40th annual raymond james
TRANSCRIPT
40th Annual Raymond James Conference
Statements herein, other than statements of historical fact, are forward-looking statements, whichare based on our current beliefs, projections, assumptions and expectations concerning futureoperations and financial performance. Such statements involve uncertainties and risks, some ofwhich are not currently known to us, and may be superseded by future events that could causeactual results to differ materially from those expressed or implied herein. You are cautioned not toplace undue reliance on forward-looking statements, which speak only as of today, and are qualifiedin their entirety by these cautionary statements. Information regarding risk factors and otherinformation that could change our projections or impact our actual results can be found in our mostrecent Annual Report on Form 10-K and in subsequent public filings, and should be considered inevaluating the forward looking statements herein. Except as required by law, we assume noobligation to update or revise these statements to reflect changes in events, conditions orcircumstances on which any such forward-looking statements are based, in whole or in part.
Financial Results
Company Overview
AGENDA
GLOBAL LEADER IN PURCHASE & COLLECTION OF NONPERFORMING LOANS
Diversified geographically and by product type
Experience through economic cycles
Nearly 5,400 employees worldwide
Own portfolios in 16 countries, 13 languages and 11 currencies
Headquarters
Invested $1.12 billion in 2018
Estimated remaining collections of $6.14 billion
European banking license
as of December 31, 2018
5
LONG HISTORY OF GENERATING SUBSTANTIAL CASH RECEIPTS
Global Financial Crisis*
* Timing defined by the Federal Reserve Bank of St. Louis - https://www.stlouisfed.org/financial-crisis/full-timeline
(USD in millions)
$0
$500
$1,000
$1,500
$2,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Americas Core Cash Collections Europe Core Cash Collections Insolvency Cash Collections Fee Income
FULL YEAR 2018 HIGHLIGHTS – RECENT INVESTMENTS DELIVERED RECORD CASH COLLECTIONS OF $1.63 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
Digital cash collections have doubled since 2017
Legal cash collections increased 24% in Q4 2018 compared to Q4 2017
Operational improvements in Europe
PAST INVESTMENTS CONTINUE DELIVERING VALUE
NCM purchase in 2012 perpetuated expansion into new asset class in 2017 and 2018
Purchase of Aktiv Kapital provided pan-European footprint and diversification
8
THE AMERICAS
Collector Tenure
United States, $3,484
Other Americas,
$199
Americas ERC Breakdown
$ in millions, as of December 31, 2018
Areas of Focus
Legal Channel
Government Relations
Digital Engagement
9
EUROPE
Cash collections in 2018 were a record
Focused on specific deliverables in local markets
Invested over 26% more in Europe Core portfolios during full year 2018 than in full
year 2017
Environment is still competitive
Expand market share in the countries we already operate in
UK, $1,217
Central Europe,
$589
Northern Europe,
$468
Southern Europe,
$187
Europe ERC Breakdown
$ in millions, as of December 31, 2018
10
Financial Results
Company Overview
AGENDA
11
FINANCIAL RESULTS - GAAP
Q4 2018 Full Year 2018
Cash Collections $402.7 $1,625.2
Total Revenues $236.7 $908.3
Net Income Attributable to PRA Group, Inc. $14.9 $65.6
Operating Expenses $183.1 $689.6
Diluted EPS $0.33 $1.44
($ in millions, except per share results)
Net Allowance Charges $21.4 $33.4
12
Americas Core, $233.9
Europe Core, $113.2
Global Insolvency,
$55.6
CASH COLLECTIONS($ in millions)
Americas Core, $945.2
Europe Core, $443.4
Global Insolvency,
$236.6
Fourth Quarter Full Year 2018
13
OPERATING EXPENSES AND CASH EFFICIENCY RATIO($ in millions)
$183.1 million Primarily driven by increases in
legal collection expenses and compensation and employee services
Cash efficiency ratio of 58% for the full year
* Cash efficiency ratio = (cash receipts – operating expenses)/cash receipts
298
383 433
592
762
971
1,214
1,444
1,6041,569
1,538
1,640
0%
10%
20%
30%
40%
50%
60%
70%
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Cash Receipts Cash Efficiency Ratio Insolvency as a % of Cash Collections
14
ESTIMATED REMAINING COLLECTIONS AND AVAILABLE CAPITAL
Estimated Remaining Collections
$826 Million Available for Portfolio Purchases
($ in millions)
United States - $3,483.8
United Kingdom - $1,216.5
Central Europe - $589.0
Southern Europe - $187.0
Northern Europe - $468.3
Other Americas - $198.7
15