PRA Group - 10-Q quarterly report FY2024 Q1

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2024

☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ________ to ________

Commission File Number: 000-50058

PRA Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware

75-3078675

(State or other jurisdiction of incorporation or organization)

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

120 Corporate Boulevard

Norfolk, Virginia 23502

(Address of principal executive offices)

(888) 772-7326

(Registrant's Telephone No., including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ☐ 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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

The number of shares of the registrant's common stock outstanding as of May 2, 2024 was 39,352,006.

Table of Contents


Part I. Financial Information

Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets	3
	Consolidated Income Statements	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Changes in Equity	6
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements	8
	1. Organization and Business	8

	2. Finance Receivables, net	8
	3. Investments	11
	4. Goodwill	11

	5. Borrowings	12
	6. Derivatives	12
	7. Fair Value	13
	8. Accumulated Other Comprehensive Loss	15
	9. Earnings per Share	16

	1 0 . Commitments and Contingencies	16
	1 1 . Recently Issued Accounting Standards	17

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39

Part II. Other Information

Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	40

Signatures		42

Part I. Financial Information

Item 1. Financial Statements (Unaudited)

PRA Group, Inc.

Consolidated Balance Sheets

March 31, 2024 and December 31, 2023

(Amounts in thousands)


	(unaudited)
	March 31, 2024		December 31, 2023
Assets
Cash and cash equivalents	$	108,100	$	112,528

Investments	58,879		72,404
Finance receivables, net	3,650,195		3,656,598

Income taxes receivable	32,067		27,713
Deferred tax assets, net	78,883		74,694
Right-of-use assets	44,187		45,877
Property and equipment, net	34,054		36,450
Goodwill	411,846		431,564
Other assets	63,971		67,526
Total assets	$	4,482,182	$	4,525,354
Liabilities and Equity
Liabilities:
Accounts payable	$	10,814	$	6,325

Accrued expenses	98,902		131,893
Income taxes payable	23,541		17,912
Deferred tax liabilities, net	16,888		17,051
Lease liabilities	48,557		50,300
Interest-bearing deposits	113,259		115,589
Borrowings	2,953,048		2,914,270
Other liabilities	20,855		32,638
Total liabilities	3,285,864		3,285,978

Equity:
Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued and outstanding	—		—
Common stock, $0.01 par value; 100,000 shares authorized, 39,345 shares issued and outstanding as of March 31, 2024; 100,000 shares authorized, 39,247 shares issued and outstanding as of December 31, 2023	393		392
Additional paid-in capital	8,928		7,071
Retained earnings	1,493,023		1,489,548
Accumulated other comprehensive loss	(373,018)		(329,899)
Total stockholders' equity - PRA Group, Inc.	1,129,326		1,167,112
Noncontrolling interests	66,992		72,264
Total equity	1,196,318		1,239,376
Total liabilities and equity	$	4,482,182	$	4,525,354

The accompanying notes are an integral part of these Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Income Statements

For the Three Months Ended March 31, 2024 and 2023

(Amounts in thousands, except per share amounts)

(unaudited)


	Three Months Ended March 31,
		2024		2023
Revenues:
Portfolio income		$	202,056	$	188,242
Changes in expected recoveries		51,674		(36,912)
Total portfolio revenue		253,730		151,330
Other revenue		1,856		4,140
Total revenues		255,586		155,470

Operating expenses:
Compensation and employee services		73,597		82,403
Legal collection fees		12,112		8,838
Legal collection costs		26,691		23,945
Agency fees		19,723		17,378
Outside fees and services		25,050		24,944
Communication		12,578		10,527
Rent and occupancy		4,144		4,448
Depreciation and amortization		2,720		3,589

Other operating expenses		12,575		13,042

Total operating expenses		189,190		189,114
Income/(loss) from operations		66,396		(33,644)
Other income and (expense):

Interest expense, net		(52,278)		(38,283)

Foreign exchange gain/(loss), net		227		(9)
Other		(206)		(650)
Income/(loss) before income taxes		14,139		(72,586)

Income tax expense/(benefit)		2,386		(18,683)
Net income/(loss)		11,753		(53,903)
Adjustment for net income attributable to noncontrolling interests		8,278		4,726
Net income/(loss) attributable to PRA Group, Inc.		$	3,475	$	(58,629)

Net income/(loss) per common share attributable to PRA Group, Inc.:
Basic		$	0.09	$	(1.50)
Diluted		$	0.09	$	(1.50)
Weighted average number of shares outstanding:
Basic		39,274		39,033
Diluted		39,448		39,033

The accompanying notes are an integral part of these Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Statements of Comprehensive Income

For the Three Months Ended March 31, 2024 and 2023

(Amounts in thousands)

(unaudited)


	Three Months Ended March 31,
		2024		2023
Net income/(loss)		$	11,753	$	(53,903)
Other comprehensive loss, net of tax
Foreign currency translation adjustments		(48,191)		(1,550)
Cash flow hedges		2,808		(4,831)
Debt securities available-for-sale		46		128
Other comprehensive loss		(45,337)		(6,253)
Total comprehensive loss		(33,584)		(60,156)
Less comprehensive income attributable to noncontrolling interests		6,059		7,276
Comprehensive loss attributable to PRA Group, Inc.		$	(39,643)	$	(67,432)

The accompanying notes are an integral part of these Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Statements of Changes in Equity

For the Three Months Ended March 31, 2024 and 2023

(Amounts in thousands)

(unaudited)


	Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive		Noncontrolling		Total
	Shares	Amount		Capital		Earnings		Income/(Loss)		Interests		Equity
Balance as of December 31, 2023	39,247	$	392	$	7,071	$	1,489,548	$	(329,899)	$	72,264	$	1,239,376
Components of comprehensive income, net of tax:
Net income	—	—		—		3,475		—		8,278		11,753
Foreign currency translation adjustments	—	—		—		—		(45,973)		(2,218)		(48,191)
Cash flow hedges	—	—		—		—		2,808		—		2,808
Debt securities available-for-sale	—	—		—		—		46		—		46
Distributions to noncontrolling interest	—	—		—		—		—		(11,332)		(11,332)
Vesting of restricted stock	98	1		(1)		—		—		—		—

Share-based compensation expense	—			3,327		—		—		—		3,327
Employee stock relinquished for payment of taxes	—	—		(1,469)		—		—		—		(1,469)
Balance as of March 31, 2024	39,345	$	393	$	8,928	$	1,493,023	$	(373,018)	$	66,992	$	1,196,318


	Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive		Noncontrolling		Total
	Shares	Amount		Capital		Earnings		Income/(Loss)		Interests		Equity
Balance as of December 31, 2022	38,980	$	390	$	2,172	$	1,573,025	$	(347,926)	$	59,089	$	1,286,750
Components of comprehensive income, net of tax:
Net loss	—	—		—		(58,629)		—		4,726		(53,903)
Foreign currency translation adjustments	—	—		—		—		(4,101)		2,551		(1,550)
Cash flow hedges	—	—		—		—		(4,831)		—		(4,831)
Debt securities available-for-sale	—	—		—		—		128		—		128
Vesting of restricted stock	190	2		(2)		—		—		—		—

Share-based compensation expense	—	—		3,799		—		—		—		3,799
Employee stock relinquished for payment of taxes	—	—		(5,684)		—		—		—		(5,684)
Balance as of March 31, 2023	39,170	$	392	$	285	$	1,514,396	$	(356,730)	$	66,366	$	1,224,709

The accompanying notes are an integral part of these Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2024 and 2023

(Amounts in thousands)

(unaudited)


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net income/(loss)	$	11,753	$	(53,903)
Adjustments to reconcile net income/(loss) to net cash used in operating activities:
Share-based compensation expense	3,327		3,799
Depreciation and amortization	2,720		3,589



Amortization of debt discount and issuance costs	2,200		2,441
Changes in expected recoveries	(51,674)		36,912

Deferred income taxes	(6,487)		(12,400)
Net unrealized foreign currency transaction gain	(9,689)		(15,020)
Fair value in earnings for equity securities	206		(3)
Other	200		(59)

Changes in operating assets and liabilities:
Other assets	1,216		(5,197)

Accrued expenses, accounts payable and other liabilities	(26,806)		9,176
Income taxes payable, net	66		(16,717)


Right-of-use asset/lease liability	(31)		(139)

Net cash used in operating activities	(72,999)		(47,521)
Cash flows from investing activities:
Purchases of property and equipment, net	(495)		(405)

Purchases of nonperforming loan portfolios	(245,817)		(219,030)
Recoveries applied to negative allowance	251,660		225,709
Purchases of investments	(48,247)		(60,057)
Proceeds from sales and maturities of investments	58,110		62,762



Net cash provided by investing activities	15,211		8,979
Cash flows from financing activities:
Proceeds from lines of credit	153,171		243,431
Principal payments on lines of credit	(86,435)		(199,377)


Proceeds from issuance of Senior Notes due 2028	—		400,000
Principal payments on long-term debt	(5,000)		(2,500)


Payments of origination cost and fees	(117)		(5,114)
Tax withholdings related to share-based payments	(1,469)		(5,683)
Distributions to noncontrolling interests	(11,332)		—


Net increase/(decrease) in interest-bearing deposits	4,004		(4,951)


Net cash provided by financing activities	52,822		425,806
Effect of exchange rates on cash	861		3,656
Net increase/(decrease) in cash, cash equivalents and restricted cash	(4,105)		390,920
Cash, cash equivalents and restricted cash, beginning of period	113,692		84,759
Cash, cash equivalents and restricted cash, end of period	$	109,587	$	475,679
Supplemental disclosure of cash flow information:
Cash paid for interest	$	76,677	$	25,081
Cash paid for income taxes	8,616		10,555


Reconciliation to Balance Sheet accounts:
Cash and cash equivalents	$	108,100	$	116,471
Restricted cash included in Other assets	1,487		359,208
Cash, cash equivalents and restricted cash	$	109,587	$	475,679

The accompanying notes are an integral part of these Consolidated Financial Statements.

PRA Group, Inc.

Notes to Consolidated Financial Statements

1. Organization and Business:

Nature of operations: As used herein, the terms "PRA Group," the "Company," or similar terms refer to PRA Group, Inc. and its subsidiaries.

PRA Group, Inc., a Delaware corporation, is a global financial and business services company with operations in the Americas, Europe and Australia. The Company's primary business is the purchase, collection and management of portfolios of nonperforming loans. The Company also provides fee-based services on class action claims recoveries in the United States ("U.S.").

Basis of presentation: The Consolidated Financial Statements of the Company are prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The accompanying interim financial statements have been prepared in accordance with the instructions for Quarterly Reports on Form 10-Q, and therefore, do not include all information and Notes to the Consolidated Financial Statements necessary for a complete presentation of financial position, results of operations, comprehensive income/(loss) and cash flows in conformity with GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the Company's Consolidated Balance Sheets as of March 31, 2024, and the Consolidated Income Statements, Statements of Comprehensive Income, Statements of Changes in Equity and Statements of Cash Flows for the three months ended March 31, 2024 and 2023, have been included. The Consolidated Financial Statements include the accounts of PRA Group and other entities in which the Company has a controlling interest. All significant intercompany accounts and transactions have been eliminated.

These unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Form 10-K"). For further discussion of the Company's significant accounting policies, refer to Note 1 to the Consolidated Financial Statements in the 2023 Form 10-K. There were no material changes to these policies during the three months ended March 31, 2024.

The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. Realized results could differ from those estimates and assumptions, and the Company's Consolidated Income Statements for the three months ended March 31, 2024 may not be indicative of future results.

Reclassification of prior year presentation: Certain prior period amounts have been reclassified for consistency with the current period presentation. In the Consolidated Statements of Cash Flows, changes in Accrued expenses, Accounts payable and Other liabilities are now presented as a single line-item within Changes in operating assets and liabilities.

2. Finance Receivables, net:

Finance receivables, net consisted of the following as of March 31, 2024 and December 31, 2023 (amounts in thousands):


	March 31, 2024		December 31, 2023
Amortized cost	$	—	$	—
Negative allowance for expected recoveries	3,650,195		3,656,598
Balance at end of period	$	3,650,195	$	3,656,598

PRA Group, Inc.

