on average equity (1) | 19.8 | % | 20.2 | % | -2 | % | 19.9 | % | 18.9 | % | 5 | % | ||||||
| Return on revenue (2) | 17.8 | % | 18.7 | % | -5 | % | 17.8 | % | 20.0 | % | -11 | % | ||||||
| Return on average assets (3) | 5.5 | % | 6.9 | % | -20 | % | 5.9 | % | 8.0 | % | -26 | % | ||||||
| Operating margin (4) | 30.9 | % | 43.8 | % | -29 | % | 32.9 | % | 38.8 | % | -15 | % | ||||||
| Operating expense to cash receipts (5) | 40.9 | % | 35.6 | % | 15 | % | 39.4 | % | 37.3 | % | 6 | % | ||||||
| Debt to stockholders'equity (6) | 215.3 | % | 164.3 | % | 31 | % | 215.3 | % | 164.3 | % | 31 | % | ||||||
| Number of full-time equivalent collectors | 2,173 | 2,457 | -12 | % | 2,173 | 2,457 | -12 | % | ||||||||||
| Number of full-time equivalent employees | 3,799 | 3,880 | -2 | % | 3,799 | 3,880 | -2 | % | ||||||||||
| Cash receipts (5) | $ | 389,020 | $ | 396,228 | -2 | % | $ | 1,603,878 | $ | 1,444,487 | 11 | % | ||||||
| Line of credit - unused portion at period end | 446,769 | 352,926 | 27 | % | 446,769 | 352,926 | 27 | % | ||||||||||
| (1) Calculated as annualized net income divided by average equity for the period | ||||||||||||||||||
| (2) Calculated as net income divided by total revenues | ||||||||||||||||||
| (3) Calculated as annualized net income divided by average assets for the period | ||||||||||||||||||
| (4) Calculated as income from operations divided by total revenues | ||||||||||||||||||
| (5) "Cash receipts" is defined as cash collections plus fee income | ||||||||||||||||||
| (6) For purposes of this ratio, "debt" equals borrowings | ||||||||||||||||||
| (7) Equals total estimated remaining collections on our owned finance receivable portfolios plus the estimated remaining collections on certain of our other investments. | ||||||||||||||||||
| PRA Group, Inc. | |||||||||||||||
| FINANCIAL HIGHLIGHTS | |||||||||||||||
| For the Quarter Ended | |||||||||||||||
| December 31 | September 30 | June 30 | March 31 | December 31 | |||||||||||
| 2015 | 2015 | 2015 | 2015 | 2014 | |||||||||||
| EARNINGS (in thousands) | |||||||||||||||
| Income recognized on finance receivables, net | $ | 208,471 | $ | 208,184 | $ | 220,064 | $ | 228,403 | $ | 222,660 | |||||
| Fee income | 19,649 | 17,803 | 13,878 | 13,053 | 22,800 | ||||||||||
| Other revenue | 2,065 | 3,443 | 3,255 | 3,750 | 5,271 | ||||||||||
| Total revenues | 230,185 | 229,430 | 237,197 | 245,206 | 250,731 | ||||||||||
| Operating expenses | 159,013 | 175,303 | 148,318 | 149,040 | 140,871 | ||||||||||
| Income from operations | 71,172 | 54,127 | 88,879 | 96,166 | 109,860 | ||||||||||
| Net interest expense | 15,321 | 16,787 | 13,452 | 14,776 | 13,493 | ||||||||||
| Net income | 40,988 | 17,583 | 51,425 | 58,135 | 46,991 | ||||||||||
| Net income attributable to PRA Group, Inc. | 40,970 | 17,396 | 51,425 | 58,135 | 46,991 | ||||||||||
| PERIOD-END BALANCES (in thousands) | |||||||||||||||
| Cash and cash equivalents | $ | 71,372 | $ | 69,111 | $ | 56,811 | $ | 40,542 | $ | 39,661 | |||||
| Finance receivables, net | 2,202,113 | 2,167,178 | 2,012,552 | 1,954,772 | 2,001,790 | ||||||||||
| Goodwill and intangible assets, net | 518,944 | 526,841 | 512,451 | 506,695 | 538,378 | ||||||||||
| Total assets | 2,996,706 | 2,984,550 | 2,783,756 | 2,700,613 | 2,778,751 | ||||||||||
| Borrowings | 1,723,268 | 1,654,457 | 1,503,363 | 1,479,262 | 1,482,456 | ||||||||||
| Total liabilities | 2,156,959 | 2,083,131 | 1,885,880 | 1,883,295 | 1,876,536 | ||||||||||
| Total equity - PRA Group, Inc. | 800,493 | 863,517 | 897,876 | 817,318 | 902,215 | ||||||||||
| FINANCE RECEIVABLE COLLECTIONS (dollars in thousands) | |||||||||||||||
| Cash collections | $ | 369,371 | $ | 380,753 | $ | 389,624 | $ | 399,747 | $ | 373,428 | |||||
