NORFOLK, Va., March 2, 2015 (GLOBE NEWSWIRE) -- PRA Group (Nasdaq:PRAA), a global leader in acquiring defaulted receivables, today reported its financial results for the fourth quarter and full year 2014.
Fourth Quarter Highlights
- Cash collections of $373.4 million, up 34% from the fourth quarter of 2013.
- Revenues of $250.7 million, up 36%.
- Income from operations of $109.9 million, up 40%.
- Net income of $47.0 million, up 3%.
- $0.93 diluted earnings per share, compared with $0.91 in the year-ago quarter, up 2%.
- 20.2% return on average equity, annualized.
- $314.2 million in investments.
"PRA Group continued to produce solid operational results and demonstrated the power of our geographic diversification with an investment performance second only to last quarter which included the Aktiv Kapital portfolio," said Steve Fredrickson, chairman, president and chief executive officer, PRA Group. "During the quarter, we invested $314.2 million in North America and Europe and delivered record quarterly income before taxes of $93.5 million. We also increased value to shareholders by repurchasing $33.2 million in common stock."
REVENUES
- Total revenues of $250.7 million in the fourth quarter, largely driven by cash collections, included finance receivables income net of principal amortization and net allowance reversals. Net finance receivables revenue was $222.7 million, up 32% from $168.7 million in the year-ago quarter. Total revenues for the full year were $881.0 million, up 20% from $735.1 million in full year 2013.
- Cash collections increased 34% in the fourth quarter from the year-ago quarter to $373.4 million, and included collections from these finance receivables sources:
| Cash Collection Source ($ in thousands) | Q42014 | Q32014 | Q22014 | Q12014 | Q42013 |
| North America-Core | $ 185,921 | $ 189,027 | $ 190,229 | $ 187,818 | $ 158,828 |
| North America-Insolvency | 103,104 | 110,544 | 124,101 | 120,702 | 114,384 |
| Europe-Core | 84,398 | 73,172 | 4,944 | 4,847 | 5,714 |
| Europe-Insolvency | 5 | -- | -- | -- | -- |
| Total Cash Collections | $ 373,428 | $ 372,743 | $ 319,274 | $ 313,367 | $ 278,926 |
Cash collections for the year increased 21% to $1.38 billion, compared with $1.14 billion in full year 2013.
- Principal amortization of finance receivables in the fourth quarter was $150.8 million or 40.4% of cash collections, compared with 39.5% in the year-ago quarter. Principal amortization included a net allowance charge of $1.0 million recorded against certain pools of finance receivables in the quarter, compared with a net allowance reversal of $0.4 million recorded in the year-ago quarter. Principal amortization of finance receivables for the year was $571.3 million or 41.4% of cash collections, compared with 41.9% in full year 2013.
- Revenues in the fourth quarter also included income from PRA Group's fee-based businesses of $22.8 million, compared with $16.1 million in the year-ago quarter. Fee-based revenue for the full year was $65.7 million, compared with $71.5 million in full year 2013.
EXPENSES AND OPERATING INCOME
- Operating expenses were $140.9 million in the fourth quarter of 2014, compared with $106.5 million a year ago, an increase of 32%. Operating expenses were $538.9 million for the full year, compared with $437.6 million in full year 2013.
- Operating income in the fourth quarter was $109.9 million, compared with $78.3 million in the year-ago quarter. The operating margin was 43.8% in the fourth quarter of 2014. Operating income for the full year was $342.1 million, compared with $297.5 million in full year 2013.
- The provision for income taxes was $46.5 million in the fourth quarter, up 68% from the year-ago quarter. PRA Group's provision for income taxes was 49.7% of income before taxes in the fourth quarter, compared with 37.7% in the year-ago quarter. The provision for income taxes was increased by $8.2 million primarily due to weakness of the Norwegian Kroner against the Euro. The provision for income taxes for the full year was $124.5 million, compared to $106.1 million in full year 2013.