Notes to Consolidated Financial Statements

Changes in the negative allowance for expected recoveries by portfolio segment for the three months ended March 31, 2024 and 2023 were as follows (amounts in thousands):


	Three Months Ended March 31, 2024
	Core		Insolvency		Total
Balance at beginning of period	$	3,295,214	$	361,384	$	3,656,598
Initial negative allowance for expected recoveries - portfolio acquisitions (1)	218,657		27,160		245,817
Foreign currency translation adjustment	(50,127)		(2,107)		(52,234)
Recoveries applied to negative allowance (2)	(215,216)		(36,444)		(251,660)
Changes in expected recoveries (3)	49,564		2,110		51,674
Balance at end of period	$	3,298,092	$	352,103	$	3,650,195


	Three Months Ended March 31, 2023
	Core		Insolvency		Total
Balance at beginning of period	$	2,936,207	$	358,801	$	3,295,008
Initial negative allowance for expected recoveries - portfolio acquisitions (1)	207,322		22,903		230,225
Foreign currency translation adjustment	19,835		4,050		23,885
Recoveries applied to negative allowance (2)	(186,386)		(39,323)		(225,709)
Changes in expected recoveries (3)	(41,128)		4,216		(36,912)
Balance at end of period	$	2,935,850	$	350,647	$	3,286,497

(1) Initial negative allowance for expected recoveries - portfolio acquisitions

Portfolio acquisitions for the three months ended March 31, 2024 and 2023 were as follows (amounts in thousands):


	Three Months Ended March 31, 2024
	Core		Insolvency		Total
Face value	$	1,708,631	$	114,216	$	1,822,847
Noncredit discount	(231,385)		(13,442)		(244,827)
Allowance for credit losses at acquisition	(1,258,589)		(73,614)		(1,332,203)
Purchase price	$	218,657	$	27,160	$	245,817


	Three Months Ended March 31, 2023
	Core		Insolvency		Total
Face value	$	1,507,965	$	104,809	$	1,612,774
Noncredit discount	(150,511)		(8,042)		(158,553)
Allowance for credit losses at acquisition	(1,150,132)		(73,864)		(1,223,996)
Purchase price	$	207,322	$	22,903	$	230,225

The initial negative allowance recorded on portfolio acquisitions for the three months ended March 31, 2024 and 2023 was as follows (amounts in thousands):


	Three Months Ended March 31, 2024
	Core		Insolvency		Total
Allowance for credit losses at acquisition	$	(1,258,589)	$	(73,614)	$	(1,332,203)
Writeoffs, net	1,258,589		73,614		1,332,203
Expected recoveries	218,657		27,160		245,817
Initial negative allowance for expected recoveries	$	218,657	$	27,160	$	245,817

PRA Group, Inc.

Notes to Consolidated Financial Statements


	Three Months Ended March 31, 2023
	Core		Insolvency		Total
Allowance for credit losses at acquisition	$	(1,150,132)	$	(73,864)	$	(1,223,996)
Writeoffs, net	1,150,132		73,864		1,223,996
Expected recoveries	207,322		22,903		230,225
Initial negative allowance for expected recoveries	$	207,322	$	22,903	$	230,225

(2) Recoveries applied to negative allowance

Recoveries applied to the negative allowance for the three months ended March 31, 2024 and 2023 were as follows (amounts in thousands):


	Three Months Ended March 31, 2024
	Core		Insolvency		Total
Recoveries (a)	$	406,313	$	47,403	$	453,716
Less - amounts reclassified to portfolio income	191,097		10,959		202,056
Recoveries applied to negative allowance	$	215,216	$	36,444	$	251,660


	Three Months Ended March 31, 2023
	Core		Insolvency		Total
Recoveries (a)	$	364,236	$	49,715	$	413,951
Less - amounts reclassified to portfolio income	177,850		10,392		188,242
Recoveries applied to negative allowance	$	186,386	$	39,323	$	225,709

(a) Recoveries include cash collections, buybacks and other cash-based adjustments.

(3) Changes in expected recoveries

Changes in expected recoveries for the three months ended March 31, 2024 and 2023 were as follows (amounts in thousands):


	Three Months Ended March 31, 2024
	Core		Insolvency		Total
Changes in expected future recoveries	$	15,646	$	190	$	15,836
Recoveries received in excess of forecast	33,919		1,919		35,838
Changes in expected recoveries	$	49,565	$	2,109	$	51,674


	Three Months Ended March 31, 2023
	Core		Insolvency		Total
Changes in expected future recoveries	$	(41,414)	$	664	$	(40,750)
Recoveries received in excess of forecast	286		3,552		3,838
Changes in expected recoveries	$	(41,128)	$	4,216	$	(36,912)

In order to estimate future cash collections, the Company considers factors such as historical collections performance and its view of economic conditions and consumer habits in the various geographies in which the Company operates. Based on these considerations, adjustments to estimated remaining collections ("ERC") may incorporate changes in both the amounts and the timing of expected cash collections over the forecast period.

Changes in expected recoveries for the three months ended March 31, 2024 were $51.7 million. This was primarily due to $35.8 million in recoveries received in excess of forecast (cash collections overperformance), due largely to collections performance in the U.S., driven by the impact of the Company's cash-generating initiatives and supplemented by tax refund seasonality, as well as collections performance in Brazil and Europe. The changes in expected future recoveries of $15.8 million reflect the Company's assessment of certain pools in Europe, Brazil and the U.S., resulting in increases to the expected cash flows.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Changes in expected recoveries for the three months ended March 31, 2023 were a net negative $36.9 million. This included $3.8 million in recoveries received in excess of forecast (cash collections overperformance) and a $40.8 million negative adjustment to changes in expected future recoveries. Overperformance decreased by $19.8 million as a result of reduced cash collections primarily in the U.S. due to a slower tax season. The changes in expected future recoveries reflected the Company's assessment of certain pools resulting in a reduction of expected cash flows as a result of slowing collection performance in the U.S. call centers resulting from weak economic conditions.

3. Investments:

Investments consisted of the following as of March 31, 2024 and December 31, 2023 (amounts in thousands):


	March 31, 2024		December 31, 2023


Debt securities



Available-for-sale	$	47,149	$	59,470


Equity securities
Private equity funds	2,243		2,451
Equity method investment	9,487		10,483

Total investments	$	58,879	$	72,404

Debt Securities

Government securities: As of March 31, 2024, the Company's available-for-sale debt securities consisted of Swedish treasury securities, all of which mature within one year. As of March 31, 2024 and December 31, 2023, the amortized cost and fair value of these investments were as follows (amounts in thousands):


	March 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
Available-for-sale


Government securities	$	47,037	$	112	$	—	$	47,149



	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
Available-for-sale

Government securities	$	59,404	$	66	$	—	$	59,470

Equity Method Investment

The Company has an 11.7% interest in RCB Investimentos S.A. ("RCB"), a servicing platform for nonperforming loans in Brazil, accounted for under the equity method.

4. Goodwill:

The Company performs an annual review of goodwill as of October 1 of each year, or more frequently if indicators of impairment exist, with the most recent annual review performed as of October 1, 2023. The Company performed a quarterly assessment by evaluating whether any triggering events had occurred as of March 31, 2024, which included considering current market conditions, and determined that goodwill was not more-likely-than-not impaired. Changes in goodwill for the three months ended March 31, 2024 and 2023, were as follows (amounts in thousands):


	Three Months Ended March 31,
	2024		2023
Balance as of beginning of period	$	431,564	$	435,921






Foreign currency translation	(19,718)		(15,274)
Balance as of end of period	$	411,846	$	420,647

PRA Group, Inc.

Notes to Consolidated Financial Statements

5. Borrowings:

Borrowings consisted of the following as of March 31, 2024 and December 31, 2023 (amounts in thousands):


	March 31, 2024		December 31, 2023
North American revolving credit facility (1)	$	504,180	$	396,303
United Kingdom revolving credit facility (2)	487,065		502,847
European revolving credit facility (3)	489,391		538,565
North American term loan (4)	437,500		442,500
Senior notes (5)	1,046,000		1,046,000

Total gross borrowings	2,964,136		2,926,215
Less: Debt discount and issuance costs	(11,088)		(11,945)
Borrowings	$	2,953,048	$	2,914,270

(1)Revolving credit facility under the Company's North American Revolving Credit and Term Loan (the "North American Credit Agreement"), which includes an aggregate principal amount of $1.5 billion (subject to compliance with a borrowing base and applicable debt covenants), consisting of (i) a fully-funded $437.5 million term loan (the "Term Loan"), (ii) a $1.0 billion domestic revolving credit facility, and (iii) a $75.0 million Canadian revolving credit facility, maturing on July 30, 2026.

(2)Revolving credit facility under the Company's United Kingdom ("UK") Credit Agreement (the "UK Credit Agreement"), consisting of an $800.0 million revolving credit facility (subject to a borrowing base), and an accordion feature for up to $200.0 million in additional commitments, subject to certain conditions, maturing on July 30, 2026.

(3)Revolving credit facility under the Company's European Credit Agreement (the "European Credit Agreement"), providing revolving borrowings for an aggregate amount of approximately €730.0 million (subject to the borrowing base and applicable debt covenants), and an accordion feature for up to €500.0 million, subject to certain conditions, maturing on November 23, 2027. During the three months ended March 31, 2024, the lenders under the European Credit Agreement consented to an increase in the limit for interest bearing deposits in AK Nordic AB from SEK1.2 billion to SEK2.2 billion.

(4)Term Loan under the North American Credit Agreement.

(5)Comprised of the Senior Notes due 2025 (the "2025 Notes"), Senior Notes due 2028 (the "2028 Notes") and the Senior Notes due 2029 (the "2029 Notes" and, together with the 2025 Notes and 2028 Notes, the "Senior Notes"), with outstanding principal balances of $298.0 million, $398.0 million and $350.0 million, respectively, as of March 31, 2024 and December 31, 2023.

For additional details about the Company's credit facilities, Term Loan and Senior Notes, refer to Note 7 to the Consolidated Financial Statements in the 2023 Form 10-K. The Company determined that it was in compliance with the covenants contained in its financing arrangements as of March 31, 2024.

6. Derivatives:

The Company periodically enters into derivative financial instruments; typically interest rate swaps and foreign currency contracts, to reduce its exposure to fluctuations in interest rates on variable-rate debt and foreign currency exchange rates. Derivative financial instruments are recognized at fair value in the Company's Consolidated Balance Sheets. For further discussion of the Company's use of, and accounting policies for, derivative instruments, refer to Notes 1 and 8 to the Consolidated Financial Statements in the 2023 Form 10-K. The following table summarizes the fair value of derivative financial instruments as of March 31, 2024 and December 31, 2023 (amounts in thousands):

March 31, 2024

December 31, 2023

Balance Sheet Account

Fair Value

Balance Sheet Account

Fair Value

Derivatives designated as hedging instruments:

Interest rate contracts

Other assets

20,999

Other assets

21,770

Interest rate contracts

Other liabilities

7,071

Other liabilities

11,627

Derivatives not designated as hedging instruments:

Foreign currency contracts

Other assets

968

Other assets

1,007

Foreign currency contracts

Other liabilities

1,375

Other liabilities

8,776

Derivatives Designated as Hedging Instruments:

Changes in the fair value of derivative contracts designated as cash flow hedging instruments are recognized in other comprehensive income ("OCI"). As of March 31, 2024 and December 31, 2023, the notional amount of interest rate contracts designated as cash flow hedging instruments was $812.9 million and $872.3 million, respectively. Derivatives designated as

PRA Group, Inc.

Notes to Consolidated Financial Statements

cash flow hedging instruments remained highly effective as of March 31, 2024, and have remaining terms from eight months to four years. As of March 31, 2024, the Company estimates that $12.8 million of net derivative gains included in OCI will be reclassified into earnings within the next 12 months.

The following tables summarize the effects of derivatives designated as cash flow hedging instruments for the three months ended March 31, 2024 and 2023 (amounts in thousands):


	Gain/(loss) recognized in OCI, net of tax
	Three Months Ended March 31,
Hedging instrument	2024		2023
Interest rate contracts	$	7,070	$	(629)

	Gain/(loss) reclassified from OCI into income
	Three Months Ended March 31,
Income statement account	2024		2023
Interest expense, net	$	5,674	$	(5,498)

Derivatives Not Designated as Hedging Instruments:

The Company enters into foreign currency contracts to economically hedge foreign currency remeasurement exposure related to certain balances denominated in currencies other than the functional currency of the Company or its international subsidiaries. Changes in fair value of derivative contracts not designated as hedging instruments are recognized in earnings. As of March 31, 2024 and December 31, 2023, the notional amount of foreign currency contracts was $307.4 million and $368.5 million, respectively.