| Cash collections on fully amortized pools | 8,280 | 11,453 | 15,162 | 17,307 | 17,785 | ||||||||||
| Principal amortization without allowance (reversals)/charges | 149,381 | 161,234 | 164,675 | 169,714 | 149,753 | ||||||||||
| Allowance (reversal)/charge | 11,519 | 11,335 | 4,885 | 1,630 | 1,015 | ||||||||||
| Principal amortization with allowance (reversals)/charges | 160,900 | 172,569 | 169,560 | 171,344 | 150,768 | ||||||||||
| Principal amortization w/ allowance charges as % of cash collections: | |||||||||||||||
| Including fully amortized pools | 43.6 | % | 45.3 | % | 43.5 | % | 42.9 | % | 40.4 | % | |||||
| Excluding fully amortized pools | 44.6 | % | 46.7 | % | 45.3 | % | 44.8 | % | 42.4 | % | |||||
| Allowance (reversal)/charge to period-end net finance receivables | 0.5 | % | 0.5 | % | 0.2 | % | 0.1 | % | 0.1 | % | |||||
| PURCHASES OF FINANCE RECEIVABLES (dollars in thousands) | |||||||||||||||
| Purchase price - North America core | $ | 120,554 | $ | 90,912 | $ | 98,317 | $ | 138,498 | $ | 119,714 | |||||
| Purchase price - North America insolvency | 20,589 | 9,300 | 19,111 | 16,437 | 24,949 | ||||||||||
| Purchase price - Europe core | 79,735 | 240,385 | 88,499 | 21,579 | 123,194 | ||||||||||
| Purchase price - Europe insolvency | 4,976 | 3,959 | 2,450 | 8,510 | 11,625 | ||||||||||
| Purchase price - total | 225,854 | 344,556 | 208,377 | 185,024 | 279,482 | ||||||||||
| Number of portfolios - total | 139 | 128 | 136 | 139 | 142 | ||||||||||
| ESTIMATED REMAINING COLLECTIONS (in thousands) | |||||||||||||||
| Estimated remaining collections - Americas core | $ | 2,558,529 | $ | 2,421,506 | $ | 2,384,698 | $ | 2,370,086 | $ | 2,229,403 | |||||
| Estimated remaining collections - Americas insolvency | 448,652 | 474,097 | 529,892 | 577,319 | 642,552 | ||||||||||
| Estimated remaining collections - Europe core | 1,964,763 | 1,903,226 | 1,685,694 | 1,619,454 | 1,478,738 | ||||||||||
| Estimated remaining collections - Europe insolvency | 34,878 | 30,081 | 26,807 | 24,838 | 15,021 | ||||||||||
| Estimated remaining collections - total | 5,006,822 | 4,828,910 | 4,627,091 | 4,591,697 | 4,365,714 | ||||||||||
| Adjusted estimated remaining collections (7) | 5,114,923 | 4,945,609 | 4,747,552 | 4,716,230 | 4,437,264 | ||||||||||
| SHARE DATA (share amounts in thousands) | |||||||||||||||
| Net income per common share - diluted | $ | 0.86 | $ | 0.36 | $ | 1.06 | $ | 1.19 | $ | 0.93 | |||||
| Weighted average number of shares outstanding - diluted | 47,539 | 48,498 | 48,529 | 49,052 | 50,444 | ||||||||||
| Shares repurchased | 2,072 | 133 | - | 1,478 | 574 | ||||||||||
| Average price paid per share repurchased (including acquisitions costs) | $ | 38.60 | $ | 58.08 | $ | - | $ | 52.65 | $ | 57.79 | |||||
| Closing market price | $ | 34.69 | $ | 52.92 | $ | 62.31 | $ | 54.32 | $ | 57.93 | |||||
| RATIOS AND OTHER DATA (dollars in thousands) | |||||||||||||||
| Return on average equity (1) | 19.8 | % | 7.8 | % | 23.5 | % | 30.1 | % | 20.2 | % | |||||
| Return on revenue (2) | 17.8 | % | 7.7 | % | 21.7 | % | 23.7 | % | 18.7 | % | |||||
| Return on average assets (3) | 5.5 | % | 2.3 | % | 7.4 | % | 8.7 | % | 6.9 | % | |||||
| Operating margin (4) | 30.9 | % | 23.6 | % | 37.5 | % | 39.2 | % | 43.8 | % | |||||
| Operating expense to cash receipts (5) | 40.9 | % | 44.0 | % | 36.8 | % | 36.1 | % | 35.6 | % | |||||
| Debt to stockholders'equity (6) | 215.3 | % | 191.6 | % | 167.4 | % | 181.0 | % | 164.3 | % | |||||
| Number of collectors | 2,173 | 2,159 | 2,317 | 2,395 | 2,457 | ||||||||||
| Number of full-time equivalent employees | 3,799 | 3,715 | 3,820 | 3,847 | 3,880 | ||||||||||
| Cash receipts (5) | $ | 389,020 | $ | 398,556 | $ | 403,502 | $ | 412,800 | $ | 396,228 | |||||