PORTFOLIO ACQUISITIONS
- PRA Group invested $279.5 million in new finance receivables from North American and European receivable sellers in the fourth quarter of 2014. The Company also invested $34.7 million in a securitized fund in Poland specifically formed to purchase and collect on Polish finance receivables. This brought total investment in the quarter to $314.2 million. This compares with $99.5 million in the year-ago quarter. For the full year, PRA Group invested $1.47 billion in new finance receivables including receivables associated with the Aktiv Kapital acquisition and the investment in Poland, compared to $656.8 million in full year 2013.
|
Portfolio Purchase Source ($ in thousands) |
Q42014 |
Q32014 |
Q22014 |
Q12014 |
Q42013 |
| North America-Core | $ 119,714 | $ 118,018 | $ 91,904 | $ 79,085 | $ 65,759 |
| North America-Insolvency | 24,949 | 38,535 | 16,187 | 72,003 | 31,987 |
| Europe-Core (1) | 123,194 | 734,803 | 1,121 | 1,626 | 1,763 |
| Europe-Insolvency | 11,625 | -- | -- | -- | -- |
| Total Portfolio Purchasing | $ 279,482 | $ 891,356 | $ 109,212 | $ 152,714 | $ 99,509 |
| (1) Excludes the $34.7 million investment in the securitized fund in Poland in Q4 2014. | |||||
BALANCE SHEET
- Borrowings totaled $1,482.5 million at December 31, 2014, and consisted of $409.0 million drawn on the domestic revolver, $427.7 million drawn on the multi-currency revolver, $260.8 million in convertible senior notes, $215.0 million in other long-term debt and $169.9 million in seller financing related to the acquisition of Aktiv Kapital. Total borrowings were $451.8 million at December 31, 2013.
- Cash and cash equivalents were $39.7 million at December 31, 2014, compared with $162.0 million at December 31, 2013.
- During the fourth quarter of 2014, the company repurchased 573,900 shares of its common stock for $33.2 million and an average price of $57.79.
- Net deferred tax liabilities were $255.6 million at December 31, 2014, compared with $210.1 million a year ago.
- Stockholders' equity increased to $902.2 million at December 31, 2014, from $869.5 million at December 31, 2013.
Conference Call Information
PRA Group will hold a conference call today at 4:30 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 89361286. 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 9, 2015, call 855-859-2056 in the U.S. or 404-537-3406 outside the U.S. and use conference ID 89361286.
About PRA Group
By acquiring defaulted receivables, PRA Group returns capital to global banks and other creditors to help expand financial services for consumers in North America and Europe. PRA Group companies collaborate with customers to create affordable, realistic debt repayment plans and provide a broad range of additional revenue and recovery services to business and government clients in the U.S. and the U.K.
PRA Group has been recognized as one of Fortune's 100 Fastest-Growing Companies for the past three years and one of Forbes' Best Small Companies in America every year since 2007. PRA Group employs about 3,900 people and is headquartered in Norfolk, Virginia. 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 December 31, | Year Ended December 31, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Revenues: | ||||
| Income recognized on finance receivables, net | $ 222,660 | $ 168,728 | $ 807,474 | $ 663,546 |
| Fee income | 22,800 | 16,125 | 65,675 | 71,532 |
| Other revenue | 5,271 | -- | 7,820 | 57 |
| Total revenues | 250,731 | 184,853 | 880,969 | 735,135 |
