UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 2, 2015
PRA Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware | 000-50058 | 75-3078675 |
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
120 Corporate Boulevard, Suite 100, Norfolk, Virginia | 23502 |
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: 888-772-7326
________________________________________________________________________________
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On March 2, 2015 the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
Exhibit 99.1. Press release dated March 2, 2015
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PRA Group, Inc.
(Registrant) |
||
March 2, 2015
(Date) |
/s/ KEVIN P. STEVENSON
Kevin P. Stevenson Executive Vice President & Chief Financial Officer |
Exhibit Index | ||
99.1 | Press release dated March 2, 2015 |
EXHIBIT 99.1
NORFOLK, Va., March 2, 2015 (GLOBE NEWSWIRE) -- PRA Group (Nasdaq:PRAA), a global leader in acquiring defaulted receivables, today reported its financial results for the fourth quarter and full year 2014.
Fourth Quarter Highlights
"PRA Group continued to produce solid operational results and demonstrated the power of our geographic diversification with an investment performance second only to last quarter which included the Aktiv Kapital portfolio," said Steve Fredrickson, chairman, president and chief executive officer, PRA Group. "During the quarter, we invested $314.2 million in North America and Europe and delivered record quarterly income before taxes of $93.5 million. We also increased value to shareholders by repurchasing $33.2 million in common stock."
REVENUES
Cash Collection Source ($ in thousands) | Q42014 | Q32014 | Q22014 | Q12014 | Q42013 |
North America-Core | $ 185,921 | $ 189,027 | $ 190,229 | $ 187,818 | $ 158,828 |
North America-Insolvency | 103,104 | 110,544 | 124,101 | 120,702 | 114,384 |
Europe-Core | 84,398 | 73,172 | 4,944 | 4,847 | 5,714 |
Europe-Insolvency | 5 | -- | -- | -- | -- |
Total Cash Collections | $ 373,428 | $ 372,743 | $ 319,274 | $ 313,367 | $ 278,926 |
Cash collections for the year increased 21% to $1.38 billion, compared with $1.14 billion in full year 2013.
EXPENSES AND OPERATING INCOME
PORTFOLIO ACQUISITIONS
Portfolio Purchase Source ($ in thousands) |
Q42014 |
Q32014 |
Q22014 |
Q12014 |
Q42013 |
North America-Core | $ 119,714 | $ 118,018 | $ 91,904 | $ 79,085 | $ 65,759 |
North America-Insolvency | 24,949 | 38,535 | 16,187 | 72,003 | 31,987 |
Europe-Core (1) | 123,194 | 734,803 | 1,121 | 1,626 | 1,763 |
Europe-Insolvency | 11,625 | -- | -- | -- | -- |
Total Portfolio Purchasing | $ 279,482 | $ 891,356 | $ 109,212 | $ 152,714 | $ 99,509 |
(1) Excludes the $34.7 million investment in the securitized fund in Poland in Q4 2014. |
BALANCE SHEET
Conference Call Information
PRA Group will hold a conference call today at 4:30 p.m. ET to discuss results with institutional investors and stock analysts. To listen to a webcast of the call, visit http://ir.pragroup.com/events.cfm. To listen by phone, call 888-695-7639 in the U.S. or 970-315-0482 outside the U.S. The conference ID is 89361286. A question-and-answer session on the call will be open only to analysts or investors. To listen to a replay of the call until March 9, 2015, call 855-859-2056 in the U.S. or 404-537-3406 outside the U.S. and use conference ID 89361286.
About PRA Group
By acquiring defaulted receivables, PRA Group returns capital to global banks and other creditors to help expand financial services for consumers in North America and Europe. PRA Group companies collaborate with customers to create affordable, realistic debt repayment plans and provide a broad range of additional revenue and recovery services to business and government clients in the U.S. and the U.K.
PRA Group has been recognized as one of Fortune's 100 Fastest-Growing Companies for the past three years and one of Forbes' Best Small Companies in America every year since 2007. PRA Group employs about 3,900 people and is headquartered in Norfolk, Virginia. For more information, please visit www.PRAgroup.com.