| Line of credit - unused portion at period end | 446,769 | 393,246 | 547,017 | 323,812 | 352,926 | ||||||||||
| (1) Calculated as annualized net income divided by average equity for the period | |||||||||||||||
| (2) Calculated as net income divided by total revenues | |||||||||||||||
| (3) Calculated as annualized net income divided by average assets for the period | |||||||||||||||
| (4) Calculated as income from operations divided by total revenues | |||||||||||||||
| (5) "Cash receipts" is defined as cash collections plus fee income | |||||||||||||||
| (6) For purposes of this ratio, "debt" equals borrowings | |||||||||||||||
| (7) Equals total estimated remaining collections on our owned finance receivable portfolios plus the estimated remaining collections on certain of our other investments. | |||||||||||||||
Use of Non-GAAP Financial Measures
PRA Group, Inc. reports financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, the Company believes certain non-GAAP performance measures and ratios which exclude penalty and fees associated with the CFPB consent order, expenses associated with acquisitions, one-time tax items, legal costs not associated with normal operations, and constant currency adjustments may provide additional meaningful comparisons between current year results and prior periods. Reconciliations from non-GAAP to the most directly comparable GAAP financial measures are provided below. These non-GAAP financial measures should be viewed in addition to, not as an alternative for reported GAAP results.
The constant currency results assume that foreign revenues and expenses are translated from foreign currencies to the U.S. Dollar at rates consistent with the prior year, and that any benefit or loss caused by foreign currency fluctuations would be consistent with the prior year. To do this the company translates the current year’s income statements into U.S. Dollars using the prior year’s average exchange rates and then replaces the foreign exchange gain or loss for the current year with the balance from the prior year. Finally, the company calculates the tax impact of the constant currency results to reflect the current effective tax rate of the reporting period.
| Three Months Ended December 31, 2015 | |||||||||||||||||||||||||||||||||
| Cash Collections | Amortization | Income Recognized on Finance Receivables | Fee Income | Other Income | Total Revenues | Expenses | Income from Operations | Income before Taxes | Net Income | Diluted EPS | |||||||||||||||||||||||
| As Reported | $ | 369,371 | $ | 160,900 | $ | 208,471 | $ | 19,649 | $ | 2,065 | $ | 230,185 | $ | 159,013 | $ | 71,172 | $ | 56,152 | $ | 40,970 | $ | 0.86 | |||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||||
| CFPB expenses including penalty and redress | - | - | - | - | - | - | (111 | ) | 111 | 111 | 68 | - | |||||||||||||||||||||
| Acquisition and other expenses | - | - | - | - | - | - | (1,639 | ) | 1,639 | 1,639 | 1,005 | 0.02 | |||||||||||||||||||||
| Legal costs not associated with normal operations | - | - | - | - | - | - | (12,045 | ) | 12,045 | 12,045 | 7,383 | 0.16 | |||||||||||||||||||||
| Constant currency adjustments | 10,884 | 5,603 | 5,281 | 558 | 725 | 6,564 | 4,143 | 2,421 | (596 | ) | (439 | ) | (0.01 | ) | |||||||||||||||||||
| Subtotal of adjustments | 10,884 | 5,603 | 5,281 | 558 | 725 | 6,564 | (9,652 | ) | 16,216 | 13,199 | 8,016 | 0.17 | |||||||||||||||||||||
| As Adjusted | 380,255 | 166,503 | 213,752 | 20,207 | 2,790 | 236,749 | 149,361 | 87,388 | 69,351 | 48,986 | 1.03 | ||||||||||||||||||||||
| Twelve Months Ended December 31, 2015 | |||||||||||||||||||||||||||||||||