| Operating expenses: | ||||
| Compensation and employee services | 65,448 | 46,393 | 234,531 | 192,474 |
| Legal collection fees | 15,125 | 10,144 | 51,107 | 41,488 |
| Legal collection costs | 15,725 | 20,044 | 88,054 | 83,063 |
| Agency fees | 7,497 | 1,608 | 16,399 | 5,901 |
| Outside fees and services | 15,707 | 6,827 | 55,821 | 31,615 |
| Communication | 7,715 | 7,357 | 33,085 | 28,161 |
| Rent and occupancy | 3,477 | 2,254 | 11,509 | 8,311 |
| Depreciation and amortization | 5,307 | 3,730 | 18,414 | 14,417 |
| Other operating expenses | 4,870 | 8,152 | 29,981 | 25,781 |
| Impairment of goodwill | -- | -- | -- | 6,397 |
| Total operating expenses | 140,871 | 106,509 | 538,901 | 437,608 |
| Income from operations | 109,860 | 78,344 | 342,068 | 297,527 |
| Other income and (expense): | ||||
| Interest income | 1 | 3 | 4 | 3 |
| Interest expense | (13,494) | (4,862) | (35,230) | (14,469) |
| Foreign exchange (loss)/gain | (2,898) | 6 | (5,829) | 4 |
| Income before income taxes | 93,469 | 73,491 | 301,013 | 283,065 |
| Provision for income taxes | 46,478 | 27,714 | 124,508 | 106,146 |
| Net income | $ 46,991 | $ 45,777 | $ 176,505 | $ 176,919 |
| Adjustment for net income attributable to redeemable noncontrolling interest | -- | -- | -- | 1,605 |
| Net income attributable to PRA Group, Inc. | $ 46,991 | $ 45,777 | $ 176,505 | $ 175,314 |
| Net income per common share attributable to PRA Group, Inc.: | ||||
| Basic | $ 0.94 | $ 0.92 | $ 3.53 | $ 3.48 |
| Diluted | $ 0.93 | $ 0.91 | $ 3.50 | $ 3.45 |
| Weighted average number of shares outstanding: | ||||
| Basic | 49,892 | 49,750 | 49,990 | 50,366 |
| Diluted | 50,444 | 50,375 | 50,421 | 50,873 |
| PRA Group, Inc. | ||
| Unaudited Consolidated Balance Sheets | ||
| (in thousands, except per share amounts) | ||
| ASSETS |
December 31, 2014 |
December 31, 2013 |
| Cash and cash equivalents | $ 39,661 | $ 162,004 |
| Investments | 89,703 | -- |
| Finance receivables, net | 2,001,790 | 1,239,191 |
| Other receivables, net | 12,959 | 12,359 |
| Income taxes receivable | -- | 11,710 |
| Net deferred tax asset | 6,126 | 1,361 |
| Property and equipment, net | 48,258 | 31,541 |
| Goodwill | 527,445 | 103,843 |
| Intangible assets, net | 10,933 | 15,767 |
| Other assets | 41,876 | 23,456 |
| Total assets | $ 2,778,751 | $ 1,601,232 |
| LIABILITIES AND EQUITY | ||
| Liabilities: | ||
| Accounts payable | $ 19,456 | $ 14,819 |
| Accrued expenses and other liabilities | 57,320 | 27,655 |
| Income taxes payable | 11,020 | -- |
| Accrued compensation | 22,993 | 27,431 |
| Net deferred tax liability | 255,587 | 210,071 |
| Interest bearing deposits | 27,704 | -- |
| Borrowings | 1,482,456 | 451,780 |
| Total liabilities | 1,876,536 | 731,756 |
| Stockholders' equity: | ||
| Preferred stock, par value $0.01, authorized shares, 2,000, issued and outstanding shares - 0 | -- | -- |
| Common stock, par value $0.01, 100,000 authorized shares, 49,577 issued and outstanding shares at December 31, 2014, and 60,000 authorized shares, 49,840 issued and outstanding shares at December 31, 2013 | 496 | 498 |
| Additional paid-in capital | 111,659 | 135,441 |
| Retained earnings | 906,010 | 729,505 |
| Accumulated other comprehensive (loss)/income | (115,950) | 4,032 |
| Total stockholders' equity | 902,215 | 869,476 |
| Total liabilities and equity | $ 2,778,751 | $ 1,601,232 |
| PRA Group, Inc. | ||
| Unaudited Consolidated Statements of Cash Flows | ||
| (in thousands) | ||
|
For the Years Ended December 31, |