The following table summarizes the effects of derivatives not designated as hedging instruments for the three months ended March 31, 2024 and 2023 (amounts in thousands):


		Gain/(loss) recognized in income
		Three Months Ended March 31,
Derivatives not designated as hedging instruments	Income statement account	2024		2023
Foreign currency contracts	Foreign exchange gain/(loss), net	$	100	$	(7,697)
Foreign currency contracts	Interest expense, net	192		521

7. Fair Value:

As defined by ASC Topic 820, "Fair Value Measurement and Disclosures" ("ASC 820"), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires the consideration of different input levels in the determination of fair value, as follows:

•Level 1: Quoted prices in active markets for identical assets and liabilities.

•Level 2: Observable inputs other than Level 1 quoted prices, such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

•Level 3: Unobservable inputs that are supported by little or no market activity. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Financial Instruments Not Carried at Fair Value

As of March 31, 2024 and December 31, 2023, the carrying amounts and estimated fair values of financial instruments not carried at fair value were as follows (amounts in thousands):


	March 31, 2024				December 31, 2023
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	108,100	$	108,100	$	112,528	$	112,528


Finance receivables, net	3,650,195		3,172,948		3,656,598		3,167,798
Financial liabilities:
Interest-bearing deposits	113,259		113,259		115,589		115,589
Revolving lines of credit	1,480,636		1,480,636		1,437,715		1,437,715
Term Loan (1)	437,500		437,500		442,500		442,500
Senior Notes (1)	1,046,000		988,926		1,046,000		964,907

(1)Carrying amounts and estimated fair values do not include debt issuance costs.

The Company uses the following methods and assumptions to estimate the fair value of the above financial instruments:

Cash equivalents: Carrying amount approximates fair value due to the short-term nature of the instruments and the observable quoted prices for identical assets in active markets. Accordingly, the Company uses Level 1 inputs.

Finance receivables, net: The Company estimates the fair value of these receivables using proprietary pricing models that the Company utilizes to make portfolio acquisition decisions. Accordingly, the Company's fair value estimates use Level 3 inputs as there is little observable market data available and management is required to use significant judgment in its estimates.

Interest-bearing deposits: Carrying amount approximates fair value due to the short-term nature of the deposits and the observable quoted prices for similar instruments in active markets. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

Revolving lines of credit: Carrying amount approximates fair value due to the short-term nature of the interest rate periods and the observable quoted prices for similar instruments in active markets. Accordingly, the Company uses Level 2 inputs for its fair value estimate.

Term loan: Carrying amount approximates fair value due to the short-term nature of the interest rate periods and the observable quoted prices for similar instruments in active markets. Accordingly, the Company uses Level 2 inputs for its fair value estimate.

Senior Notes: Fair value estimates for the Senior Notes incorporate quoted market prices obtained from secondary market broker quotes, which were derived from a variety of inputs, including client orders, information from their pricing vendors, modeling software and actual trading prices when they occur. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Financial Instruments Carried at Fair Value

As of March 31, 2024 and December 31, 2023, financial instruments measured at fair value on a recurring basis were as follows (amounts in thousands):


	Fair Value Measurements as of March 31, 2024
	Level 1		Level 2		Level 3		Total
Assets:

Government securities	$	47,149	$	—	$	—	$	47,149


Derivative contracts (recorded in Other assets)	—		21,967		—		21,967
Liabilities:
Derivative contracts (recorded in Other liabilities)	—		8,446		—		8,446

	Fair Value Measurements as of December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:

Government securities	$	59,470	$	—	$	—	$	59,470


Derivative contracts (recorded in Other assets)	—		22,777		—		22,777
Liabilities:
Derivative contracts (recorded in Other liabilities)	—		20,403		—		20,403

The Company uses the following methods and assumptions to estimate the fair value of the above financial instruments:

Government securities: Fair value of the Company's investments in government securities is estimated using quoted market prices. Accordingly, the Company uses Level 1 inputs.

Derivative contracts: Fair value of derivative contracts is estimated using industry standard valuation models. These models project future cash flows and discount the future amounts to present value using market-based observable inputs, including interest rate curves and other factors. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

8. Accumulated Other Comprehensive Loss:

Reclassifications out of Accumulated other comprehensive loss for the three months ended March 31, 2024 and 2023, were as follows (amounts in thousands):


	Three Months Ended March 31,
Gain on cash flow hedges	2024		2023		Income Statement Account
Interest rate swaps	$	5,674	$	5,498	Interest expense, net
Income tax effect of item above (1)	(1,413)		(1,296)		Income tax expense/(benefit)
Total gain on cash flow hedges	$	4,261	$	4,202

(1)Income tax effects are released from Accumulated other comprehensive loss contemporaneously with the related gross pretax amount.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Changes in Accumulated other comprehensive loss by component, after tax, for the three months ended March 31, 2024 and 2023, were as follows (amounts in thousands):


	Three Months Ended March 31, 2024
	Debt Securities		Cash Flow		Currency Translation		Accumulated Other
	Available-for-sale		Hedges		Adjustments		Comprehensive Loss (1)
Balance as of beginning of period	$	65	$	6,597	$	(336,561)	$	(329,899)
Other comprehensive gain/(loss) before reclassifications	46		7,070		(45,973)		(38,857)
Reclassifications, net	—		(4,262)		—		(4,262)
Net current period other comprehensive gain/(loss)	46		2,808		(45,973)		(43,119)
Balance as of end of period	$	111	$	9,405	$	(382,534)	$	(373,018)

	Three Months Ended March 31, 2023
	Debt Securities		Cash Flow		Currency Translation		Accumulated Other
	Available-for-sale		Hedges		Adjustments		Comprehensive Loss (1)
Balance as of beginning of period	$	(237)	$	27,804	$	(375,493)	$	(347,926)
Other comprehensive gain/(loss) before reclassifications	128		(629)		(4,101)		(4,602)
Reclassifications, net	—		(4,202)		—		(4,202)
Net current period other comprehensive gain/(loss)	128		(4,831)		(4,101)		(8,804)
Balance as of end of period	$	(109)	$	22,973	$	(379,594)	$	(356,730)

(1) Net of deferred taxes for unrealized (gains)/losses from cash flow hedges of $(3.1) million and $(7.6) million for the three months ended March 31, 2024 and 2023, respectively.

9. Earnings per Share:

Basic earnings per share ("EPS") are computed by dividing net income available to common stockholders of PRA Group, Inc. by weighted average common shares outstanding. Diluted EPS are computed using the same components as basic EPS, with the denominator adjusted for nonvested share awards, if dilutive. Share-based awards that are contingent upon the attainment of performance goals are included in the computation of diluted EPS if the effect is dilutive. The dilutive effect of nonvested shares is computed using the treasury stock method, which assumes any proceeds that could be obtained upon the vesting of nonvested shares would be used to purchase common shares at the average market price for the period.

The following table provides a reconciliation between the computation of basic and diluted EPS for the three months ended March 31, 2024 and 2023 (amounts in thousands, except per share amounts):


	Three Months Ended March 31,
	2024					2023
	Net Income Attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS		Net Loss Attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS
Basic EPS	$	3,475	39,274	$	0.09	$	(58,629)	39,033	$	(1.50)
Dilutive effect of nonvested share awards	—		174	—		—		—	—

Diluted EPS	$	3,475	39,448	$	0.09	$	(58,629)	39,033	$	(1.50)

PRA Group, Inc.

Notes to Consolidated Financial Statements

10. Commitments and Contingencies:

Forward Flow Agreements:

The Company enters into forward flow agreements for the purchase of nonperforming loans. These agreements typically have terms ranging from six to 12 months, or they can be open-ended, and establish purchase prices and specific criteria for the accounts to be purchased. Some of the agreements establish a volume reference for the contract term in the form of a target or maximum, however, very few agreements establish a minimum contractual obligation, and many of the contracts contain early termination provisions allowing either party to cancel the agreements in accordance with a specified notice period. The amounts purchased are also dependent on actual delivery by the sellers, and while purchases under these agreements comprise a significant portion of the Company's overall purchases, as of March 31, 2024, the minimum purchase obligation under these forward flow agreements was not significant.

Litigation and Regulatory Matters:

The Company and its subsidiaries are from time-to-time subject to a variety of legal and regulatory claims, inquiries and proceedings and regulatory matters, most of which are incidental to the ordinary course of its business. The Company initiates lawsuits against customers and is occasionally countersued by them in such actions. Also, customers, either individually, as members of a class action, or through a governmental entity on behalf of customers, may initiate litigation against the Company in which they allege that the Company has violated a law in the process of collecting on an account. From time-to-time, other types of lawsuits are brought against the Company. Additionally, the Company receives subpoenas and other requests or demands for information from regulators or governmental authorities who are investigating the Company's debt collection activities.

The Company accrues for potential liability arising from legal proceedings and regulatory matters when it is probable that such liability has been incurred and the amount of the loss can be reasonably estimated. This determination is based upon currently available information for those proceedings in which the Company is involved, taking into account the Company's best estimate of such losses for those cases for which such estimates can be made. The Company's estimate involves significant judgment, given the varying stages of the proceedings (including the fact that many of them are currently in preliminary stages), the number of unresolved issues in many of the proceedings (including issues regarding class certification and the scope of many of the claims), and the related uncertainty of the potential outcomes of these proceedings. In making determinations of the likely outcome of pending litigation, the Company considers many factors, including, but not limited to, the nature of the claim, the Company's experience with similar types of claims, the jurisdiction in which the matter is filed, input from outside legal counsel, the likelihood of resolving the matter through alternative mechanisms, the matter's current status and the damages sought or demands made. Accordingly, the Company's estimate will change from time to time, and actual losses could exceed the current estimate.

In certain legal proceedings, the Company may have recourse to insurance or third-party contractual indemnities to cover all or portions of its litigation expenses, judgments, or settlements. Loss estimates and accruals for potential liability related to legal proceedings are typically exclusive of potential recoveries, if any, under the Company's insurance policies or third-party indemnities.

The Company believes that the estimate of the aggregate range of reasonably possible losses in excess of the amount accrued for its legal proceedings outstanding as of March 31, 2024, where the range of loss can be estimated, was not material. As of March 31, 2024, there were no material developments in any of the legal proceedings included in Note 14 to the Consolidated Financial Statements in the 2023 Form 10-K, and there were no new material legal proceedings during the three months ended March 31, 2024.

11. Recently Issued Accounting Standards:

Recently issued accounting standards not yet adopted:

The Company does not expect that any recently issued accounting pronouncements will have a material effect on its Consolidated Financial Statements.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

All references in this Quarterly Report on Form 10-Q ("Quarterly Report") to "PRA Group," "we," "our," "us," "the Company" or similar terms are to PRA Group, Inc. and its subsidiaries.

