Form 8-K PRA GROUP INC For: Aug 08

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August 8, 2022 4:09 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of Earliest Event Reported):			August 8, 2022

PRA Group, Inc.

_________________________________________

(Exact name of registrant as specified in its charter)

Delaware

000-50058

75-3078675

(State or other jurisdiction of incorporation)

(Commission File Number)

(I.R.S. Employer Identification No.)

120 Corporate Boulevard

Norfolk,

Virginia

23502

(Address of principal executive offices)

(Zip Code)


Registrant’s telephone number, including area code:						(888)			772-7326

Not Applicable

______________________________________________

Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	PRAA	NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Item 2.02 Results of Operations and Financial Condition.

On August 8, 2022, PRA Group, Inc. (the “Company”) issued a press release announcing its second quarter 2022 results. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K and is incorporated into this Item 2.02 by reference.

Item 7.01 Regulation FD Disclosure.

The slide presentation being used in connection with the Company’s previously announced August 8, 2022 webcast and conference call to discuss its second quarter 2022 results is available in the Investor Relations section of the Company’s website at https://ir.pragroup.com/events-and-presentations.

None of the information furnished in Item 2.02, Item 7.01 or Exhibit 99.1 of this Form 8-K shall be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that Section. Unless expressly set forth by specific reference in such filings, none of the information furnished in this Form 8-K shall be incorporated by reference in any filing under the Securities Act of 1933, as amended, whether made before or after the date hereof and regardless of any general incorporation language in such filings.

Item 9.01 Financial Statements and Exhibits



(d)	Exhibits
	99.1	Press release dated August 8, 2022
	104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	PRA Group, Inc.

Date: August 8, 2022	By:	/s/ Peter M. Graham
		Peter M. Graham
		Executive Vice President and Chief Financial Officer

PRA Group Reports Second Quarter 2022 Results

NORFOLK, Va., August 8, 2022 - PRA Group, Inc. (Nasdaq: PRAA) (the "Company"), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the second quarter of 2022 ("Q2 2022").

Q2 2022 Highlights

•Total portfolio purchases of $231.3 million.

•Total cash collections were $444.1 million.

•Estimated remaining collections (ERC)1 of $5.6 billion.

•Cash efficiency ratio2 of 61.3%.

•Diluted earnings per share were $0.91.

•Common stock repurchases3 of $34.9 million, or 0.8 million shares.

•Debt to Adjusted EBITDA4 for the 12 months ended June 30, 2022 was 2.03x.

•Available capacity under the Company's credit facilities of $1.6 billion; $452.9 million after considering borrowing base restrictions.



	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands, except per share amounts)	2022		2021		2022		2021
Net income attributable to PRA Group, Inc.	$	36,484	$	55,996	$	76,456	$	114,402
Diluted earnings per share	$	0.91	$	1.22	$	1.88	$	2.48

“We had a solid purchasing quarter, driven by increased portfolio acquisitions in Europe, specifically in Northern Europe,” said Kevin Stevenson, president and chief executive officer. “We continue to see deterioration in consumer savings, higher credit card balances, and rising delinquency rates, which we believe suggests that more supply will be available in the coming months. Our strong balance sheet and geographic diversity provide us with a significant competitive advantage in capitalizing on what appears to be an increasingly favorable purchasing environment, and permit us to be disciplined in our capital allocation strategy. During the quarter, we repurchased nearly $35 million of shares of our common stock, underscoring our commitment to deploy capital in the areas that can generate the highest returns for our shareholders. Looking ahead, we will continue executing this measured strategy, while remaining active in the market and preparing to ramp up our purchasing as supply increases."

1.Refers to the sum of all future projected cash collections on the Company's nonperforming loan portfolios.

2.Calculated by dividing cash receipts less operating expense by cash receipts.

3.Share repurchases are subject to market conditions and other factors, and the share repurchase program remains subject to the discretion of PRA Group, Inc.'s board of directors.