||
| 2014 | 2013 | |
| Cash flows from operating activities: | ||
| Net income | $ 176,505 | $ 176,919 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Amortization of share-based compensation | 14,968 | 12,272 |
| Depreciation and amortization | 18,414 | 14,417 |
| Impairment of goodwill | -- | 6,397 |
| Amortization of debt discount | 4,058 | 1,508 |
| Amortization of debt fair value | (4,827) | -- |
| Deferred tax expense | 52,978 | 11,011 |
| Changes in operating assets and liabilities: | ||
| Other assets | (1,844) | (4,783) |
| Other receivables | 9,435 | (1,786) |
| Accounts payable | (13,934) | 2,556 |
| Income tax receivable/payable, net | 16,862 | (14,814) |
| Accrued expenses | 5,037 | 14,179 |
| Accrued compensation | (15,579) | 7,251 |
| Net cash provided by operating activities | 262,073 | 225,127 |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | (24,385) | (15,875) |
| Acquisition of finance receivables, net of buybacks | (682,441) | (638,616) |
| Collections applied to principal on finance receivables | 571,338 | 478,891 |
| Business acquisition, net of cash acquired | (851,183) | -- |
| Purchase of investments | (69,862) | -- |
| Proceeds from sales and maturities of investments | 25,821 | -- |
| Net cash used in investing activities | (1,030,712) | (175,600) |
| Cash flows from financing activities: | ||
| Income tax benefit from share-based compensation | 5,558 | 4,552 |
| Payment of liability-classified contingent consideration | (5,240) | |
| Proceeds from lines of credit | 543,000 | 217,000 |
| Principal payments on lines of credit | (134,000) | (344,000) |
| Repurchases of common stock | (33,164) | (58,511) |
| Cash paid for purchase of portion of noncontrolling interest | -- | (5,663) |
| Distributions paid to noncontrolling interest | -- | (2,075) |
| Principal payments on long-term debt | (359,281) | (5,542) |
| Proceeds from long-term debt | 623,354 | -- |
| Net increase in interest bearing deposits | 2,492 | -- |
| Proceeds from convertible debt, net | -- | 279,281 |
| Net cash provided by financing activities | 647,959 | 79,802 |
| Effect of exchange rate on cash | (1,663) | (12) |
| Net (decrease)/increase in cash and cash equivalents | (122,343) | 129,317 |
| Cash and cash equivalents, beginning of period | 162,004 | 32,687 |
| Cash and cash equivalents, end of period | $ 39,661 | $ 162,004 |
| Supplemental disclosure of cash flow information: | ||
| Cash paid for interest | $ 31,831 | $ 9,830 |
| Cash paid for income taxes | 47,947 | 105,719 |
| Supplemental disclosure of non-cash information: | ||
| Adjustment of the redeemable noncontrolling interest measurement amount | $ -- | $ (184) |
| Purchase of redeemable noncontrolling interest | -- | 14,986 |
| Employee stock relinquished for payment of taxes | (11,146) | (7,350) |
| FINANCIAL HIGHLIGHTS | ||||||
|
As of and for the Three Months Ended December 31, |
As of and for the Year Ended December 31, |
|||||
| 2014 | 2013 | Change | 2014 | 2013 | Change | |
| EARNINGS (in thousands) | ||||||
| Income recognized on finance receivables, net | $ 222,660 | $ 168,728 | 32% | $ 807,474 | $ 663,546 | 22% |
| Fee income | 22,800 | 16,125 | 41% | 65,675 | 71,532 | -8% |
| Other revenue | 5,271 | -- | 100% | 7,820 | 57 | 13619% |
| Total revenues | 250,731 | 184,853 | 36% | 880,969 | 735,135 | 20% |
| Operating expenses | 140,871 | 106,509 | 32% | 538,901 | 437,608 | 23% |
| Income from operations | 109,860 | 78,344 | 40% | 342,068 | 297,527 | 15% |