Forward-Looking Statements:

This Quarterly Report contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical fact are forward-looking statements, including statements regarding cash collection trends, operating cost trends, liquidity and capital needs and other statements of expectations, beliefs, future plans, strategies and anticipated events or trends. Our results could differ materially from those expressed or implied by such forward-looking statements, or our forward-looking statements could be wrong, as a result of risks, uncertainties and assumptions, including the following:

•a deterioration in the economic or inflationary environment in the markets in which we operate;

•our ability to replace our portfolios of nonperforming loans with additional portfolios sufficient to operate efficiently and profitably and/or purchase nonperforming loans at appropriate prices;

•our ability to collect sufficient amounts on our nonperforming loans to fund our operations, including as a result of restrictions imposed by local, state, federal and international laws and regulations;

•a disruption or failure by any of our outsourcing or offshoring third party service providers to meet their obligations and our service level expectations;

•our ability to successfully implement our strategic and operational initiatives in our U.S. business;

•changes in accounting standards and their interpretations;

•the impact of a disease outbreak on the markets in which we operate and our inability to successfully manage the challenges associated with a disease outbreak, including epidemics, pandemics or similar widespread public health concerns;

•the occurrence of goodwill impairment charges;

•loss contingency accruals that are inadequate to cover actual losses;

•our ability to manage risks associated with our international operations;

•changes in local, state, federal or international laws or the interpretation of these laws, including tax, bankruptcy and collection laws;

•our ability to comply with existing and new regulations of the collection industry;

•changes in tax provisions or exposure to additional tax liabilities;

•investigations, reviews, or enforcement actions by governmental authorities, including the Consumer Financial Protection Bureau ("CFPB");

•our ability to comply with data privacy regulations such as the General Data Protection Regulation ("GDPR");

•adverse outcomes in pending litigation or administrative proceedings;

•our ability to retain, expand, renegotiate or replace our credit facilities and our inability to comply with the covenants under our financing arrangements;

•our ability to manage effectively our capital and liquidity needs, including as a result of changes in credit or capital markets or adverse changes in our credit ratings, whether due to concerns about our industry in general, the financial condition of our competitors, or other factors;

•changes in interest or exchange rates;

•default by or failure of one or more of our counterparty financial institutions;

•disruptions of business operations caused by cybersecurity incidents or the underperformance or failure of information technology infrastructure, networks or communication systems; and

•the "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 Form 10-K") and in other filings with the Securities and Exchange Commission.

You should assume that the information appearing in this Quarterly Report is accurate only as of the date it was issued. Our business, financial condition, results of operations and prospects may have changed since that date. The future events, developments or results described in, or implied by, this Quarterly Report could turn out to be materially different. Except as required by law, we assume no obligation to publicly update or revise our forward-looking statements after the date of this Quarterly Report and you should not expect us to do so.

Frequently Used Terms

We may use the following terminology throughout this Quarterly Report:

•"Buybacks" refers to purchase price refunded by the seller due to the return of ineligible nonperforming loan accounts.

•"Cash collections" refers to collections on our nonperforming loan portfolios.

•"Cash receipts" refers to cash collections on our nonperforming loan portfolios, fees and revenue recognized from our class action claims recovery services.

•"Change in expected recoveries" refers to the differences of actual recoveries received when compared to expected recoveries and the net present value of changes in estimated remaining collections.

•"Core" accounts or portfolios refer to accounts or portfolios that are nonperforming loans and are not in an insolvent status upon acquisition. These accounts are aggregated separately from insolvency accounts.

•"Estimated remaining collections" or "ERC" refers to the sum of all future projected cash collections on our nonperforming loan portfolios.

•"Finance receivables" or "receivables" refers to the negative allowance for expected recoveries recorded on our balance sheet as an asset.

•"Insolvency" accounts or portfolios refer to accounts or portfolios of nonperforming loans that are in an insolvent status when we purchase them and as such are purchased as a pool of insolvent accounts. These accounts include Individual Voluntary Arrangements ("IVAs"), Trust Deeds in the UK, Consumer Proposals in Canada and bankruptcy accounts in the U.S., Canada, Germany and the UK.

•"Negative allowance" refers to the present value of cash flows expected to be collected on our finance receivables.

•"Portfolio acquisitions" refers to all nonperforming loan portfolios acquired as a result of a purchase or added as a result of a business acquisition.

•"Portfolio purchases" refers to all nonperforming loan portfolios purchased in the normal course of business and excludes those added as a result of business acquisitions.

•"Portfolio income" reflects revenue recorded due to the passage of time using the effective interest rate calculated based on the purchase price of nonperforming loan portfolios and estimated remaining collections.

•"Purchase price" refers to the cash paid to a seller to acquire nonperforming loans.

•"Purchase price multiple" refers to the total estimated collections on our nonperforming loan portfolios divided by purchase price.

•"Recoveries" refers to cash collections plus buybacks and other adjustments.

•"Total estimated collections" or "TEC" refers to actual cash collections plus estimated remaining collections on our nonperforming loan portfolios.

Executive Overview

We are a global financial and business services company with operations in the Americas, Europe and Australia. Our primary business is the purchase, collection and management of portfolios of nonperforming loans. We are headquartered in Norfolk, Virginia, and our shares of common stock are traded on the Nasdaq Global Select Market under the symbol "PRAA".

For the first quarter of 2024, we generated:

•Total portfolio purchases of $245.8 million.

•Total cash collections of $449.5 million.

•Cash efficiency ratio of 58.0%.

•Diluted earnings per share of $0.09.

•ERC of $6.5 billion as of March 31, 2024.

Building on the momentum from last year, we began 2024 on a positive note, with higher cash collections in the Americas and Europe compared to Q1 2023. Although we are seeing fewer large one-time payments in the U.S. and some markets in Europe, our level of customer engagement and the proportion of customers paying us both remain fairly steady.

We remain disciplined with regards to pricing and are strategically deploying capital in the markets where we see the most attractive returns, and the combination of increased purchases and improved pricing is positively impacting portfolio income. Our roadmap to enhanced profitability is centered on the creation of value from higher cash collections, while reducing marginal costs, and is supported by three pillars:

1.Optimizing investments - increasing ERC and portfolio returns.

2.Driving operational execution - maximizing cash collected per dollar invested.

3.Managing expenses - optimizing our cost structure.

In the U.S., we continue to capitalize on the significant growth in U.S. portfolio supply driven by credit normalization. We recorded our second highest Q1 U.S. investment level in Company history and expect strong portfolio investments to continue. There is a strong correlation between U.S. credit card charge-off rates and our U.S. portfolio purchases, and in recent years, we have seen industry credit card balances and delinquency and charge-off rates continue to rise. Across our U.S. call centers, we have continued to refine and optimize our customer contact strategies and built capacity to support portfolio growth. We have also made improvements to our overall legal collection processes, and we are encouraged by the pace at which we are realizing cash collections from these process enhancements. In Brazil, our cash collections in Q1 2024 continued to benefit from higher recent purchasing levels.

In Europe, investment opportunities are less predictable than the U.S., since the market is more spot-driven, and we have not seen large spot transactions similar to those that have come to market previously. The volume of portfolios available for sale in Q1 2024 was lower than normal, however, we are seeing an uptick in market volumes, and we expect that our investments in the second quarter will align more closely with long-term trends.

Summary of Selected Financial Data


As of or for the period ended (in thousands, except per share, ratio, headcount data or where otherwise noted)	March 31, 2024			March 31, 2023	Change
Selected Income statement data:
Portfolio income	$	202,056			$	188,242		$	13,814
As a % of total revenues	79.1		%		121.1		%	(42.0)		%
Changes in expected recoveries	51,674				(36,912)			88,586
As a % of total revenues	20.2		%		(23.7)		%	43.9		%
Operating expenses	189,190				189,114			76
As a % of total revenues	74.0		%		121.6		%	(47.6)		%
Interest expense, net	52,278				38,283			13,995
As a % of total revenues	20.5		%		24.6		%	(4.1)		%
Income tax expense/(benefit)	2,386				(18,683)			21,069
As a % of total revenues	0.9		%		(12.0)		%	12.9		%
Net income/(loss) attributable to PRA Group	3,475				(58,629)			62,104
As a % of total revenues	1.4		%		(37.7)		%	39.1		%
Common share data:
Diluted earnings per share	$	0.09			$	(1.50)		$	1.59
Diluted average common shares outstanding	39,448				39,033			415
Common shares outstanding (period-end)	39,345				39,170			175
Portfolio volumes:
Total portfolio purchases	$	245,817			$	230,225		$	15,592
Total cash collections	449,518				411,284			38,234
Estimated remaining collections	6,498,172				5,674,681			823,491
Selected Balance sheet data (period-end):
Finance receivables, net	$	3,650,195			$	3,286,497		$	363,698
Borrowings	2,953,048				2,937,895			15,153
Total stockholders' equity - PRA Group, Inc.	1,129,326				1,158,343			(29,017)
Selected Performance data and ratios:
Cash efficiency ratio (1)	58.0		%		54.3		%	3.7		%
Net loss attributable to PRA Group (last 12 months)	$	(21,373)			$	(83,477)		$	62,104
Adjusted EBITDA (last 12 months) (2)	1,043,534				1,015,451			28,083
Debt to Adjusted EBITDA (3)	2.83 x				2.89 x			(0.06) x

Return on average Total stockholders' equity - PRA Group (4)	1.2		%		(19.7)		%	20.9		%
Return on average tangible equity (5)	1.9		%		(30.7)		%	32.6		%
Availability under credit facilities (period-end):
Availability based on current ERC	$	366,927			$	436,807		$	(69,880)
Additional availability	855,211				1,162,662			(307,451)
Total availability	1,222,138				1,599,469			(377,331)
Headcount (full-time equivalents)	3,119				3,184			(65)

(1)Calculated by dividing cash receipts less operating expenses by cash receipts. Cash receipts refers to cash collections on our nonperforming loan portfolios, fees and revenue recognized from our class action claims recovery services.

(2)Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") is a non-GAAP financial measure. Refer to section "Non-GAAP Financial Measure s " for a reconciliation of Net Income/(loss) attributable to PRA Group, the most directly comparable financial measure calculated and reported in accordance with GAAP, to Adjusted EBITDA.

(3)Debt to Adjusted EBITDA is a non-GAAP financial measure, which is calculated by dividing Borrowings by Adjusted EBITDA. Refer to section "Non-GAAP Financial Measures" for additional information.

(4)Calculated by dividing annualized net income income/(loss) attributable to PRA Group by average total stockholders' equity - PRA Group for the period.

(5)Return on average tangible equity ("ROATE") is a non-GAAP financial Measure. Average tangible equity ("ATE") is also a non-GAAP financial measure. Refer to section "Non-GAAP Financial Measures" for a reconciliation of Total stockholders' equity - PRA Group, the most directly comparable financial measure calculated and reported in accordance with GAAP, to ATE.

First Quarter 2024 ("Q1 2024") Compared To First Quarter 2023 ("Q1 2023")

Cash Collections

Cash collections were as follows (amounts in thousands):


	First Quarter
	2024		2023		$ Change		% Change
Americas and Australia Core	$	256,861	$	227,960	$	28,901	12.7	%
Americas Insolvency	25,209		25,751		(542)		(2.1)
Europe Core	145,933		134,005		11,928		8.9
Europe Insolvency	21,515		23,568		(2,053)		(8.7)
Total cash collections	$	449,518	$	411,284	$	38,234	9.3	%
Cash collections adjusted (1)	$	449,518	$	419,044	$	30,474	7.3	%

(1)Cash collections adjusted refers to Q1 2023 foreign currency cash collections remeasured at Q1 2024 average U.S. dollar exchange rates.

Cash collections were $449.5 million in Q1 2024, an increase of $38.2 million, or 9.3%, compared to $411.3 million in Q1 2023. The increase was primarily due to an increase in U.S. Core collections of $21.4 million, driven largely by higher recent purchasing levels and the impact of our cash-generating initiatives, which were supplemented by tax refund seasonality. Also contributing to the increase were higher cash collections in Europe and Brazil of $9.8 million and $6.7 million, respectively, primarily due to higher recent purchasing levels.

Revenues

Revenues were as follows (amounts in thousands):


	First Quarter
	2024		2023		$ Change		% Change
Portfolio income	$	202,056	$	188,242	$	13,814	7.3	%
Changes in expected recoveries	51,674		(36,912)		88,586		240.0
Total portfolio revenue	253,730		151,330		102,400		67.7
Other revenue	1,856		4,140		(2,284)		(55.2)
Total revenues	$	255,586	$	155,470	$	100,116	64.4	%

Total Portfolio Revenue

Total portfolio revenue was $253.7 million in Q1 2024, an increase of $102.4 million, or 67.7%, compared to $151.3 million in Q1 2023. This increase was primarily due to the increase in changes in expected recoveries, driven mainly by cash collections overperformance in the U.S., Brazil and Europe, and a net increase to the ERC of certain pools in Q1 2024 compared to a net decrease in the prior year period. The increase in portfolio income was primarily due to the impact of higher purchasing and improved returns in the U.S. beginning in 2023.

Operating Expenses

Total operating expenses of $189.2 million in Q1 2024 were flat compared to Q1 2023, increasing by $0.1 million.