| Cash Collections | Amortization | Income Recognized on Finance Receivables | Fee Income | Other Income | Total Revenues | Expenses | Income from Operations | Income before Taxes | Net Income | Diluted EPS | |||||||||||||||||||||||
| As Reported | $ | 1,539,495 | $ | 674,373 | $ | 865,122 | $ | 64,383 | $ | 12,513 | $ | 942,018 | $ | 631,674 | $ | 310,344 | $ | 257,522 | $ | 167,926 | $ | 3.47 | |||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||||
| CFPB expenses including penalty and redress | - | - | - | - | - | - | (28,807 | ) | 28,807 | 28,807 | 19,641 | 0.41 | |||||||||||||||||||||
| Acquisition and other expenses | - | - | - | - | - | - | (5,628 | ) | 5,628 | 5,628 | 3,837 | 0.08 | |||||||||||||||||||||
| One-time tax items | - | - | - | - | - | - | - | - | - | 2,026 | 0.04 | ||||||||||||||||||||||
| Legal costs not associated with normal operations | - | - | - | - | - | - | (13,824 | ) | 13,824 | 13,824 | 9,426 | 0.19 | |||||||||||||||||||||
| Constant currency adjustments | 22,232 | 10,984 | 11,248 | 759 | 424 | 12,431 | 8,038 | 4,393 | 7,323 | 5,078 | 0.10 | ||||||||||||||||||||||
| Subtotal of adjustments | 22,232 | 10,984 | 11,248 | 759 | 424 | 12,431 | (40,221 | ) | 52,652 | 55,582 | 40,008 | 0.83 | |||||||||||||||||||||
| As Adjusted | 1,561,727 | 685,357 | 876,370 | 65,142 | 12,937 | 954,449 | 591,453 | 362,996 | 313,104 | 207,934 | 4.30 | ||||||||||||||||||||||
| Three Months Ended December 31, 2014 | |||||||||||||||||||||||||||||||||
| Cash Collections | Amortization | Income Recognized on Finance Receivables | Fee Income | Other Income | Total Revenues | Expenses | Income from Operations | Income before Taxes | Net Income | Diluted EPS | |||||||||||||||||||||||
| As Reported | $ | 373,428 | $ | 150,768 | $ | 222,660 | $ | 22,800 | $ | 5,271 | $ | 250,731 | $ | 140,871 | $ | 109,860 | $ | 93,469 | $ | 46,991 | $ | 0.93 | |||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||||
| Acquisition and other expenses | - | - | - | - | - | - | (3,040 | ) | 3,040 | 3,040 | 2,049 | 0.04 | |||||||||||||||||||||
| Legal costs not associated with normal operations | - | - | - | - | - | - | (15 | ) | 15 | 15 | 10 | - | |||||||||||||||||||||
| Subtotal of adjustments | - | - | - | - | - | - | (3,055 | ) | 3,055 | 3,055 | 2,059 | 0.04 | |||||||||||||||||||||
| As Adjusted | 373,428 | 150,768 | 222,660 | 22,800 | 5,271 | 250,731 | 137,816 | 112,915 | 96,524 | 49,050 | 0.97 | ||||||||||||||||||||||
| Twelve Months Ended December 31, 2014 | |||||||||||||||||||||||||||||||||
| Cash Collections | Amortization | Income Recognized on Finance Receivables | Fee Income | Other Income | Total Revenues | Expenses | Income from Operations | Income before Taxes | Net Income | Diluted EPS | |||||||||||||||||||||||
| As Reported | $ | 1,378,812 | $ | 571,338 | $ | 807,474 | $ | 65,675 | $ | 7,820 | $ | 880,969 | $ | 538,901 | $ | 342,068 | $ | 301,013 | $ | 176,505 | $ | 3.50 | |||||||||||
| Adjustments: | |||||||||||||||||||||||||||||||||
| Acquisition and other expenses | - | - | - | - | - | - | (17,905 | ) | 17,905 | 17,905 | 11,094 | 0.22 | |||||||||||||||||||||
| One-time tax items | - | - | - | - | - | - | - | - | - | (1,232 | ) | (0.02 | ) | ||||||||||||||||||||
| Loss on foreign currency exchange contracts | - | - | - | - | - | - | - | - | 8,240 | 5,105 | 0.10 | ||||||||||||||||||||||
| Legal costs not associated with normal operations | - | - | - | - | - | - | (426 | ) | 426 | 426 | 264 | 0.01 | |||||||||||||||||||||
| Subtotal of adjustments | - | - | - | - | - | - | (18,331 | ) | 18,331 | 26,571 | 15,231 | 0.30 | |||||||||||||||||||||
| As Adjusted | 1,378,812 | 571,338 | 807,474 | 65,675 | 7,820 | 880,969 | 520,570 | 360,399 | 327,584 | 191,736 | 3.80 | ||||||||||||||||||||||