4.A reconciliation of this non-GAAP financial measure to the most comparable GAAP measure can be found at the end of this press release.

Cash Collections and Revenues

The following table presents cash collections by quarter and by source on an as reported and constant currency-adjusted basis:



Cash Collection Source	2022				2021
($ in thousands)	Q2		Q1		Q4		Q3		Q2
Americas and Australia Core	$	244,377	$	270,284	$	257,705	$	276,691	$	324,845
Americas Insolvency	34,278		35,209		36,851		37,464		37,768
Europe Core	142,470		151,162		155,853		151,625		157,637
Europe Insolvency	22,935		24,325		23,262		22,574		23,579
Total Cash Collections	$	444,060	$	480,980	$	473,671	$	488,354	$	543,829



Cash Collection Source -
Constant Currency Adjusted	2022								2021
($ in thousands)	Q2								Q2
Americas and Australia Core	$	244,377							$	325,895
Americas Insolvency	34,278								37,744
Europe Core	142,470								140,199
Europe Insolvency	22,935								21,227
Total Cash Collections	$	444,060							$	525,065

•Total cash collections in Q2 2022 decreased 18.3%, or 15.4% on a constant currency adjusted basis, to $444.1 million compared to $543.8 million in the second quarter of 2021 ("Q2 2021"). The decrease was driven primarily by a 32.5% decrease in U.S. call center and other collections, and a 15.8% decrease in U.S. legal collections. The overall decrease in U.S. cash collections was due to excess consumer liquidity in 2021, which generated high levels of collections then, as well as lower levels of portfolio purchases. Europe cash collections decreased by 8.7%; however, on a currency adjusted basis, they increased by 2.5%. For the six months ended June 30, 2022, cash collections decreased $174.7 million compared to the same period last year.

•Total portfolio revenue in Q2 2022 was $250.6 million compared to $282.7 million in Q2 2021.

Expenses

•Operating expenses in Q2 2022 decreased by $6.9 million, or 3.8%, compared to Q2 2021. The decrease was primarily driven by:

◦a 6.9% decrease in compensation and employee services expenses primarily due to the level and timing of compensation accruals in the prior year and lower collector compensation expenses in the U.S. call centers; and

◦a 22.3% decrease in legal collection fees due to lower external legal cash collections, which was partially offset by a 31.1% increase in outside fees and services related to higher corporate legal expenses.

•For the six months ended June 30, 2022, operating expenses decreased $17.0 million to $343.2 million compared to $360.1 million in the same period last year.

•The effective tax rate for the six months ended June 30, 2022 was 20.3%.

Portfolio Acquisitions

•The Company purchased $231.3 million in portfolios of nonperforming loans in Q2 2022.

•At the end of Q2 2022, the Company had in place maximum forward flow commitments1 of up to $960.2 million, comprised of $300.9 million in the Americas and Australia and $659.3 million in Europe.

1.Contractual agreements with sellers of nonperforming loans that allow for the purchase of nonperforming portfolios at pre-established prices.



Portfolio Purchase Source	2022				2021
($ in thousands)	Q2		Q1		Q4		Q3		Q2
Americas and Australia Core	$	99,962	$	90,639	$	90,263	$	162,451	$	98,901
Americas Insolvency	6,369		9,118		21,183		9,878		14,642
Europe Core	123,814		38,764		60,430		212,194		106,134
Europe Insolvency	1,202		8,929		29,820		7,424		—
Total Portfolio Acquisitions	$	231,347	$	147,450	$	201,696	$	391,947	$	219,677

Share Repurchases

•The Company repurchased $34.9 million, or 0.8 million shares, with $92.7 million remaining under its current share repurchase plan as of June 30, 2022.

•At June 30, 2022, the Company has repurchased more than 14% of its common stock since it began its share repurchases in 2021.

Conference Call Information

PRA Group, Inc. will hold a conference call today at 5:00 p.m. Eastern time to discuss its financial and operational results.