Compensation and Employee Services

Compensation and employee services were $73.6 million in Q1 2024, a decrease of $8.8 million, or 10.7%, compared to $82.4 million in Q1 2023. The decrease mainly reflects severance expenses of $7.5 million incurred in Q1 2023, and despite adding to our U.S. call center employee base to service the larger volume of accounts, adjusting for those severances expenses, compensation and employee services expenses were lower compared to the prior year period.

Legal Collection Fees

Legal collection fees were $12.1 million in Q1 2024, an increase of $3.3 million, or 37.3%, compared to $8.8 million in Q1 2023. Legal collection fees represent contingent fees incurred for the cash collections generated by our third-party attorney network. The increase mainly reflects higher external legal collections within our U.S. Core portfolio.

Legal Collection Costs

Legal collection costs were $26.7 million in Q1 2024, an increase of $2.8 million, or 11.7%, compared to $23.9 million in Q1 2023. Legal collection costs consist primarily of costs paid to courts where a lawsuit is filed for the purpose of attempting to collect on an account. The increase primarily reflects higher volumes of lawsuits filed in Europe, as well as the costs associated with our legal cash-generating initiatives in the U.S.

Agency Fees

Agency fees were $19.7 million in Q1 2024, an increase of $2.3 million, or 13.2%, compared to $17.4 million in Q1 2023. Agency fees primarily represent third-party collection fees. The increase was mainly due to the increase in cash collections in Brazil.

Communication

Communication expense was $12.6 million in Q1 2024, an increase of $2.1 million, or 19.9%, compared to $10.5 million in Q1 2023. Communication expense relates mainly to correspondence, network and calling costs associated with our revenue generating activities. The increase was primarily due to the expansion in account volumes.

Interest Expense, Net

Interest expense, net was $52.3 million in Q1 2024, an increase of $14.0 million, or 36.6%, compared to $38.3 million in Q1 2023. The increase was primarily due to higher average debt balances and increased interest rates in Q1 2024.

Interest expense, net consisted of the following (amounts in thousands):


	First Quarter
	2024		2023		$ Change		% Change
Interest on debt obligations and unused line fees	$	33,956	$	21,824	$	12,132	55.6	%
Interest on senior notes	18,203		15,073		3,130		20.8
Coupon interest on convertible notes	—		3,019		(3,019)		(100.0)
Amortization of loan fees and other loan costs	2,200		2,441		(241)		(9.9)
Interest income	(2,081)		(4,074)		1,993		(48.9)
Interest expense, net	$	52,278	$	38,283	$	13,995	36.6	%

Income Tax Expense/(Benefit)

Income tax expense was $2.4 million in Q1 2024 compared to a tax benefit of $18.7 million in Q1 2023. The increase was primarily due to higher income before taxes. In Q1 2024, our effective tax rate was 16.9% compared to an effective tax benefit rate of 25.7% in Q1 2023, due mainly to higher income before taxes, as well as changes in the mix of income from different taxing jurisdictions and the timing of discrete items.

Supplemental Performance Data

Finance Receivables Portfolio Performance

We purchase portfolios of nonperforming loans from a variety of credit originators or acquire portfolios through strategic acquisitions and segregate them into two main portfolio segments: Core or Insolvency, based on the status of the account upon acquisition. In addition, the accounts are segregated into geographical regions based upon where the account was acquired. Ultimately, accounts are aggregated into annual pools based on portfolio segment, geography and year of acquisition. Portfolios of accounts that were in an insolvency status at the time of acquisition are represented in the Insolvency tables below. All other acquisitions of portfolios of accounts are included in our Core portfolio tables as represented below. Once an account is initially segregated, it is not later transferred from an Insolvency pool to a Core pool or vice versa and the account continues to be accounted for as originally segregated regardless of any future changes in operational status. Specifically, if a Core account files for bankruptcy or insolvency protection after acquisition, we adjust our collection practices to comply with any respective bankruptcy or insolvency rules or policies; however, for accounting purposes, the account remains in the Core pool. In the event an insolvency account is dismissed from its bankruptcy or insolvency status whether voluntarily or involuntarily, we are typically free to pursue alternative collection activities; however, the account remains in the Insolvency pool.

The purchase price multiple represents our estimate of total cash collections over the original purchase price of the portfolio. Purchase price multiples can vary over time due to a variety of factors, including pricing competition, supply levels, paper type, age of the accounts acquired, mix of portfolios purchased, costs to collect, expected returns and changes in operational efficiency. For example, increased pricing due to elevated levels of competition or supply constraints negatively impacts purchase price multiples as we pay more to buy similar portfolios of nonperforming loans.

Further, there is a direct relationship between the price we pay for a portfolio, the purchase price multiple and the effective interest rate of the pool. When we pay more for a portfolio, the purchase price multiple and effective interest rates are generally lower. The opposite tends to occur when we pay less for a portfolio. Certain types of accounts have lower collection costs, and we generally pay more for these types of accounts, resulting in a lower purchase price multiple but similar net income margins when compared with other portfolio purchases. Within a given portfolio type, when lower purchase price multiples are the result of more competitive pricing, this generally leads to lower profitability. As portfolio pricing becomes more favorable, our profitability will tend to increase. Profitability within given Core portfolio types may also be impacted by the age and quality of the accounts, which impact the cost to collect those accounts. Fresher accounts, for example, typically carry lower associated collection costs, while older accounts and lower balance accounts typically carry higher costs and, as a result, require higher purchase price multiples to achieve the same net profitability as fresher paper.

Revenue recognition is driven by estimates of the amount and timing of future cash collections. We record new portfolio acquisitions at the purchase price, which reflects the amount we expect to collect discounted at an effective interest rate. During the year of acquisition, portfolios are aggregated into annual pools, and the blended effective interest rate will change to reflect new buying and new cash flow estimates until the end of the year. At that time, the purchase price amount is fixed at the aggregated amounts paid to acquire the portfolio, the effective interest rate is fixed at the amount we expect to collect, discounted at the rate to equate purchase price to the recovery estimate, and the currency rates are fixed for purposes of comparability in future periods. Depending on the level of performance and expected future impacts from our operations, we may update ERC and TEC levels based on the results of our cash forecasting with a correlating adjustment to the purchase price multiple. We follow an established process to evaluate ERC, and we typically do not adjust our ERC and TEC until we gain sufficient collection experience and confidence with a pool of accounts. Over time, our TEC has often increased as pools have aged resulting in the ratio of TEC to purchase price for any given year of buying to gradually increase.

The numbers presented in the following tables represent gross cash collections and do not reflect any costs to collect; therefore, they may not represent relative profitability. Due to all of the factors described above, readers should be cautious when making comparisons of purchase price multiples among periods and between types of categories of portfolio segments and related geographies.


Purchase Price Multiples as of March 31, 2024 Amounts in thousands
Purchase Period	Purchase Price (1)(2)		Total Estimated Collections (3)		Estimated Remaining Collections (4)		Current Purchase Price Multiple	Original Purchase Price Multiple (5)
Americas and Australia Core
1996-2013	$	1,932,722	$	5,735,181	$	53,058	297%	233%
2014	404,117		887,557		26,537		220%	204%
2015	443,114		903,490		35,096		204%	205%
2016	455,767		1,081,231		61,791		237%	201%
2017	532,851		1,204,662		98,626		226%	193%
2018	653,975		1,495,710		144,303		229%	202%
2019	581,476		1,294,975		159,210		223%	206%
2020	435,668		952,081		189,210		219%	213%
2021	435,846		745,705		325,686		171%	191%
2022	406,082		712,575		417,252		175%	179%
2023	622,583		1,227,658		1,038,459		197%	197%
2024	174,596		368,538		362,801		211%	211%
Subtotal	7,078,797		16,609,363		2,912,029
Americas Insolvency
1996-2013	1,266,056		2,502,843		54		198%	159%
2014	148,420		218,846		67		147%	124%
2015	63,170		88,037		51		139%	125%
2016	91,442		118,193		268		129%	123%
2017	275,257		357,959		1,435		130%	125%
2018	97,879		135,560		1,013		138%	127%
2019	123,077		168,504		12,379		137%	128%
2020	62,130		91,371		24,293		147%	136%
2021	55,187		73,991		29,902		134%	136%
2022	33,442		46,945		31,961		140%	139%
2023	91,282		120,803		105,383		132%	135%
2024	22,156		33,077		32,692		149%	149%
Subtotal	2,329,498		3,956,129		239,498
Total Americas and Australia	9,408,295		20,565,492		3,151,527
Europe Core
2012-2013	40,742		72,345		1		178%	153%
2014	773,811		2,551,509		431,677		330%	208%
2015	411,340		750,954		138,612		183%	160%
2016	333,090		578,002		161,067		174%	167%
2017	252,174		368,260		105,187		146%	144%
2018	341,775		548,888		186,849		161%	148%
2019	518,610		843,205		334,701		163%	152%
2020	324,119		564,901		247,220		174%	172%
2021	412,411		698,784		399,930		169%	170%
2022	359,447		583,939		460,431		162%	162%
2023	410,593		693,985		603,457		169%	169%
2024	43,809		82,653		81,224		189%	189%
Subtotal	4,221,921		8,337,425		3,150,356
Europe Insolvency
2014	10,876		18,933		—		174%	129%
2015	18,973		29,335		—		155%	139%
2016	39,338		57,747		742		147%	130%
2017	39,235		52,006		1,517		133%	128%
2018	44,908		52,670		3,747		117%	123%
2019	77,218		112,606		17,421		146%	130%
2020	105,440		156,347		35,698		148%	129%
2021	53,230		73,023		29,947		137%	134%
2022	44,604		61,163		43,051		137%	137%
2023	46,558		64,359		56,671		138%	138%
2024	4,978		7,530		7,495		151%	151%
Subtotal	485,358		685,719		196,289
Total Europe	4,707,279		9,023,144		3,346,645
Total PRA Group	$	14,115,574	$	29,588,636	$	6,498,172

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

(2)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.

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

(4)Non-U.S. amounts are presented at the March 31, 2024 exchange rate.

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


Portfolio Financial Information (1)
Amounts in thousands
	March 31, 2024 (year-to-date)								As of March 31, 2024
Purchase Period	Cash Collections (2)		Portfolio Income (2)		Changes in Expected Recoveries (2)		Total Portfolio Revenue (2)		Net Finance Receivables (3)
Americas and Australia Core
1996-2013	$	9,021	$	3,462	$	5,949	$	9,411	$	16,050
2014	3,410		1,423		1,852		3,275		10,235
2015	4,262		1,713		2,582		4,294		15,130
2016	6,247		3,288		1,994		5,282		20,969
2017	10,450		4,796		3,180		7,976		40,703
2018	21,334		7,599		8,233		15,833		78,949
2019	22,567		9,256		2,710		11,966		89,544
2020	26,730		10,437		1,040		11,478		105,887
2021	29,841		14,658		(3,302)		11,356		171,251
2022	43,687		18,510		421		18,930		254,765
2023	73,573		45,156		8,060		53,215		565,671
2024	5,739		4,114		974		5,086		173,900
Subtotal	256,861		124,412		33,693		158,102		1,543,054
Americas Insolvency
1996-2013	267		37		231		268		—
2014	64		30		38		68		—
2015	50		11		28		39		28
2016	194		11		186		197		231
2017	805		46		1,028		1,074		1,280
2018	956		48		17		65		967
2019	5,719		399		(158)		240		11,825
2020	4,612		762		672		1,434		21,843
2021	4,090		885		193		1,079		25,851
2022	2,634		846		130		976		26,191
2023	5,432		2,984		(1,004)		1,981		80,736
2024	386		353		19		372		22,142
Subtotal	25,209		6,412		1,380		7,793		191,094
Total Americas and Australia	282,070		130,824		35,073		165,895		1,734,148
Europe Core
2012-2013	281		—		281		281		—
2014	24,056		16,757		6,329		23,086		97,667
2015	7,696		3,524		1,324		4,848		68,718
2016	6,809		3,351		1,410		4,762		90,482
2017	4,609		1,745		688		2,434		70,014
2018	9,554		3,534		(143)		3,392		121,309
2019	17,474		5,802		2,086		7,888		225,375
2020	12,662		4,951		1,190		6,141		152,642
2021	17,293		7,418		1,470		8,888		241,757
2022	18,662		7,916		273		8,190		288,841
2023	25,401		11,317		401		11,718		354,946
2024	1,436		369		563		932		43,288
Subtotal	145,933		66,684		15,872		82,560		1,755,039
Europe Insolvency
2014	45		—		45		45		—
2015	60		2		31		33		—
2016	250		36		69		105		278
2017	488		42		8		50		1,296
2018	1,080		88		9		97		3,393
2019	3,710		428		316		743		15,271
2020	6,272		847		(285)		561		32,321
2021	3,485		746		208		954		25,897
2022	3,332		1,025		227		1,252		34,421
2023	2,760		1,315		75		1,390		43,143
2024	33		19		26		45		4,988
Subtotal	21,515		4,548		729		5,275		161,008
Total Europe	167,448		71,232		16,601		87,835		1,916,047
Total PRA Group	$	449,518	$	202,056	$	51,674	$	253,730	$	3,650,195

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

(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 March 31, 2024 exchange rate.