| Net interest expense | 13,493 | 4,859 | 178% | 35,226 | 14,466 | 144% |
| Net income | 46,991 | 45,777 | 3% | 176,505 | 176,919 | 0% |
| Net income attributable to PRA Group, Inc. | 46,991 | 45,777 | 3% | 176,505 | 175,314 | 1% |
| PERIOD-END BALANCES (in thousands) | ||||||
| Cash and cash equivalents | $ 39,661 | $ 162,004 | -76% | $ 39,661 | $ 162,004 | -76% |
| Finance receivables, net | 2,001,790 | 1,239,191 | 62% | 2,001,790 | 1,239,191 | 62% |
| Goodwill and intangible assets, net | 538,378 | 119,610 | 350% | 538,378 | 119,610 | 350% |
| Total assets | 2,778,751 | 1,601,232 | 74% | 2,778,751 | 1,601,232 | 74% |
| Borrowings | 1,482,456 | 451,780 | 228% | 1,482,456 | 451,780 | 228% |
| Total liabilities | 1,876,536 | 731,756 | 156% | 1,876,536 | 731,756 | 156% |
| Total equity | 902,215 | 869,476 | 4% | 902,215 | 869,476 | 4% |
| FINANCE RECEIVABLE INCOME (dollars in thousands) | ||||||
| Cash collections | $ 373,428 | $ 278,926 | 34% | $ 1,378,812 | $ 1,142,437 | 21% |
| Cash collections on fully amortized pools | 17,785 | 9,801 | 81% | 68,349 | 35,520 | 92% |
| Principal amortization without allowance (reversals)/charges | 149,753 | 110,626 | 35% | 576,273 | 480,912 | 20% |
| Allowance (reversal)/charge | 1,015 | (429) | -337% | (4,935) | (2,022) | 144% |
| Principal amortization with allowance (reversals)/charges | 150,768 | 110,197 | 37% | 571,338 | 478,890 | 19% |
| Principal amortization w/ allowance charges as % of cash collections: | ||||||
| Including fully amortized pools | 40.4% | 39.5% | 2% | 41.4% | 41.9% | -1% |
| Excluding fully amortized pools | 42.4% | 40.9% | 4% | 43.6% | 43.3% | 1% |
| Allowance (reversal)/charge to period-end net finance receivables | 0.1% | (0.0%) | -246% | (0.2%) | (0.2%) | 51% |
| PURCHASES OF FINANCE RECEIVABLES (dollars in thousands) | ||||||
| Purchase price - North America core | $ 119,714 | $ 65,759 | 82% | $ 408,721 | $ 395,068 | 3% |
| Purchase price - North America insolvency | 24,949 | 31,987 | -22% | 151,674 | 242,649 | -37% |
| Purchase price - Europe core | 123,194 | 1,763 | 6888% | 860,744 | 19,067 | 4414% |
| Purchase price - Europe insolvency | 11,625 | -- | 100% | 11,625 | -- | 100% |
| Purchase price - total | 279,482 | 99,509 | 181% | 1,432,764 | 656,783 | 118% |
| Number of portfolios - total | 142 | 83 | 71% | 456 | 347 | 31% |
| ESTIMATED REMAINING COLLECTIONS (in thousands) | ||||||
| Estimated remaining collections - North America core | $ 2,229,403 | $ 1,824,132 | 22% | $ 2,229,403 | $ 1,824,132 | 22% |
| Estimated remaining collections - North America insolvency | 642,552 | 822,988 | -22% | 642,552 | 822,988 | -22% |
| Estimated remaining collections - Europe core | 1,478,738 | 22,150 | 6576% | 1,478,738 | 22,150 | 6576% |
| Estimated remaining collections - Europe insolvency | 15,021 | -- | 100% | 15,021 | -- | 100% |
| Estimated remaining collections - total | 4,365,714 | 2,669,270 | 64% | 4,365,714 | 2,669,270 | 64% |
| SHARE DATA (share amounts in thousands) | ||||||
| Net income per common share - diluted | $ 0.93 | $ 0.91 | 2% | $ 3.50 | $ 3.45 | 1% |
| Weighted average number of shares outstanding - diluted | 50,444 | 50,375 | 0% | 50,421 | 50,873 | -1% |
| Shares repurchased | 574 | -- | 100% | 574 | 1,203 | -52% |
| Average price paid per share repurchased (including acquisitions costs) | $ 57.79 | $ -- | 100% | $ 57.79 | $ 48.62 | 19% |
| Closing market price | $ 57.93 | $ 52.84 | 10% | $ 57.93 | $ 52.84 | 10% |
| RATIOS AND OTHER DATA (dollars in thousands) | ||||||