To listen to a webcast of the call and view the accompanying slides, visit https://ir.pragroup.com/events-and-presentations. To listen by phone, call 844-835-9982 in the U.S. or 412-317-5267 outside the U.S., and ask the operator for the PRA Group conference call. To listen to a replay of the call, either visit the same website until August 8, 2023, or call 877-344-7529 in the U.S. or 412-317-0088 outside the U.S. and use access code 6057434 until August 15, 2022.

The Company plans to report its third quarter 2022 results after market close on November 3, 2022.

About PRA Group, Inc.

As a global leader in acquiring and collecting nonperforming loans, PRA Group, Inc. returns capital to banks and other creditors to help expand financial services for consumers in the Americas, Europe and Australia. With thousands of employees worldwide, PRA Group, Inc. companies collaborate with customers to help them resolve their debt. For more information, please visit www.pragroup.com.

About Forward Looking Statements

Statements made herein that are not historical in nature, including PRA Group, Inc.’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, Inc.’s future operations and financial 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, Inc. 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, Inc.’s filings with the Securities and Exchange Commission, including PRA Group, Inc.’s annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, which are available through PRA Group, Inc.'s website and contain a detailed discussion of PRA Group, Inc.'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 more 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 Group, Inc. assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA Group, Inc.’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

(Amounts in thousands, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues:
Portfolio income	$	194,009	$	219,137	$	401,541	$	450,809
Changes in expected recoveries	56,567		63,548		86,481		113,684
Total portfolio revenue	250,576		282,685		488,022		564,493
Fee income	6,467		2,453		8,297		4,634
Other revenue	1,219		491		2,548		5,971
Total revenues	258,262		285,629		498,867		575,098
Operating expenses:
Compensation and employee services	74,137		79,632		145,233		153,616
Legal collection fees	9,554		12,289		20,427		25,215
Legal collection costs	17,746		18,469		34,303		39,781
Agency fees	14,826		15,908		32,214		31,499
Outside fees and services	27,493		20,973		46,871		41,733
Communication	9,528		10,594		22,111		23,257
Rent and occupancy	4,633		4,643		9,620		9,123
Depreciation and amortization	3,865		3,815		7,643		7,796
Other operating expenses	12,743		15,092		24,741		28,110

Total operating expenses	174,525		181,415		343,163		360,130

Income from operations	83,737		104,214		155,704		214,968
Other income and (expense):

Interest expense, net	(31,562)		(30,836)		(63,310)		(62,388)
Foreign exchange gain/(loss)	1,319		(1,079)		787		(1,105)
Other	(181)		183		(671)		209
Income before income taxes	53,313		72,482		92,510		151,684
Income tax expense	14,177		11,921		18,756		29,243
Net income	39,136		60,561		73,754		122,441
Adjustment for net income/(loss) attributable to noncontrolling interests	2,652		4,565		(2,702)		8,039
Net income attributable to PRA Group, Inc.	$	36,484	$	55,996	$	76,456	$	114,402
Net income per common share attributable to PRA Group, Inc.:
Basic	$	0.92	$	1.22	$	1.90	$	2.50
Diluted	$	0.91	$	1.22	$	1.88	$	2.48
Weighted average number of shares outstanding:
Basic	39,779		45,807		40,278		45,738
Diluted	39,900		46,059		40,602		46,051

PRA Group, Inc.