About Forward Looking Statements
Statements made herein which are not historical in nature, including PRA Group's or its management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
The forward-looking statements in this press release are based upon management's current beliefs, estimates, assumptions and expectations of PRA Group's future operations and economic performance, taking into account currently available information. These statements are not statements of historical fact or guarantees of future performance, and there can be no assurance that anticipated events will transpire or that our expectations will prove to be correct. Forward-looking statements involve risks and uncertainties, some of which are not currently known to PRA Group. Actual events or results may differ materially from those expressed or implied in any such forward-looking statements as a result of various factors, including risk factors and other risks that are described from time to time in PRA Group's filings with the Securities and Exchange Commission including but not limited to PRA Group's annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, filed with the Securities and Exchange Commission and available through PRA Group's website, which contain a detailed discussion of PRA Group's business, including risks and uncertainties that may affect future results.
Due to such uncertainties and risks, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of today. Information in this press release may be superseded by recent information or statements, which may be disclosed in later press releases, subsequent filings with the Securities and Exchange Commission or otherwise. Except as required by law, PRA assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA Group's expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part.
PRA Group, Inc. | ||||
Unaudited Consolidated Income Statements | ||||
(in thousands, except per share amounts) | ||||
Three Months Ended December 31, | Year Ended December 31, | |||
2014 | 2013 | 2014 | 2013 | |
Revenues: | ||||
Income recognized on finance receivables, net | $ 222,660 | $ 168,728 | $ 807,474 | $ 663,546 |
Fee income | 22,800 | 16,125 | 65,675 | 71,532 |
Other revenue | 5,271 | -- | 7,820 | 57 |
Total revenues | 250,731 | 184,853 | 880,969 | 735,135 |
Operating expenses: | ||||
Compensation and employee services | 65,448 | 46,393 | 234,531 | 192,474 |
Legal collection fees | 15,125 | 10,144 | 51,107 | 41,488 |
Legal collection costs | 15,725 | 20,044 | 88,054 | 83,063 |
Agency fees | 7,497 | 1,608 | 16,399 | 5,901 |
Outside fees and services | 15,707 | 6,827 | 55,821 | 31,615 |
Communication | 7,715 | 7,357 | 33,085 | 28,161 |
Rent and occupancy | 3,477 | 2,254 | 11,509 | 8,311 |
Depreciation and amortization | 5,307 | 3,730 | 18,414 | 14,417 |
Other operating expenses | 4,870 | 8,152 | 29,981 | 25,781 |
Impairment of goodwill | -- | -- | -- | 6,397 |
Total operating expenses | 140,871 | 106,509 | 538,901 | 437,608 |
Income from operations | 109,860 | 78,344 | 342,068 | 297,527 |
Other income and (expense): | ||||
Interest income | 1 | 3 | 4 | 3 |
Interest expense | (13,494) | (4,862) | (35,230) | (14,469) |
Foreign exchange (loss)/gain | (2,898) | 6 | (5,829) | 4 |
Income before income taxes | 93,469 | 73,491 | 301,013 | 283,065 |
Provision for income taxes | 46,478 | 27,714 | 124,508 | 106,146 |
Net income | $ 46,991 | $ 45,777 | $ 176,505 | $ 176,919 |
Adjustment for net income attributable to redeemable noncontrolling interest | -- | -- | -- | 1,605 |
Net income attributable to PRA Group, Inc. | $ 46,991 | $ 45,777 | $ 176,505 | $ 175,314 |
Net income per common share attributable to PRA Group, Inc.: | ||||
Basic | $ 0.94 | $ 0.92 | $ 3.53 | $ 3.48 |
Diluted | $ 0.93 | $ 0.91 | $ 3.50 | $ 3.45 |
Weighted average number of shares outstanding: | ||||
Basic | 49,892 | 49,750 | 49,990 | 50,366 |
Diluted | 50,444 | 50,375 | 50,421 | 50,873 |
PRA Group, Inc. | ||
Unaudited Consolidated Balance Sheets | ||