| Return on average equity (1) | 20.2% | 21.5% | -6% | 18.9% | 22.2% | -15% |
| Return on revenue (2) | 18.7% | 24.8% | -24% | 20.0% | 24.1% | -17% |
| Return on average assets (3) | 6.9% | 11.5% | -40% | 8.0% | 11.9% | -33% |
| Operating margin (4) | 43.8% | 42.4% | 3% | 38.8% | 40.5% | -4% |
| Operating expense to cash receipts (5) | 35.6% | 36.1% | -2% | 37.3% | 36.0% | 3% |
| Debt to equity (6) | 164.3% | 52.0% | 216% | 164.3% | 52.0% | 216% |
| Number of full-time equivalent collectors | 2,457 | 2,313 | 6% | 2,457 | 2,313 | 6% |
| Number of full-time equivalent employees | 3,880 | 3,543 | 10% | 3,880 | 3,543 | 10% |
| Cash receipts (5) | $ 396,228 | $ 295,051 | 34% | $ 1,444,487 | $ 1,213,969 | 19% |
| Line of credit - unused portion at period end | 352,926 | 435,500 | -19% | 352,926 | 435,500 | -19% |
| (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 | ||||||
| FINANCIAL HIGHLIGHTS | ||||||
| For the Quarter Ended | ||||||
|
December 31 2014 |
September 30 2014 |
June 30 2014 |
March 31 2014 |
December 31 2013 |
September 30 2013 |
|
| EARNINGS (in thousands) | ||||||
| Income recognized on finance receivables, net | $ 222,660 | $ 224,326 | $ 182,518 | $ 177,970 | $ 168,728 | $ 171,456 |
| Fee income | 22,800 | 12,757 | 14,510 | 15,608 | 16,125 | 26,249 |
| Other revenue | 5,271 | 1,890 | 315 | 344 | -- | 57 |
| Total revenues | 250,731 | 238,973 | 197,343 | 193,922 | 184,853 | 197,762 |
| Operating expenses | 140,871 | 150,784 | 124,906 | 122,340 | 106,509 | 118,297 |
| Income from operations | 109,860 | 88,189 | 72,437 | 71,582 | 78,344 | 79,465 |
| Net interest expense | 13,493 | 11,807 | 5,067 | 4,859 | 4,859 | 3,995 |
| Net income | 46,991 | 51,167 | 37,507 | 40,840 | 45,777 | 49,211 |
| Net income attributable to PRA Group, Inc. | 46,991 | 51,167 | 37,507 | 40,840 | 45,777 | 47,338 |
| PERIOD-END BALANCES (in thousands) | ||||||
| Cash and cash equivalents | $ 39,661 | $ 70,300 | $ 270,526 | $ 191,819 | $ 162,004 | $ 108,705 |
| Finance receivables, net | 2,001,790 | 1,913,710 | 1,219,595 | 1,253,961 | 1,239,191 | 1,256,822 |
| Goodwill and intangible assets, net | 538,378 | 606,716 | 118,927 | 118,800 | 119,610 | 119,636 |
| Total assets | 2,778,751 | 2,757,429 | 1,695,362 | 1,642,613 | 1,601,232 | 1,547,985 |
| Borrowings | 1,482,456 | 1,425,409 | 448,785 | 450,278 | 451,780 | 452,229 |
| Total liabilities | 1,876,536 | 1,797,569 | 743,106 | 732,395 | 731,756 | 721,001 |
| Total equity | 902,215 | 959,860 | 952,256 | 910,218 | 869,476 | 816,647 |
| FINANCE RECEIVABLE COLLECTIONS (dollars in thousands) | ||||||
| Cash collections | $ 373,428 | $ 372,743 | $ 319,274 | $ 313,367 | $ 278,926 | $ 291,651 |
| Cash collections on fully amortized pools | 17,785 | 17,105 | 16,943 | 16,516 | 9,801 | 8,762 |
| Principal amortization without allowance (reversals)/charges | 149,753 | 150,115 | 139,055 | 137,350 | 110,626 | 122,776 |
| Allowance (reversal)/charge | 1,015 | (1,698) | (2,299) | (1,953) | (429) | (2,581) |
| Principal amortization with allowance (reversals)/charges | 150,768 | 148,417 | 136,756 | 135,397 | 110,197 | 120,195 |
| Principal amortization w/ allowance charges as % of cash collections: | ||||||
| Including fully amortized pools | 40.4% | 39.8% | 42.8% | 43.2% | 39.5% | 41.2% |
| Excluding fully amortized pools | 42.4% | 41.7% | 45.2% | 45.6% | 40.9% | 42.5% |
| Allowance (reversal)/charge to period-end net finance receivables | 0.1% | -0.1% | -0.2% | -0.2% | 0.0% | -0.2% |