Consolidated Balance Sheets

(Amounts in thousands)


	(unaudited)
	June 30, 2022		December 31, 2021
Assets
Cash and cash equivalents	$	67,974	$	87,584
Investments	86,386		92,977
Finance receivables, net	3,183,632		3,428,285
Income taxes receivable	42,207		41,146
Deferred tax assets, net	63,810		67,760
Right-of-use assets	55,877		56,713
Property and equipment, net	54,182		54,513
Goodwill	437,032		480,263
Other assets	97,653		57,002
Total assets	$	4,088,753	$	4,366,243
Liabilities and Equity
Liabilities:
Accounts payable	$	4,689	$	3,821
Accrued expenses	97,139		127,802
Income taxes payable	15,575		19,276
Deferred tax liabilities, net	44,029		36,630
Lease liabilities	60,681		61,188
Interest-bearing deposits	114,383		124,623
Borrowings	2,481,622		2,608,714
Other liabilities	28,268		59,352
Total liabilities	2,846,386		3,041,406

Equity:
Preferred stock, $0.01 par value, 2,000 shares authorized, 0 shares issued and outstanding	—		—
Common stock, $0.01 par value, 100,000 shares authorized, 39,639 shares issued and outstanding at June 30, 2022; 100,000 shares authorized, 41,008 shares issued and outstanding at December 31, 2021	396		410
Additional paid-in capital	—		—
Retained earnings	1,554,237		1,552,845
Accumulated other comprehensive loss	(347,821)		(266,909)
Total stockholders' equity - PRA Group, Inc.	1,206,812		1,286,346
Noncontrolling interest	35,555		38,491
Total equity	1,242,367		1,324,837
Total liabilities and equity	$	4,088,753	$	4,366,243


Select Expenses (Income) Amounts in thousands, pre-tax

	Three Months Ended
	June 30, 2022	March 31, 2022	December 31, 2021	September 30, 2021	June 30, 2021	March 31, 2021	December 31, 2020	September 30, 2020



Noncash interest expense - amortization of debt discount	—	—	—	—	—	—	1,959	2,388
Noncash interest expense - amortization of debt issuance costs	2,471	2,627	2,455	2,406	2,391	2,256	2,393	2,476
Change in fair value of derivatives	1,525	2,726	3,115	2,982	2,911	3,102	3,875	3,701
Amortization of intangibles	77	83	(269)	104	105	181	1,792	360
Stock-based compensation expense	3,849	3,891	3,470	4,317	4,040	4,113	5,370	3,097


Purchase Price Multiples as of June 30, 2022 Amounts in thousands
Purchase Period	Purchase Price (2)(3)		Total Estimated Collections (4)		Estimated Remaining Collections (5)		Current Purchase Price Multiple	Original Purchase Price Multiple (6)
Americas and Australia Core
1996-2011	$	1,287,821	$	4,129,821	$	28,610	321%	240%
2012	254,076		658,792		14,240		259%	226%
2013	390,826		901,496		18,209		231%	211%
2014	404,117		867,655		29,052		215%	204%
2015	443,114		909,063		67,094		205%	205%
2016	455,767		1,100,432		126,762		241%	201%
2017	532,851		1,216,134		195,337		228%	193%
2018	653,975		1,435,326		256,051		219%	202%
2019	581,476		1,264,852		338,254		218%	206%
2020	435,668		939,503		412,666		216%	213%
2021	435,846		823,057		652,069		189%	191%
2022	189,008		326,906		314,050		173%	173%
Subtotal	6,064,545		14,573,037		2,452,394
Americas Insolvency
1996-2011	786,827		1,752,738		487		223%	174%
2012	251,395		393,285		34		156%	136%
2013	227,834		355,469		241		156%	133%
2014	148,420		218,894		930		147%	124%
2015	63,170		87,521		188		139%	125%
2016	91,442		116,606		520		128%	123%
2017	275,257		354,999		11,154		129%	125%
2018	97,879		136,590		26,747		140%	127%
2019	123,077		166,922		63,023		136%	128%
2020	62,130		86,969		54,366		140%	136%
2021	55,187		75,444		62,017		137%	136%
2022	15,487		21,168		20,497		137%	137%
Subtotal	2,198,105		3,766,605		240,204
Total Americas and Australia	8,262,650		18,339,642		2,692,598
Europe Core
2012	20,409		43,182		—		212%	187%
2013	20,334		26,618		—		131%	119%
2014 (1)	773,811		2,326,310		427,901		301%	208%
2015	411,340		727,139		169,579		177%	160%
2016	333,090		561,978		200,511		169%	167%
2017	252,174		358,481		131,223		142%	144%
2018	341,775		527,914		233,268		154%	148%
2019	518,610		775,679		392,617		150%	152%
2020	324,119		555,868		335,393		172%	172%
2021	412,411		702,825		542,754		170%	170%
2022	156,018		265,207		243,846		170%	170%
Subtotal	3,564,091		6,871,201		2,677,092
Europe Insolvency
2014 (1)	10,876		18,507		5		170%	129%
2015	18,973		28,867		332		152%	139%
2016	39,338		56,985		2,558		145%	130%
2017	39,235		49,996		6,627		127%	128%
2018	44,908		50,016		13,881		111%	123%
2019	77,218		102,120		38,269		132%	130%
2020	105,440		142,714		74,518		135%	129%
2021	53,230		71,526		52,846		134%	134%
2022	9,294		12,707		11,946		137%	137%
Subtotal	398,512		533,438		200,982
Total Europe	3,962,603		7,404,639		2,878,074
Total PRA Group	$	12,225,253	$	25,744,281	$	5,570,672

