Q4 and Full Year 2018 Conference Call Presentation 1
Statements herein, 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 Such statements involve uncertainties and risks, some of which are not currently known to us, and may be superseded by future events that could cause actual results to differ materially from those expressed or implied herein. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of today, and are qualified in their entirety by these cautionary statements. Information regarding risk factors and other information that could change our projections or impact our actual results can be found in our most recent Annual Report on Form 10-K and in subsequent public filings, and should be considered in evaluating the forward looking statements herein. Except as required by law, we assume no obligation to update or revise these statements to reflect changes in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part. 2
FULL YEAR 2018 HIG IGHLIGHTS – RECENT IN INVESTMENTS DELIVERED RECORD CA CASH SH COLLECT CTIONS OF $1.63 BIL BILLION Record portfolio investment in Americas Core of $657.1 million Portfolio investment and new call centers drove record cash collection in U.S. call centers Legal cash collections increased 24% in Q4 2018 compared to Q4 2017 Digital cash collections have doubled since 2017 Operational improvements in Europe 3
PAST IN INVESTMENTS CONTINUE DELIVERING VALUE Purchase of Aktiv Kapital provided pan-European footprint and diversification NCM purchase in 2012 perpetuated expansion into new asset class in 2017 and 2018 4
OTH THER EVENTS Net cash proceeds of $38 million on sale of majority stake in the RCB servicing platform Approximately $27 million pretax gain Well positioned in Latin America’s largest economy Outsized noncash charge related to portfolios outperforming underwritten expectations Noncash charge of approximately $21 million 5
Q4 HIG IGHLIGHTS ($ in millions) Fourth Quarter 2018 Portfolio Investment Europe Insolvency, $33.7 Americas Insolvency, Record quarterly portfolio investment of $490.9 million $52.9 driven by Americas Core and Europe Core Europe Core, $231.8 Record Estimated Remaining Collections (ERC) of $6.14 billion Americas Core, $172.5 6
TH THE AMERICAS Americas ERC Breakdown Areas of Focus Other Americas, $199 Collector Tenure Legal Channel Digital Engagement United States, $3,484 Government Relations $ in millions, as of December 31, 2018 7
EUROPE Europe ERC Breakdown Cash collections in 2018 were a record Southern Europe, Focused on specific deliverables $187 in local markets Northern Europe, $468 Expand market share in the UK, $1,217 countries we already operate in Central Europe, Environment is still competitive $589 Invested over 26% more in Europe Core $ in millions, as of December 31, 2018 portfolios during full year 2018 than in full year 2017 8
FIN INANCIAL RESULTS - GAAP ($ in millions, except per share results) Q4 2018 Full Year 2018 $402.7 $1,625.2 Cash Collections $236.7 $908.3 Total Revenues $21.4 $33.4 Net Allowance Charges $183.1 $689.6 Operating Expenses $14.9 $65.6 Net Income Attributable to PRA Group, Inc. $0.33 $1.44 Diluted EPS 9
CA CASH SH COLLECT CTIONS ($ in millions) Fourth Quarter Full Year 2018 Global Global Insolvency, Insolvency, $55.6 $236.6 Europe Core, Europe Core, Americas Core, Americas Core, $113.2 $443.4 $233.9 $945.2 10
ADDITIONAL REVENUE AND ALL LLOWANCE CH CHARGES Additional Revenue Revisited interpretation of rules governing revenue recognition on portfolios that do not qualify for sale accounting Resulted in an additional $5 million of revenue from 2016 – 2018 Allowance Charges Net Allowance charges of $21 million, primarily related to 2013 – 2015 U.S vintages $195 million in upward revisions to estimated remaining collections in 2018 11
OPERATING EXPENSES AND CA CASH SH EFFIC ICIENCY RATI TIO ($ in millions) 1,800 70% $183.1 million 1,640 1,604 Primarily driven by increases in 1,569 1,600 1,538 60% legal collection expenses and 1,444 compensation and employee 1,400 services 50% 1,214 1,200 Cash efficiency ratio of 58% for 971 the full year 40% 1,000 762 800 30% 592 600 383 20% 433 400 298 10% 200 0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Cash Receipts Cash Efficiency Ratio Insolvency as a % of Cash Collections * Cash efficiency ratio = (cash receipts – operating expenses)/cash receipts 12
ESTIMATED REMAINING COLL LLECT CTIONS AND AVAILABLE CA CAPITAL ($ in millions) Estimated Remaining Collections United States - $3,483.8 United Kingdom - $1,216.5 Central Europe - $589.0 Northern Europe - $468.3 Other Americas - $198.7 Southern Europe - $187.0 $826 Million Available for Portfolio Purchases 13
Q1 1 20 2019 19 RE REVENUE MODEL - $ $ IN IN THOUSANDS 14
Q&A 15
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