Cash Collections by Year, By Year of Purchase (1) as of March 31, 2024 Amounts in millions
			Cash Collections
Purchase Period	Purchase Price (2)(3)		1996-2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		2023		2024		Total
Americas and Australia Core
1996-2013	$	1,932.7	$	3,618.9	$	660.3	$	474.4	$	299.7	$	197.0	$	140.3	$	99.7	$	64.7	$	46.5	$	36.0	$	28.4	$	9.0	$	5,674.9
2014	404.1		—		92.7		253.4		170.3		114.2		82.2		55.3		31.9		22.3		15.0		11.8		3.4		852.5
2015	443.1		—		—		117.0		228.4		185.9		126.6		83.6		57.2		34.9		19.5		14.1		4.3		871.5
2016	455.8		—		—		—		138.7		256.5		194.6		140.6		105.9		74.2		38.4		24.9		6.2		980.0
2017	532.9		—		—		—		—		107.3		278.7		256.5		192.5		130.0		76.3		43.8		10.4		1,095.5
2018	654.0		—		—		—		—		—		122.7		361.9		337.7		239.9		146.1		92.9		21.3		1,322.5
2019	581.5		—		—		—		—		—		—		143.8		349.0		289.8		177.7		110.3		22.6		1,093.2
2020	435.7		—		—		—		—		—		—		—		132.9		284.3		192.0		125.8		26.7		761.7
2021	435.8		—		—		—		—		—		—		—		—		85.0		177.3		136.8		29.8		428.9
2022	406.1		—		—		—		—		—		—		—		—		—		67.7		195.4		43.7		306.8
2023	622.6		—		—		—		—		—		—		—		—		—		—		108.4		73.6		182.0
2024	174.5		—		—		—		—		—		—		—		—		—		—		—		5.9		5.9
Subtotal	7,078.8		3,618.9		753.0		844.8		837.1		860.9		945.1		1,141.4		1,271.8		1,206.9		946.0		892.6		256.9		13,575.4
Americas Insolvency
1996-2013	1,266.1		1,491.4		421.4		289.9		168.7		85.5		30.3		6.8		3.6		2.2		1.6		1.1		0.3		2,502.8
2014	148.4		—		37.0		50.9		44.3		37.4		28.8		15.8		2.2		1.1		0.7		0.4		0.1		218.7
2015	63.2		—		—		3.4		17.9		20.1		19.8		16.7		7.9		1.3		0.6		0.3		0.1		88.1
2016	91.4		—		—		—		18.9		30.4		25.0		19.9		14.4		7.4		1.8		0.9		0.2		118.9
2017	275.3		—		—		—		—		49.1		97.3		80.9		58.8		44.0		20.8		4.9		0.8		356.6
2018	97.9		—		—		—		—		—		6.7		27.4		30.5		31.6		24.6		12.7		1.0		134.5
2019	123.1		—		—		—		—		—		—		13.4		31.4		39.1		37.8		28.7		5.7		156.1
2020	62.1		—		—		—		—		—		—		—		6.5		16.1		20.4		19.5		4.6		67.1
2021	55.2		—		—		—		—		—		—		—		—		4.6		17.9		17.5		4.1		44.1
2022	33.4		—		—		—		—		—		—		—		—		—		3.2		9.2		2.6		15.0
2023	91.3		—		—		—		—		—		—		—		—		—		—		9.2		5.4		14.6
2024	22.1		—		—		—		—		—		—		—		—		—		—		—		0.3		0.3
Subtotal	2,329.5		1,491.4		458.4		344.2		249.8		222.5		207.9		180.9		155.3		147.4		129.4		104.4		25.2		3,716.8
Total Americas and Australia	9,408.3		5,110.3		1,211.4		1,189.0		1,086.9		1,083.4		1,153.0		1,322.3		1,427.1		1,354.3		1,075.4		997.0		282.1		17,292.2
Europe Core
2012-2013	40.7		27.7		14.2		5.5		3.5		3.3		3.3		2.4		1.9		1.8		1.4		1.0		0.3		66.3
2014	773.8		—		153.2		292.0		246.4		220.8		206.3		172.9		149.8		149.2		122.2		107.6		24.1		1,844.5
2015	411.3		—		—		45.8		100.3		86.2		80.9		66.1		54.3		51.4		40.7		33.8		7.7		567.2
2016	333.1		—		—		—		40.4		78.9		72.6		58.0		48.3		46.7		36.9		29.7		6.8		418.3
2017	252.2		—		—		—		—		17.9		56.0		44.1		36.1		34.8		25.2		20.2		4.6		238.9
2018	341.8		—		—		—		—		—		24.3		88.7		71.3		69.1		50.7		41.6		9.6		355.3
2019	518.6		—		—		—		—		—		—		48.0		125.7		121.4		89.8		75.1		17.5		477.5
2020	324.1		—		—		—		—		—		—		—		32.3		91.7		69.0		56.1		12.7		261.8
2021	412.4		—		—		—		—		—		—		—		—		48.5		89.9		73.0		17.3		228.7
2022	359.4		—		—		—		—		—		—		—		—		—		33.9		83.8		18.7		136.4
2023	410.6		—		—		—		—		—		—		—		—		—		—		50.3		25.4		75.7
2024	43.9		—		—		—		—		—		—		—		—		—		—		—		1.2		1.2
Subtotal	4,221.9		27.7		167.4		343.3		390.6		407.1		443.4		480.2		519.7		614.6		559.7		572.2		145.9		4,671.8
Europe Insolvency
2014	10.9		—		—		4.3		3.9		3.2		2.6		1.5		0.8		0.3		0.2		0.2		—		17.0
2015	19.0		—		—		3.0		4.4		5.0		4.8		3.9		2.9		1.6		0.6		0.4		0.1		26.7
2016	39.3		—		—		—		6.2		12.7		12.9		10.7		7.9		6.0		2.7		1.3		0.3		60.7
2017	39.2		—		—		—		—		1.2		7.9		9.2		9.8		9.4		6.5		3.8		0.5		48.3
2018	44.9		—		—		—		—		—		0.6		8.4		10.3		11.7		9.8		7.2		1.1		49.1
2019	77.2		—		—		—		—		—		—		5.0		21.1		23.9		21.0		17.5		3.7		92.2
2020	105.4		—		—		—		—		—		—		—		6.0		34.6		34.1		29.7		6.3		110.7
2021	53.2		—		—		—		—		—		—		—		—		5.5		14.4		14.7		3.3		37.9
2022	44.6		—		—		—		—		—		—		—		—		—		4.5		12.4		3.5		20.4
2023	46.6		—		—		—		—		—		—		—		—		—		—		4.3		2.7		7.0
2024	5.0		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal	485.4		—		—		7.3		14.5		22.1		28.8		38.7		58.8		93.0		93.8		91.5		21.5		470.0
Total Europe	4,707.3		27.7		167.4		350.6		405.1		429.2		472.2		518.9		578.5		707.6		653.5		663.7		167.4		5,141.8
Total PRA Group	$	14,115.6	$	5,138.0	$	1,378.8	$	1,539.6	$	1,492.0	$	1,512.6	$	1,625.2	$	1,841.2	$	2,005.6	$	2,061.9	$	1,728.9	$	1,660.7	$	449.5	$	22,434.0

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

(2)Includes the acquisition date finance receivables portfolios 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 pool are presented at the year-end exchange rate for the respective year of purchase.

Estimated Remaining Collections

The following chart shows our ERC of $6.5 billion as of March 31, 2024 by geography (amounts in millions).

The following chart shows our ERC by year, geography and portfolio for the 12 months ending March 31, for each year presented. These amounts reflect current estimates of how much we expect to collect on our portfolios and, where applicable, are converted to U.S. dollars at the applicable March 31, 2024 exchange rate.

The following table also displays our ERC by year, geography and portfolio for the 12 months ending March 31, for each year presented (amounts in thousands):


ERC By Year, Geography & Portfolio
	Americas and Australia Core		Americas Insolvency		Europe Core		Europe Insolvency		Total
2025	$	881,969	$	90,129	$	506,516	$	71,667	$	1,550,281
2026	667,699		65,011		427,764		52,259		1,212,733
2027	428,408		43,775		359,525		34,078		865,786
2028	293,265		27,055		304,238		20,339		644,897
2029	200,868		11,967		260,605		10,556		483,996
2030	138,622		1,539		223,841		3,962		367,964
2031	96,852		22		193,131		1,201		291,206
2032	66,136		—		167,542		667		234,345
2033	45,829		—		145,780		523		192,132
2034	30,935		—		127,242		419		158,596
Thereafter	61,446		—		434,172		618		496,236
	$	2,912,029	$	239,498	$	3,150,356	$	196,289	$	6,498,172

Cash Collections

The following table displays our quarterly cash collections by geography and portfolio (amounts in thousands):


Cash Collections by Geography & Portfolio
	First Quarter
	2024				2023
Americas and Australia Core	$	256,861	57.1	%	$	227,960	55.4	%
Americas Insolvency	25,209		5.6		25,751		6.3
Europe Core	145,933		32.5		134,005		32.6
Europe Insolvency	21,515		4.8		23,568		5.7
Total Cash Collections	$	449,518	100.0	%	$	411,284	100.0	%

The following table displays the source of our Core cash collections (amounts in thousands):


Cash Collections by Source - Core Portfolios Only
	First Quarter
	2024				2023
Call Center and Other Collections	$	247,677	61.5	%	$	236,415	65.3	%
External Legal Collections	64,427		16.0		54,934		15.2
Internal Legal Collections	90,690		22.5		70,616		19.5
Total Core Cash Collections	$	402,794	100.0	%	$	361,965	100.0	%

Seasonality

Customer payment patterns in all of the countries in which we operate can be affected by seasonal employment trends, income tax refunds, and holiday spending habits.

Portfolio Acquisitions

The following chart shows the purchase price of our portfolios by year since 2014, including portfolios acquired through business acquisitions. The 2024 total represents portfolio acquisitions through March 31, 2024, while the prior year totals are for the full year.

The following table displays our quarterly portfolio acquisitions (amounts in thousands):


Portfolio Acquisitions by Geography & Type
	First Quarter
	2024				2023
Americas & Australia Core	$	174,660	71.1	%	$	116,867	50.8	%
Americas Insolvency	22,156		9.0		15,701		6.8
Europe Core	43,997		17.9		90,454		39.3
Europe Insolvency	5,004		2.0		7,203		3.1
Total Portfolio Acquisitions	$	245,817	100.0	%	$	230,225	100.0	%

Portfolio Acquisitions by Asset Type and Delinquency Category (U.S. Only)

The following tables categorize our quarterly U.S. portfolio acquisitions by asset type and delinquency category. Since our inception in 1996, we have acquired nearly 63.6 million customer accounts in the U.S. (amounts in thousands).


U.S Portfolio Acquisitions by Major Asset Type
	First Quarter
	2024				2023
Major Credit Cards	$	59,058	31.5	%	$	13,234	12.1	%
Private Label Credit Cards	109,887		58.7		66,652		60.9
Consumer Finance	6,247		3.3		28,051		25.6
Auto Related	12,069		6.5		1,481		1.4
Total	$	187,261	100.0	%	$	109,418	100.0	%


U.S. Portfolio Acquisitions by Delinquency Category
	First Quarter
	2024				2023
Fresh (1)	$	104,504	63.3	%	$	70,053	74.8	%
Primary (2)	2,501		1.5		3,863		4.1
Secondary (3)	52,855		32.0		17,789		19.0
Other (4)	5,245		3.2		2,012		2.1
Total Core	165,105		100.0	%	93,717		100.0	%
Insolvency	22,156				15,701
Total	$	187,261			$	109,418

(1)Fresh accounts are typically past due 120 to 270 days, charged-off by the credit originator and sold prior to any post-charge-off collection activity.