(1) Includes finance receivables portfolios that were acquired through the acquisition of Aktiv Kapital AS in 2014 (as described in our 2021 Form 10-K).

(2)Includes the acquisition date finance receivables portfolios that were acquired through our business acquisitions.

(3)Non-U.S. amounts are presented at the exchange rate at the end of the year in which the portfolio was purchased. In addition, any purchase price adjustments that occur throughout the life of the portfolio are presented at the year-end exchange rate for the respective year of purchase.

(4)Non-U.S. amounts are presented at the year-end exchange rate for the respective year of purchase.

(5)Non-U.S. amounts are presented at the June 30, 2022 exchange rate.

(6)The Original Purchase Price Multiple represents the purchase price multiple at the end of the year of acquisition.


Portfolio Financial Information Year-to-date as of June 30, 2022 Amounts in thousands
Purchase Period	Cash Collections (2)		Portfolio Income (2)		Change in Expected Recoveries (2)		Total Portfolio Revenue (2)		Net Finance Receivables as of June 30, 2022 (3)
Americas and Australia Core
1996-2011	$	9,290	$	4,850	$	4,121	$	8,971	$	6,112
2012	4,060		1,537		2,856		4,393		4,779
2013	7,009		2,407		3,267		5,674		7,428
2014	8,428		3,112		4,006		7,118		10,827
2015	11,397		6,968		(903)		6,065		26,081
2016	22,959		16,400		(8,667)		7,733		42,829
2017	45,524		22,712		1,644		24,356		86,986
2018	86,025		29,629		38,110		67,739		148,802
2019	103,082		42,796		10,968		53,764		191,387
2020	108,985		49,429		(2,664)		46,765		236,150
2021	94,843		60,622		(29,540)		31,082		347,652
2022	13,059		9,735		(382)		9,353		184,283
Subtotal	514,661		250,197		22,816		273,013		1,293,316
Americas Insolvency
1996-2011	270		303		(34)		269		—
2012	300		33		267		300		—
2013	326		132		195		327		—
2014	402		432		(72)		360		101
2015	318		119		118		237		137
2016	1,063		193		136		329		326
2017	13,729		1,707		1,753		3,460		10,023
2018	13,556		1,942		2,566		4,508		24,213
2019	20,072		3,306		3,679		6,985		56,306
2020	9,970		3,120		908		4,028		44,517
2021	8,811		3,556		925		4,481		48,766
2022	670		379		355		734		15,391
Subtotal	69,487		15,222		10,796		26,018		199,780
Total Americas and Australia	584,148		265,419		33,612		299,031		1,493,096
Europe Core
2012	483		—		483		483		—
2013	276		—		276		276		—
2014 (1)	65,187		39,018		21,507		60,525		115,595
2015	22,334		10,469		5,643		16,112		91,262
2016	20,077		9,781		193		9,974		118,088
2017	13,643		4,750		2,254		7,004		89,349
2018	28,166		9,371		2,668		12,039		155,679
2019	49,329		14,970		4,040		19,010		268,004
2020	37,785		14,558		3,257		17,815		205,856
2021	48,978		21,573		2,524		24,097		324,509
2022	7,374		1,789		2,808		4,597		153,103
Subtotal	293,632		126,279		45,653		171,932		1,521,445
Europe Insolvency
2014 (1)	146		12		124		136		4
2015	386		133		(94)		39		261
2016	1,676		400		77		477		1,952
2017	3,834		360		644		1,004		6,079
2018	5,203		721		(1,224)		(503)		12,571
2019	10,823		2,017		570		2,587		33,313
2020	17,381		3,341		6,329		9,670		64,336
2021	7,025		2,551		590		3,141		41,617
2022	786		308		200		508		8,958
Subtotal	47,260		9,843		7,216		17,059		169,091
Total Europe	340,892		136,122		52,869		188,991		1,690,536
Total PRA Group	$	925,040	$	401,541	$	86,481	$	488,022	$	3,183,632