| PURCHASES OF FINANCE RECEIVABLES (dollars in thousands) | ||||||
| Purchase price - North America core | $ 119,714 | $ 118,018 | $ 91,904 | $ 79,085 | $ 65,759 | $ 89,044 |
| Purchase price - North America insolvency | 24,949 | 38,535 | 16,187 | 72,003 | 31,987 | 41,794 |
| Purchase price - Europe core | 123,194 | 734,803 | 1,121 | 1,626 | 1,763 | 11,037 |
| Purchase price - Europe insolvency | 11,625 | -- | -- | -- | -- | -- |
| Purchase price - total | 279,482 | 891,356 | 109,212 | 152,714 | 99,509 | 141,875 |
| Number of portfolios - total | 142 | 125 | 85 | 104 | 83 | 79 |
| ESTIMATED REMAINING COLLECTIONS (in thousands) | ||||||
| Estimated remaining collections - North America core | $ 2,229,403 | $ 2,089,253 | $ 1,948,414 | $ 1,891,511 | $ 1,824,132 | $ 1,762,369 |
| Estimated remaining collections - North America insolvency | 642,552 | 697,662 | 733,176 | 793,855 | 822,988 | 877,722 |
| Estimated remaining collections - Europe core | 1,478,738 | 1,582,135 | 20,349 | 19,358 | 22,150 | 32,272 |
| Estimated remaining collections - Europe insolvency | 15,021 | -- | -- | -- | -- | -- |
| Estimated remaining collections - total | 4,365,714 | 4,369,050 | 2,701,939 | 2,704,724 | 2,669,270 | 2,672,363 |
| SHARE DATA-ADJUSTED (7) (share amounts in thousands) | ||||||
| Net income per common share - diluted | $ 0.93 | $ 1.01 | $ 0.74 | $ 0.81 | $ 0.91 | $ 0.93 |
| Weighted average number of shares outstanding - diluted | 50,444 | 50,439 | 50,437 | 50,363 | 50,375 | 50,660 |
| Shares repurchased | 574 | -- | -- | -- | -- | 989 |
| Average price paid per share repurchased (including acquisitions costs) | $ 57.79 | $ -- | $ -- | $ -- | $ -- | $ 50.55 |
| Closing market price | $ 57.93 | $ 52.23 | $ 59.53 | $ 57.86 | $ 52.84 | $ 59.93 |
| RATIOS AND OTHER DATA (dollars in thousands) | ||||||
| Return on average equity (1) | 20.2% | 21.1% | 16.0% | 18.2% | 21.5% | 23.5% |
| Return on revenue (2) | 18.7% | 21.4% | 19.0% | 21.1% | 24.8% | 24.9% |
| Return on average assets (3) | 6.9% | 7.3% | 9.0% | 10.0% | 11.5% | 12.5% |
| Operating margin (4) | 43.8% | 36.9% | 36.7% | 36.9% | 42.4% | 40.2% |
| Operating expense to cash receipts (5) | 35.6% | 39.1% | 37.4% | 37.2% | 36.1% | 37.2% |
| Debt to equity (6) | 164.3% | 148.5% | 47.1% | 49.5% | 52.0% | 55.4% |
| Number of collectors | 2,457 | 2,498 | 2,258 | 2,379 | 2,313 | 2,054 |
| Number of full-time equivalent employees | 3,880 | 3,913 | 3,567 | 3,621 | 3,543 | 3,223 |
| Cash receipts (5) | $ 396,228 | $ 385,500 | $ 333,784 | $ 328,975 | $ 295,051 | $ 317,900 |
| Line of credit - unused portion at period end | 352,926 | 513,800 | 650,000 | 435,500 | 435,500 | 435,500 |
| (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 | ||||||
Use of Non-GAAP Financial Measures
Management believes that the presentation of certain financial information in this press release, excluding the costs associated with Aktiv Kapital acquisition and certain acquisition related foreign exchange losses that were recorded during the three and twelve months ended December 31, 2014, is useful to investors and improves the comparability of the Company's ongoing operational results between periods. The foreign exchange losses are related to foreign currency forward contracts put in place between signing and closing of the Aktiv Kapital acquisition to mitigate the risk of converting US dollars to Euros. The non-GAAP information should be considered in addition to, not as a substitute for, financial information prepared in accordance with GAAP.