(in thousands, except per share amounts) | ||
ASSETS |
December 31, 2014 |
December 31, 2013 |
Cash and cash equivalents | $ 39,661 | $ 162,004 |
Investments | 89,703 | -- |
Finance receivables, net | 2,001,790 | 1,239,191 |
Other receivables, net | 12,959 | 12,359 |
Income taxes receivable | -- | 11,710 |
Net deferred tax asset | 6,126 | 1,361 |
Property and equipment, net | 48,258 | 31,541 |
Goodwill | 527,445 | 103,843 |
Intangible assets, net | 10,933 | 15,767 |
Other assets | 41,876 | 23,456 |
Total assets | $ 2,778,751 | $ 1,601,232 |
LIABILITIES AND EQUITY | ||
Liabilities: | ||
Accounts payable | $ 19,456 | $ 14,819 |
Accrued expenses and other liabilities | 57,320 | 27,655 |
Income taxes payable | 11,020 | -- |
Accrued compensation | 22,993 | 27,431 |
Net deferred tax liability | 255,587 | 210,071 |
Interest bearing deposits | 27,704 | -- |
Borrowings | 1,482,456 | 451,780 |
Total liabilities | 1,876,536 | 731,756 |
Stockholders' equity: | ||
Preferred stock, par value $0.01, authorized shares, 2,000, issued and outstanding shares - 0 | -- | -- |
Common stock, par value $0.01, 100,000 authorized shares, 49,577 issued and outstanding shares at December 31, 2014, and 60,000 authorized shares, 49,840 issued and outstanding shares at December 31, 2013 | 496 | 498 |
Additional paid-in capital | 111,659 | 135,441 |
Retained earnings | 906,010 | 729,505 |
Accumulated other comprehensive (loss)/income | (115,950) | 4,032 |
Total stockholders' equity | 902,215 | 869,476 |
Total liabilities and equity | $ 2,778,751 | $ 1,601,232 |
PRA Group, Inc. | ||
Unaudited Consolidated Statements of Cash Flows | ||
(in thousands) | ||
For the Years Ended December 31, |
||
2014 | 2013 | |
Cash flows from operating activities: | ||
Net income | $ 176,505 | $ 176,919 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of share-based compensation | 14,968 | 12,272 |
Depreciation and amortization | 18,414 | 14,417 |
Impairment of goodwill | -- | 6,397 |
Amortization of debt discount | 4,058 | 1,508 |
Amortization of debt fair value | (4,827) | -- |
Deferred tax expense | 52,978 | 11,011 |
Changes in operating assets and liabilities: | ||
Other assets | (1,844) | (4,783) |
Other receivables | 9,435 | (1,786) |
Accounts payable | (13,934) | 2,556 |
Income tax receivable/payable, net | 16,862 | (14,814) |
Accrued expenses | 5,037 | 14,179 |
Accrued compensation | (15,579) | 7,251 |
Net cash provided by operating activities | 262,073 | 225,127 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (24,385) | (15,875) |
Acquisition of finance receivables, net of buybacks | (682,441) | (638,616) |
Collections applied to principal on finance receivables | 571,338 | 478,891 |
Business acquisition, net of cash acquired | (851,183) | -- |
Purchase of investments | (69,862) | -- |
Proceeds from sales and maturities of investments | 25,821 | -- |
Net cash used in investing activities | (1,030,712) | (175,600) |
Cash flows from financing activities: | ||
Income tax benefit from share-based compensation | 5,558 | 4,552 |
Payment of liability-classified contingent consideration | (5,240) | |
Proceeds from lines of credit | 543,000 | 217,000 |
Principal payments on lines of credit | (134,000) | (344,000) |
Repurchases of common stock | (33,164) | (58,511) |
Cash paid for purchase of portion of noncontrolling interest | -- | (5,663) |
Distributions paid to noncontrolling interest | -- | (2,075) |
Principal payments on long-term debt | (359,281) | (5,542) |
Proceeds from long-term debt | 623,354 | -- |
Net increase in interest bearing deposits | 2,492 | -- |
Proceeds from convertible debt, net | -- | 279,281 |
Net cash provided by financing activities | 647,959 | 79,802 |
Effect of exchange rate on cash | (1,663) | (12) |
Net (decrease)/increase in cash and cash equivalents | (122,343) | 129,317 |
Cash and cash equivalents, beginning of period | 162,004 | 32,687 |
Cash and cash equivalents, end of period | $ 39,661 | $ 162,004 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | $ 31,831 | $ 9,830 |