(2)Primary accounts are typically 240 to 450 days past due, charged-off and have been previously placed with one contingent fee servicer.

(3)Secondary accounts are typically 360 to 630 days past due, charged-off and have been previously placed with two contingent fee servicers.

(4)Other accounts are 480 days or more past due, charged-off and have previously been worked by three or more contingent fee servicers.

Non-GAAP Financial Measures

We report our financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). However, our management also uses certain non-GAAP financial measures, including:

•adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), to evaluate the Company's performance and to set performance goals; and

•return on average tangible equity ("ROATE"), as a measure to monitor and evaluate operating performance relative to the Company's equity.

Adjusted EBITDA

We present Adjusted EBITDA because we consider it an important supplemental measure of operations and financial performance. Our management believes Adjusted EBITDA helps provide enhanced period-to-period comparability of operations and financial performance, as it excludes certain items whose fluctuations from period-to-period do not necessarily correspond to changes in the operations of our business, 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. In addition, our calculation of Adjusted EBITDA may not be comparable to the calculation of similarly titled measures presented by other companies. Adjusted EBITDA is calculated starting with our GAAP financial measure, Net income/(loss) attributable to PRA Group, Inc. and is adjusted for:

•income tax expense (or less income tax benefit);

•foreign exchange loss (or less foreign exchange gain);

•interest expense, net (or less interest income, net);

•other expense (or less other income);

•depreciation and amortization;

•impairment of real estate;

•net income attributable to noncontrolling interests; and

•recoveries applied to negative allowance less changes in expected recoveries.

The following table provides a reconciliation of Net income/(loss) attributable to PRA Group, Inc. as reported in accordance with GAAP to Adjusted EBITDA for the last 12 months ("LTM") as of March 31, 2024, and for the year ended December 31, 2023 (amounts in thousands):


Reconciliation of Non-GAAP Financial Measures
	LTM		Year Ended
	March 31, 2024		December 31, 2023
Net income/(loss) attributable to PRA Group, Inc.	$	(21,373)	$	(83,477)
Adjustments:
Income tax expense/(benefit)	4,936		(16,133)
Foreign exchange gain	(525)		(289)
Interest expense, net	195,719		181,724
Other expense (1)	1,500		1,944
Depreciation and amortization	12,507		13,376
Impairment of real estate	5,239		5,239
Adjustment for net income attributable to noncontrolling interests	20,275		16,723

Recoveries applied to negative allowance less Changes in expected recoveries	825,256		887,891
Adjusted EBITDA	$	1,043,534	$	1,006,998

(1)Other expense reflects non-operating activities.

Additionally, we evaluate our 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 displays our Debt to Adjusted EBITDA ratio for the LTM as of March 31, 2024 and for the year ended December 31, 2023 (amounts in thousands):


Debt to Adjusted EBITDA
	LTM			Year Ended
	March 31, 2024			December 31, 2023
Borrowings	$	2,953,048		$	2,914,270
Adjusted EBITDA	1,043,534			1,006,998
Debt to Adjusted EBITDA	2.83		x	2.89		x

Return on average tangible equity

We use ROATE, which is a supplemental measure of performance that is not required by, or presented in accordance with, GAAP, to monitor and evaluate operating performance relative to the Company's equity. Management believes ROATE is a useful financial measure for investors in evaluating the effective use of equity, and is an important component of our long-term shareholder return. Average tangible equity ("ATE") is defined as average Total stockholders' equity - PRA Group, Inc. less average goodwill and average other intangible assets. ROATE is calculated by dividing annualized Net income/(loss) attributable to PRA Group, Inc. by ATE. The following table displays our ROATE and provides a reconciliation of Total stockholders' equity - PRA Group, Inc. as reported in accordance with GAAP to ATE for the periods indicated (amounts in thousands, except for ratio data):



	Period Ended				Average		Period Ended				Average
	March 31, 2024		December 31, 2023		First Quarter 2024		March 31, 2023		December 31, 2022		First Quarter 2023
Total stockholders' equity - PRA Group, Inc.	$	1,129,326	$	1,167,112	$	1,148,219	$	1,158,343	$	1,227,661	$	1,193,002
Less: Goodwill	411,846		431,564		421,705		420,647		435,921		428,284
Less: Other intangible assets	1,666		1,742		1,704		1,833		1,847		1,840
Average tangible equity					$	724,810					$	762,878

					First Quarter 2024						First Quarter 2023
Net income/(loss) attributable to PRA Group, Inc.					$	3,475					$	(58,629)
Return on average tangible equity (1)					1.9%						(30.7)%

(1)Based on annualized Net income/(loss) attributable to PRA Group, Inc.

Liquidity and Capital Resources

We actively manage our liquidity to meet our business needs and financial obligations.

Sources of Liquidity

Cash and cash equivalents. As of March 31, 2024, cash and cash equivalents totaled $108.1 million, of which $96.6 million consisted of cash on hand related to international operations with indefinitely reinvested earnings. For additional information about the unremitted earnings of our international subsidiaries, refer to Note 13 to our Consolidated Financial Statements in the 2023 Form 10-K.

Borrowings. As of March 31, 2024, we had the following committed amounts, amounts outstanding and availability under our credit facilities (amounts in thousands):


					Availability
	Committed Amount		Amount Outstanding		Availability Based on Current ERC (1)		Additional Availability (2)		Total Availability
North American revolving credit	$	1,075,000	$	504,180	$	72,629	$	498,191	$	570,820
UK revolving credit	800,000		487,065		63,357		249,578		312,935
European revolving credit	827,774		489,391		230,941		107,442		338,383
Term loan	437,500		437,500		—		—		—
Senior notes	1,046,000		1,046,000		—		—		—

Less: Debt discounts and issuance costs	—		(11,088)		—		—		—
Total	$	4,186,274	$	2,953,048	$	366,927	$	855,211	$	1,222,138

(1)Available borrowings after calculation of borrowing base, which may be used for general corporate purposes, including portfolio purchases.

(2)Subject to borrowing base and debt covenants, including advance rates ranging from 35-55% of applicable ERC.

For additional details about our credit facilities, term loan and senior notes, see Note 5 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

Interest-bearing deposits. As of March 31, 2024, interest-bearing deposits totaled $113.3 million. In Q1 2024, the interest-bearing deposit limit under our European credit facility was increased from SEK 1.2 billion to SEK 2.2 billion, and as of March 31, 2024, our limit was $206.3 million in U.S. dollars.

Furthermore, we have the ability to slow the purchase of nonperforming loans and to use the net cash flow generated from cash collections on our portfolio of existing nonperforming loans to temporarily service our debt and fund existing operations.

Uses of Liquidity and Material Cash Requirements

Forward Flows. We enter into forward flow agreements for the purchase of nonperforming loans. These agreements typically have terms ranging from six to 12 months, or they can be open-ended, and establish purchase prices and specific criteria for the accounts to be purchased. Some of the agreements establish a volume reference for the contract term in the form of a target or maximum, however, very few agreements establish a minimum contractual obligation, and many of the contracts contain early termination provisions allowing either party to cancel the agreements in accordance with a specified notice period.

As of March 31, 2024, we have forward flow agreements in place with an estimated purchase price of approximately $473.9 million over the next 12 months. This total is comprised of $375.8 million for the Americas and Australia and $98.1 million for Europe. These amounts represent our estimated forward flow purchases over the next 12 months based on projections and other factors, including sellers' estimates of future flows sales, and are dependent on actual delivery by the sellers. Accordingly, amounts purchased under these agreements may vary significantly. In addition to these agreements, we may also enter into new or renewed forward flow commitments and/or close on spot purchase transactions.

Borrowings. As of March 31, 2024, we had $3.0 billion in borrowings. The estimated interest, unused fees and principal payments for the next 12 months are $204.5 million, of which $10.0 million relates to principal on our term loan. After 12 months, principal payments on our debt are due from between one and six years. Many of our financing arrangements include covenants with which we must comply, and as of March 31, 2024, we determined that we were in compliance with these covenants.

Share Repurchases. On February 25, 2022, our Board of Directors approved a share repurchase program under which we are authorized to repurchase up to $150.0 million of our outstanding common stock. Repurchases are subject to restrictive covenants contained in our credit facilities and indentures that govern our senior notes, and there were no repurchases during the first quarter of 2024.

The share repurchase program has no stated expiration date and does not obligate us to repurchase any specified amount of shares, remains subject to the discretion of our Board of Directors and, subject to compliance with applicable laws, may be modified, suspended or discontinued at any time. Repurchases may be made from time-to-time in open market transactions, through privately negotiated transactions, in block transactions, through purchases made in accordance with trading plans adopted under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or other methods, subject to market and/or other conditions and applicable regulatory requirements. As of March 31, 2024, we had $67.7 million remaining for share repurchases under the program.

Leases. Our leases have remaining terms from one to 12 years. As of March 31, 2024, we had $48.6 million in lease liabilities, of which $9.9 million is due within the next 12 months. For additional information about our leases, refer to Note 5 to our Consolidated Financial Statements in the 2023 Form 10-K.

Derivatives. We enter into derivative financial instruments to reduce our exposure to fluctuations in interest rates on variable rate debt and foreign currency exchange rates. As of March 31, 2024, we had $8.4 million of derivative liabilities, of which $1.4 million matures within one year. The remaining $7.0 million matures in 2028. For more information, see Note 6 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

Investments. As of March 31, 2024, we held $47.1 million in Swedish treasury securities to meet the liquidity requirements of the Swedish Financial Services Authority for our banking subsidiary, AK Nordic AB.

We believe that funds generated from operations and cash collections on nonperforming loan portfolios, together with existing cash, available borrowings under our revolving credit facilities and access to the capital markets, will be sufficient to finance our operations, planned capital expenditures, forward flow purchase commitments, debt maturities and additional portfolio purchases during the next 12 months and beyond. Market conditions permitting, we may seek to access the debt or equity capital markets as we deem appropriate. Business acquisitions or higher than expected levels of portfolio purchasing could require additional financing from other sources. We may also, from time-to-time, repurchase senior notes in the open market or otherwise.

Cash Flow Analysis

The following table summarizes our cash flow activity for the first quarter of 2024 compared to the prior year period (amounts in thousands):


	First Quarter
	2024		2023		$ Change
Net cash provided by/(used in):
Operating activities	$	(72,999)	$	(47,521)	$	(25,478)
Investing activities	15,211		8,979		6,232
Financing activities	52,822		425,806		(372,984)
Effect of exchange rate on cash	861		3,656		(2,795)
Net increase/(decrease) in cash and cash equivalents	$	(4,105)	$	390,920	$	(395,025)

Operating Activities

Net cash used in operating activities mainly reflects cash collections recognized as revenue and cash paid for operating expenses, interest and income taxes. To calculate net cash used in operating activities, net income/(loss) was adjusted for (i) non-cash items included in net income such as unrealized foreign currency transaction gains, changes in expected recoveries, depreciation and amortization, deferred taxes, fair value changes in equity securities, and stock-based compensation, as well as (ii) changes in the balances of operating assets and liabilities, which can vary significantly in the normal course of business due to the amount and timing of payments.

Net cash used in operating activities was $73.0 million in Q1 2024 compared to $47.5 million in Q1 2023. This was primarily driven by higher cash paid for interest and lower accrued expenses, partially offset by higher cash collections recognized as income.

Investing Activities

Net cash provided by investing activities increased $6.2 million in Q1 2024. An increase of $26.0 million in recoveries applied to the negative allowance and a $7.2 million net decrease in investment purchase/disposal activity were partially offset by a $26.8 million increase in purchases of nonperforming loan portfolios.

Financing Activities

Net cash provided by financing activities decreased $373.0 million in Q1 2024. A decrease of $400.0 million in proceeds from senior notes due to the issuance of our 2028 Notes in Q1 2023 was partially offset by a $22.7 million increase in net draws on our lines of credit.