(1) Includes finance receivables portfolios that were acquired through the acquisition of Aktiv Kapital AS in 2014 (as described in our 2021 Form 10-K).

(2)Non-U.S. amounts are presented using the average exchange rates during the current reporting period.

(3)Non-U.S. amounts are presented at the June 30, 2022 exchange rate.


Cash Collections by Year, By Year of Purchase (1) as of June 30, 2022 Amounts in millions
			Cash Collections
Purchase Period	Purchase Price (3)(4)		1996-2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		Total
Americas and Australia Core
1996-2011	$	1,287.8	$	2,419.5	$	486.0	$	381.3	$	266.3	$	183.1	$	119.0	$	78.0	$	56.0	$	45.0	$	29.7	$	20.8	$	9.3	$	4,094.0
2012	254.1		—		56.9		173.6		146.2		97.3		60.0		40.0		27.8		17.9		11.8		9.0		4.1		644.6
2013	390.8		—		—		101.6		247.8		194.0		120.8		78.9		56.4		36.9		23.2		16.7		7.0		883.3
2014	404.1		—		—		—		92.7		253.4		170.3		114.2		82.2		55.3		31.9		22.3		8.4		830.7
2015	443.1		—		—		—		—		117.0		228.4		185.9		126.6		83.6		57.2		34.9		11.4		845.0
2016	455.8		—		—		—		—				138.7		256.5		194.6		140.6		105.9		74.2		23.0		933.5
2017	532.9		—		—		—		—		—		—		107.3		278.7		256.5		192.5		130.0		45.5		1010.5
2018	654.0		—		—		—		—		—		—		—		122.7		361.9		337.7		239.9		86.0		1,148.2
2019	581.5		—		—		—		—		—		—		—		—		143.8		349.0		289.8		103.1		885.7
2020	435.7		—		—		—		—		—		—		—		—		—		133.0		284.3		109.0		526.3
2021	435.8		—		—		—		—		—		—		—		—		—		—		85.0		94.8		179.8
2022	189.0		—		—		—		—		—		—		—		—		—		—		—		13.1		13.1
Subtotal	6,064.6		2,419.5		542.9		656.5		753.0		844.8		837.2		860.8		945.0		1,141.5		1,271.9		1,206.9		514.7		11,994.7
Americas Insolvency
1996-2011	786.8		667.4		336.8		313.7		244.7		128.2		44.6		8.4		4.0		2.1		1.3		0.8		0.3		1,752.3
2012	251.4		—		17.4		103.6		94.1		80.1		60.7		29.3		4.3		1.9		0.9		0.6		0.3		393.2
2013	227.8		—		—		52.5		82.6		81.7		63.4		47.8		21.9		2.9		1.3		0.8		0.3		355.2
2014	148.4		—		—		—		37.0		50.9		44.3		37.4		28.8		15.8		2.2		1.1		0.4		217.9
2015	63.2		—		—		—		—		3.4		17.9		20.1		19.8		16.7		7.9		1.3		0.3		87.4
2016	91.4		—		—		—		—		—		18.9		30.4		25.0		19.9		14.4		7.4		1.1		117.1
2017	275.3		—		—		—		—		—		—		49.1		97.3		80.9		58.8		44.0		13.7		343.8
2018	97.9		—		—		—		—		—		—		—		6.7		27.4		30.5		31.6		13.6		109.8