| PRA Group, Inc. | |||
| Reconciliation of Net Income, Earnings Per Share and Financial Ratios to GAAP Net Income, Earnings Per Share and Financial Ratios | |||
| (in thousands, except per share amounts) | |||
|
GAAP Three Months Ended December 31, 2014 |
Less: Adjustments Related to Aktiv Kapital Acquisition |
Adjusted Three Months Ended December 31, 2014 |
|
| Revenues: | |||
| Income recognized on finance receivables, net | $ 222,660 | $ 222,660 | |
| Fee income | 22,800 | 22,800 | |
| Other revenue | 5,271 | 5,271 | |
| Total revenues | 250,731 | 250,731 | |
| Operating expenses: | |||
| Compensation and employee services | 65,448 | 65,448 | |
| Legal collection fees | 15,125 | 15,125 | |
| Legal collection costs | 15,725 | 15,725 | |
| Agency fees | 7,497 | 7,497 | |
| Outside fees and services | 15,707 | (2,379) | 13,328 |
| Communication | 7,715 | 7,715 | |
| Rent and occupancy | 3,477 | 3,477 | |
| Depreciation and amortization | 5,307 | 5,307 | |
| Other operating expenses | 4,870 | 4,870 | |
| Impairment of goodwill | -- | ||
| Total operating expenses | 140,871 | (2,379) | 138,492 |
| Income from operations | 109,860 | 2,379 | 112,239 |
| Other income and (expense): | |||
| Interest income | 1 | 1 | |
| Interest expense | (13,494) | (13,494) | |
| Foreign exchange (loss)/gain | (2,898) | (2,898) | |
| Income before income taxes | 93,469 | 2,379 | 95,848 |
| Provision for income taxes | 46,478 | 1,183 | 47,661 |
| Net income | $ 46,991 | $ 1,196 | $ 48,187 |
| Adjustment for net income attributable to redeemable noncontrolling interest | -- | -- | |
| Net income attributable to PRA Group, Inc. | $ 46,991 | $ 1,196 | $ 48,187 |
| Net income per common share attributable to PRA Group, Inc.: | |||
| Basic | $ 0.94 | $ 0.02 | $ 0.97 |
| Diluted | $ 0.93 | $ 0.02 | $ 0.96 |
| Weighted average number of shares outstanding: | |||
| Basic | 49,892 | 49,892 | 49,892 |
| Diluted | 50,444 | 50,444 | 50,444 |
| Operating margin: | 43.82% | 44.76% | |
| Net income margin: | 18.7% | 19.2% | |
| Return on average equity: | 20.2% | 20.7% | |
| PRA Group, Inc. | |||
| Reconciliation of Net Income, Earnings Per Share and Financial Ratios to GAAP Net Income, Earnings Per Share and Financial Ratios | |||
| (in thousands, except per share amounts) | |||
|
GAAP Year Ended December 31, 2014 |
Less: Adjustments Related to Aktiv Kapital Acquisition |
Adjusted Year Ended December 31, 2014 |
|
| Revenues: | |||
| Income recognized on finance receivables, net | $ 807,474 | $ 807,474 | |
| Fee income | 65,675 | 65,675 | |
| Other revenue | 7,820 | 7,820 | |
| Total revenues | 880,969 | 880,969 | |
| Operating expenses: | |||
| Compensation and employee services | 234,531 | 234,531 | |
| Legal collection fees | 51,107 | 51,107 | |
| Legal collection costs | 88,054 | 88,054 | |
| Agency fees | 16,399 | 16,399 | |
| Outside fees and services | 55,821 | (17,214) | 38,607 |
| Communication | 33,085 | 33,085 | |
| Rent and occupancy | 11,509 | 11,509 | |
| Depreciation and amortization | 18,414 | 18,414 | |
| Other operating expenses | 29,981 | 29,981 | |
| Impairment of goodwill | -- | ||
| Total operating expenses | 538,901 | (17,214) | 521,687 |
| Income from operations | 342,068 | 17,214 | 359,282 |
| Other income and (expense): | |||
| Interest income | 4 | 4 | |
| Interest expense | (35,230) | (35,230) | |
| Foreign exchange (loss)/gain | (5,829) | 8,240 | 2,411 |
| Income before income taxes | 301,013 | 25,454 | 326,467 |
| Provision for income taxes | 124,508 | 10,529 | 135,037 |
| Net income | $ 176,505 | $ 14,925 | $ 191,430 |
| Adjustment for net income attributable to redeemable noncontrolling interest | -- | -- | |
| Net income attributable to PRA Group, Inc. | $ 176,505 | $ 14,925 | $ 191,430 |
| Net income per common share attributable to PRA Group, Inc.: | |||
| Basic | $ 3.53 | $ 0.30 | $ 3.83 |
| Diluted | $ 3.50 | $ 0.30 | $ 3.80 |
| Weighted average number of shares outstanding: | |||
| Basic | 49,990 | 49,990 | 49,990 |
| Diluted | 50,421 | 50,421 | 50,421 |
| Operating margin: | 38.83% | 40.78% | |
| Net income margin: | 20.0% | 21.7% | |
| Return on average equity: | 18.9% | 20.5% | |