Recent Accounting Pronouncements

For discussion of recent accounting pronouncements and the anticipated effects on our Consolidated Financial Statements, see Note 11 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

Critical Accounting Estimates

Our Consolidated Financial Statements have been prepared in accordance with GAAP. Some of our significant accounting policies require that we use estimates, assumptions and judgments that affect the reported amounts of revenues, expenses, assets and liabilities. For a discussion of our significant accounting policies and critical accounting estimates, refer to Note 1 to our Consolidated Financial Statements in our 2023 Form 10-K.

We consider accounting estimates to be critical if they (1) involve a significant level of estimation uncertainty and (2) have had or are reasonably likely to have a material impact on our financial condition or results of operations. We base our estimates on historical experience, current trends and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. If these estimates differ significantly from actual results, the impact on our Consolidated Financial Statements may be material. We have determined that the following accounting policies involve critical estimates:

Revenue Recognition - Finance Receivables

Revenue recognition for finance receivables involves the use of estimates and the exercise of judgment on the part of management. These estimates include projections of the amount and timing of cash collections we expect to receive from our pools of accounts. We review individual pools for trends, actual performance versus projections and curve shape (a graphical depiction of the amount and timing of cash collections). We then project ERC and apply a discounted cash flow methodology to our ERC. Adjustments to ERC may include adjustments reflecting recent collection trends, our view of current and future economic conditions, changes in collection assumptions or other timing related adjustments.

Significant changes in our cash flow estimates could result in increased or decreased revenue as we immediately recognize the discounted value of such changes using the constant effective interest rate of the pool. Generally, adjustments to cash forecasts result in an adjustment to revenue at an amount less than the impact of the performance in the period due to the effects of discounting. Additionally, cash collection forecast increases will result in more revenue being recognized and cash collection forecast decreases in less revenue being recognized over the life of the pool.

Goodwill

In accordance with Financial Accounting Standards Board ("FASB") ASC Topic 350, "Intangibles-Goodwill and Other" ("ASC 350"), we evaluate goodwill for impairment annually as of October 1, and more frequently if circumstances indicate that it is more-likely-than-not that the fair value of a reporting unit is below its carrying value.

We determine the fair value of a reporting unit by applying certain approaches prescribed under ASC Topic 820 "Fair Value Measurements and Disclosures": the income approach and the market approach. Under the income approach, we estimate the fair value of a reporting unit based on the present value of estimated future cash flows and a residual terminal value. Cash flow projections are based on management's estimates of a variety of factors, including growth rates and operating margins, which take into consideration industry and market conditions. Under the market approach, we estimate fair value based on market trading multiples and other relevant market transactions involving comparable publicly traded companies with operating and investment characteristics similar to the reporting unit. Depending on the availability of public data and suitable comparable transaction data, we may give more weight to the income approach than the market approach. We also assess the reasonableness of the aggregate estimated fair value of our reporting units by comparison to our market capitalization over a reasonable period, considering historic control premiums in the financial services industry and the current market environment.

As of March 31, 2024, we had goodwill of $411.8 million, consisting primarily of $385.0 million in our Debt Buying and Collection ("DBC") reporting unit. We performed our most recent annual review of the DBC reporting unit as of October 1, 2023, and concluded that goodwill was not impaired.

As of March 31, 2024, our quarterly impairment assessment did not identify the occurrence of any triggering events, and we determined our goodwill was not more-likely-than-not impaired. However, consistent with our most recent annual review, the DBC reporting unit may be at-risk for future impairment if our cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including adverse changes in the debt sales market that impact our estimated purchasing volumes and purchase price multiples, and/or an increase in the discount rate. For additional information, refer to Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates" of our 2023 Form 10-K.

Income Taxes

We are subject to income taxes in the U.S. and in numerous international jurisdictions. These tax laws are complex and are subject to different interpretations by the taxpayer and the relevant government taxing authorities. When determining our domestic and non-U.S. income tax expense, we make judgments about the application of these inherently complex laws.

We record a tax provision for the anticipated tax consequences of the reported results of operations. The provision for income taxes is estimated using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled.

We exercise significant judgment in estimating the potential exposure to unresolved tax matters and apply a more likely than not criteria approach for recording tax benefits related to uncertain tax positions in the application of the complex tax laws. While actual results could vary, we believe we have adequate tax accruals with respect to the ultimate outcome of such

unresolved tax matters. We record interest and penalties related to unresolved tax matters as a component of income tax expense when the more likely than not standards are not met.

If all or part of the deferred tax assets are determined not to be realizable in the future, we would establish a valuation allowance and charge the impact to earnings in the period such a determination is made. If we subsequently realize deferred tax assets that were previously determined to be unrealizable, the respective valuation allowance would be reversed, resulting in a positive adjustment to earnings. The establishment or release of a valuation allowance does not have an impact on cash, nor does such an allowance preclude the use of loss carryforwards or other deferred tax assets in future periods. The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our results of operations and financial position. For further information regarding our uncertain tax positions, refer to Note 13 to our Consolidated Financial Statements in our 2023 Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our business is subject to various financial risks, including market, currency, interest rate, credit, liquidity and cash flow risk. We use various strategies, including derivative financial instruments, to manage these risks; however, they may still impact our Consolidated Financial Statements.

We do not utilize derivative financial instruments with a level of complexity or with a risk greater than the exposure to be managed, nor do we enter into or hold derivatives for trading or speculative purposes. Derivative instruments involve, to varying degrees, elements of non-performance, or credit risk. We do not believe that we currently face a significant risk of loss in the event of non-performance by the counterparties to these instruments, as these transactions were executed with a diversified group of major financial institutions with investment-grade credit ratings. Our intention is to spread our counterparty credit risk across a number of counterparties so that exposure to a single counterparty is mitigated.

Interest Rate Risk

We are subject to interest rate risk from borrowings on our variable rate credit facilities, as well as our interest-bearing deposits. As such, our consolidated financial results are subject to fluctuations due to changes in market interest rates. We assess this interest rate risk by estimating the increase or decrease in interest expense that would occur due to a change in short-term interest rates. The borrowings on our variable rate credit facilities were $1.9 billion as of March 31, 2024, and based on our debt structure, assuming a 50 basis point decrease/increase in interest rates, interest expense over the following 12 months would decrease/increase by an estimated $6.1 million.

To reduce the exposure to changes in the market rate of interest, we have entered into interest rate derivative contracts to hedge a portion of our borrowings under floating rate financing arrangements. Under the terms of the interest rate derivatives, we receive a variable interest rate and pay a fixed interest rate. Of our $3.0 billion in total borrowings as of March 31, 2024, $1.1 billion was fixed rate debt. Considering these fixed rate borrowings and the interest rate hedges on our variable rate debt, with maturities ranging from nine months to four years, as of March 31, 2024, 60% of our total debt was either fixed rate or converted to a fixed rate.

Currency Exchange Risk

We operate internationally and enter into transactions denominated in various foreign currencies. During Q1 2024, we generated $130.8 million of revenues from operations outside the U.S. and used multiple functional currencies. Weakness in one particular currency might be offset by strength in other currencies over time.

Fluctuations in foreign currencies could cause us to incur foreign currency exchange gains and losses, and could adversely affect our comprehensive income and stockholders' equity. Additionally, our reported financial results could change from period-to-period due solely to fluctuations between currencies. Foreign currency gains and losses are primarily the result of the remeasurement of transactions in other currencies into an entity's functional currency. Foreign currency gains and losses are included as a component of Other income and (expense) in our Consolidated Income Statements. From time-to-time, we may elect to enter into foreign exchange derivative contracts to reduce these variations in our Consolidated Income Statements.

When an entity's functional currency is different than the reporting currency of its parent, foreign currency translation adjustments may occur. Foreign currency translation adjustments are included as a component of Other comprehensive income/(loss) in our Consolidated Statements of Comprehensive Income and as a component of Equity in our Consolidated Balance Sheets.

We have taken measures to mitigate the impact of foreign currency fluctuations. We have organized our European operations so that portfolio ownership and collections generally occur within the same entity. Additionally, our European and UK credit facilities are multi-currency facilities, allowing us to better match funding and portfolio acquisitions by currency. We actively monitor the value of our finance receivables by currency. In the event adjustments are required to our liability composition by currency we may, from time to time, execute re-balancing foreign exchange contracts to more closely align funding and portfolio acquisitions by currency.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. We conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on this evaluation, the principal executive officer and principal financial officer have concluded that, as of March 31, 2024, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting. There was no change in our internal control over financial reporting that occurred during the quarter ended March 31, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

For information regarding legal proceedings as of March 31, 2024, refer to Note 10 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our 2023 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchase Programs

On February 25, 2022, our Board of Directors approved a share repurchase program under which we are authorized to repurchase up to $150.0 million of our outstanding common stock. For more information, see Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" in this Quarterly Report. We did not repurchase any common stock during the first quarter of 2024.

We do not currently pay regular dividends on our common stock and did not pay dividends during the first quarter of 2024; however, our Board of Directors may determine in the future to declare or pay dividends on our common stock. Our credit facilities and the indentures governing our senior notes contain financial and other restrictive covenants, including restrictions on certain types of transactions and our ability to pay dividends to our stockholders and repurchase our common stock.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None of the Company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or non-rule 10b5-1 trading arrangement during the first quarter of 2024.

Item 6. Exhibits


3.1			Fifth Amended and Restated Certificate of Incorporation of PRA Group, Inc. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed June 17, 2020 (File No. 000-50058)).
3.2			Amended and Restated By-Laws of PRA Group, Inc. (Incorporated by reference to Exhibit 3.2 of the Current Report on Form 8-K filed June 17, 2020 (File No. 000-50058)).
4.1			Form of Common Stock Certificate (Incorporated by reference to Exhibit 4.1 of Amendment No. 1 to the Registration Statement on Form S-1 filed October 15, 2002 (Registration No. 333-99225)).
4.2			Form of Warrant (Incorporated by reference to Exhibit 4.2 of Amendment No. 2 to the Registration Statement on Form S-1 filed October 30, 2002 (Registration No. 333-99225)).
4.3			Indenture, dated as of August 27, 2020 among PRA Group Inc., the domestic subsidiaries of PRA Group Inc., party thereto and Regions Bank as trustee (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed September 1, 2020 (File No. 000-50058)).
4.4			Indenture, dated as of September 22, 2021 among PRA Group Inc., the domestic subsidiaries of PRA Group Inc., party thereto and Regions Banks, as trustee (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed September 24, 2021 (File No. 000-50058)).
4.5			Indenture, dated as of February 6, 2023, among PRA Group, Inc., the domestic subsidiaries of PRA Group, Inc., party thereto and Regions Bank, as trustee (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed February 6, 2023 (File No. 000-50058)).
4.6			Description of the Registrant's Securities Registered pursuant to Section 12 of the Securities Exchange Act of 1934 (Incorporated by reference to Exhibit 4.3 of the Annual Report on Form 10-K filed February 26, 2021 (File No. 000-50058)).




10.1			Eighth Amendment to the Credit Agreement dated December 20, 2023 by and among PRA Group, Inc and PRA Group Canada Inc., the Guarantors, the Lenders party thereto, Bank of America, N.A., as Administrative Agent and Bank of America, N.A., acting through its Canada Branch, as Canadian Administrative Agent (filed herewith)


10.2			Am e nd ment dated March 25, 2024 to the European Credit Agreement dated November 23, 2022 by and among PRA Group Europe Holdings S.a.r.l, and its Swiss Bank, PRA Group Europe Holding S.a.r.l, Luxembourg, Zug Branch and DNB Bank ASA (filed herew ith)
31.1			Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
31.2			Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
32.1			Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (filed herewith).
101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkable Document
101.LAB			XBRL Taxonomy Extension Label Linkable Document
101.PRE			XBRL Taxonomy Extension Presentation Linkable Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

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, thereunto duly authorized.



	PRA Group, Inc.
	(Registrant)

May 8, 2024	By:	/s/ Vikram A. Atal
		Vikram A. Atal
		President and Chief Executive Officer
		(Principal Executive Officer)




May 8, 2024	By:	/s/ Rakesh Sehgal
		Rakesh Sehgal
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

PRA Group - 10-Q quarterly report FY2024 Q1

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