2019	123.1		—		—		—		—		—		—		—		—		13.4		31.4		39.1		20.0		103.9
2020	62.1		—		—		—		—		—		—		—		—		—		6.5		16.1		10.0		32.6
2021	55.2		—		—		—		—		—		—		—		—		—		—		4.5		8.8		13.3
2022	15.5		—		—		—		—		—		—		—		—		—		—		—		0.7		0.7
Subtotal	2,198.1		667.4		354.2		469.8		458.4		344.3		249.8		222.5		207.8		181.0		155.2		147.3		69.5		3,527.2
Total Americas and Australia	8,262.7		3,086.9		897.1		1,126.3		1,211.4		1,189.1		1,087.0		1,083.3		1,152.8		1,322.5		1,427.1		1,354.2		584.2		15,521.9
Europe Core
2012	20.4		—		11.6		9.0		5.6		3.2		2.2		2.0		2.0		1.5		1.2		1.2		0.5		40.0
2013	20.3		—		—		7.1		8.5		2.3		1.3		1.2		1.3		0.9		0.7		0.7		0.3		24.3
2014 (2)	773.8		—		—		—		153.2		292.0		246.4		220.8		206.3		172.9		149.8		149.2		65.2		1,655.8
2015	411.3		—		—		—		—		45.8		100.3		86.2		80.9		66.1		54.3		51.4		22.3		507.3
2016	333.1		—		—		—		—		—		40.4		78.9		72.6		58.0		48.3		46.7		20.1		365.0
2017	252.2		—		—		—		—		—		—		17.9		56.0		44.1		36.1		34.8		13.6		202.5
2018	341.8		—		—		—		—		—		—		—		24.3		88.7		71.2		69.1		28.2		281.5
2019	518.6		—		—		—		—		—		—		—		—		47.9		125.7		121.4		49.2		344.2
2020	324.1		—		—		—		—		—		—		—		—		—		32.4		91.7		37.8		161.9
2021	412.4		—		—		—		—		—		—		—		—		—		—		48.4		49.0		97.4
2022	156.0		—		—		—		—		—		—		—		—		—		—		—		7.4		7.4
Subtotal	3,564.0		—		11.6		16.1		167.3		343.3		390.6		407.0		443.4		480.1		519.7		614.6		293.6		3,687.3
Europe Insolvency
2014 (2)	10.9		—		—		—		—		4.3		3.9		3.2		2.6		1.5		0.8		0.3		0.1		16.7
2015	19.0		—		—		—		—		3.0		4.4		5.0		4.8		3.9		2.9		1.6		0.4		26.0
2016	39.3		—		—		—		—		—		6.2		12.7		12.9		10.7		7.9		6.0		1.7		58.1
2017	39.2		—		—		—		—		—		—		1.2		7.9		9.2		9.8		9.4		3.8		41.3
2018	44.9		—		—		—		—		—		—		—		0.6		8.4		10.3		11.7		5.2		36.2
2019	77.2		—		—		—		—		—		—		—		—		5.1		21.1		23.9		10.8		60.9
2020	105.4		—		—		—		—		—		—		—		—		—		6.1		34.6		17.5		58.2
2021	53.3		—		—		—		—		—		—		—		—		—		—		5.4		7.0		12.4
2022	9.3		—		—		—		—		—		—		—		—		—		—		—		0.8		0.8
Subtotal	398.5		—		—		—		—		7.3		14.5		22.1		28.8		38.8		58.9		92.9		47.3		310.6
Total Europe	3,962.5		—		11.6		16.1		167.3		350.6		405.1		429.1		472.2		518.9		578.6		707.5		340.9		3,997.9
Total PRA Group	$	12,225.2	$	3,086.9	$	908.7	$	1,142.4	$	1,378.7	$	1,539.7	$	1,492.1	$	1,512.4	$	1,625.0	$	1,841.4	$	2,005.7	$	2,061.7	$	925.1	$	19,519.8

(1)Non-U.S. amounts are presented using the average exchange rates during the cash collection period.

(2)Includes finance receivables portfolios that were acquired through the acquisition of Aktiv Kapital AS in 2014 (as described in our 2021 Form 10-K).

(3)Includes the nonperforming loan portfolios that were acquired through our business acquisitions.

(4)Non-U.S. amounts are presented at the exchange rate at the end of the year in which the portfolio was purchased. In addition, any purchase price adjustments that occur throughout the life of the pool are presented at the year-end exchange rate for the respective year of purchase.

Use of Non-GAAP Financial Measures

PRA Group, Inc. reports financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management uses certain non-GAAP financial measures, including Adjusted EBITDA, internally to evaluate the Company’s performance and to set performance goals. Adjusted EBITDA is calculated as net income attributable to PRA Group, Inc. plus income tax expense; less foreign exchange gain (or plus foreign exchange loss); plus interest expense, net; plus other expense (or less other income); plus depreciation and amortization; plus adjustment for net income attributable to noncontrolling interests; and plus recoveries applied to negative allowance less changes in expected recoveries. Adjusted EBITDA is a supplemental measure of performance that is not required by, or presented in accordance with, GAAP. PRA Group, Inc. presents Adjusted EBITDA because the Company considers it an important supplemental measure of operations and financial performance. Management believes Adjusted EBITDA helps provide enhanced period-to-period comparability of operations and financial performance and is useful to investors as other companies in the industry report similar financial measures. Adjusted EBITDA should not be considered as an alternative to net income determined in accordance with GAAP. Set forth below is a reconciliation of Adjusted EBITDA for the last twelve months (LTM) ended June 30, 2022 and for the year ended December 31, 2021, to net income, the most directly comparable financial measure calculated and reported in accordance with GAAP. The calculation of Adjusted EBITDA below may not be comparable to the calculation of similarly titled measures reported by other companies.


Reconciliation of Non-GAAP Financial Measures
	LTM		For the Year Ended
Adjusted EBITDA for PRA Group ($ in millions)	June 30, 2022		December 31, 2021
Net income attributable to PRA Group, Inc.	$	145	$	183
Adjustments:
Income tax expense	44		55
Foreign exchange (gains)/losses	(1)		1
Interest expense, net	125		124
Other expense	1		—
Depreciation and amortization	15		15
Adjustment for net income attributable to noncontrolling interests	2		12

Recoveries applied to negative allowance less Changes in expected recoveries	893		988
Adjusted EBITDA	$	1,224	$	1,378

Additionally, management evaluates the Company's business using certain ratios that use Adjusted EBITDA, including Debt to Adjusted EBITDA, which is calculated by dividing borrowings by Adjusted EBITDA. The following table reflects our Debt to Adjusted EBITDA for LTM as of June 30, 2022 and for the year ended December 31, 2021 (amounts in millions):


Debt to Adjusted EBITDA
	LTM		For the Year Ended
	June 30, 2022		December 31, 2021
Borrowings	$	2,482	$	2,609
LTM Adjusted EBITDA	1,224		1,378
Debt to LTM Adjusted EBITDA	2.03		1.89