Cash paid for income taxes | 47,947 | 105,719 |
Supplemental disclosure of non-cash information: | ||
Adjustment of the redeemable noncontrolling interest measurement amount | $ -- | $ (184) |
Purchase of redeemable noncontrolling interest | -- | 14,986 |
Employee stock relinquished for payment of taxes | (11,146) | (7,350) |
FINANCIAL HIGHLIGHTS | ||||||
As of and for the Three Months Ended December 31, |
As of and for the Year Ended December 31, |
|||||
2014 | 2013 | Change | 2014 | 2013 | Change | |
EARNINGS (in thousands) | ||||||
Income recognized on finance receivables, net | $ 222,660 | $ 168,728 | 32% | $ 807,474 | $ 663,546 | 22% |
Fee income | 22,800 | 16,125 | 41% | 65,675 | 71,532 | -8% |
Other revenue | 5,271 | -- | 100% | 7,820 | 57 | 13619% |
Total revenues | 250,731 | 184,853 | 36% | 880,969 | 735,135 | 20% |
Operating expenses | 140,871 | 106,509 | 32% | 538,901 | 437,608 | 23% |
Income from operations | 109,860 | 78,344 | 40% | 342,068 | 297,527 | 15% |
Net interest expense | 13,493 | 4,859 | 178% | 35,226 | 14,466 | 144% |
Net income | 46,991 | 45,777 | 3% | 176,505 | 176,919 | 0% |
Net income attributable to PRA Group, Inc. | 46,991 | 45,777 | 3% | 176,505 | 175,314 | 1% |
PERIOD-END BALANCES (in thousands) | ||||||
Cash and cash equivalents | $ 39,661 | $ 162,004 | -76% | $ 39,661 | $ 162,004 | -76% |
Finance receivables, net | 2,001,790 | 1,239,191 | 62% | 2,001,790 | 1,239,191 | 62% |
Goodwill and intangible assets, net | 538,378 | 119,610 | 350% | 538,378 | 119,610 | 350% |
Total assets | 2,778,751 | 1,601,232 | 74% | 2,778,751 | 1,601,232 | 74% |
Borrowings | 1,482,456 | 451,780 | 228% | 1,482,456 | 451,780 | 228% |
Total liabilities | 1,876,536 | 731,756 | 156% | 1,876,536 | 731,756 | 156% |
Total equity | 902,215 | 869,476 | 4% | 902,215 | 869,476 | 4% |
FINANCE RECEIVABLE INCOME (dollars in thousands) | ||||||
Cash collections | $ 373,428 | $ 278,926 | 34% | $ 1,378,812 | $ 1,142,437 | 21% |
Cash collections on fully amortized pools | 17,785 | 9,801 | 81% | 68,349 | 35,520 | 92% |
Principal amortization without allowance (reversals)/charges | 149,753 | 110,626 | 35% | 576,273 | 480,912 | 20% |
Allowance (reversal)/charge | 1,015 | (429) | -337% | (4,935) | (2,022) | 144% |
Principal amortization with allowance (reversals)/charges | 150,768 | 110,197 | 37% | 571,338 | 478,890 | 19% |
Principal amortization w/ allowance charges as % of cash collections: | ||||||
Including fully amortized pools | 40.4% | 39.5% | 2% | 41.4% | 41.9% | -1% |
Excluding fully amortized pools | 42.4% | 40.9% | 4% | 43.6% | 43.3% | 1% |
Allowance (reversal)/charge to period-end net finance receivables | 0.1% | (0.0%) | -246% | (0.2%) | (0.2%) | 51% |
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands) | ||||||
Purchase price - North America core | $ 119,714 | $ 65,759 | 82% | $ 408,721 | $ 395,068 | 3% |
Purchase price - North America insolvency | 24,949 | 31,987 | -22% | 151,674 | 242,649 | -37% |
Purchase price - Europe core | 123,194 | 1,763 | 6888% | 860,744 | 19,067 | 4414% |
Purchase price - Europe insolvency | 11,625 | -- | 100% | 11,625 | -- | 100% |
Purchase price - total | 279,482 | 99,509 | 181% | 1,432,764 | 656,783 | 118% |
Number of portfolios - total | 142 | 83 | 71% | 456 | 347 | 31% |
ESTIMATED REMAINING COLLECTIONS (in thousands) | ||||||
Estimated remaining collections - North America core | $ 2,229,403 | $ 1,824,132 | 22% | $ 2,229,403 | $ 1,824,132 | 22% |
Estimated remaining collections - North America insolvency | 642,552 | 822,988 | -22% | 642,552 | 822,988 | -22% |
Estimated remaining collections - Europe core | 1,478,738 | 22,150 | 6576% | 1,478,738 | 22,150 | 6576% |
Estimated remaining collections - Europe insolvency | 15,021 | -- | 100% | 15,021 | -- | 100% |
Estimated remaining collections - total | 4,365,714 | 2,669,270 | 64% | 4,365,714 | 2,669,270 | 64% |
SHARE DATA (share amounts in thousands) | ||||||
Net income per common share - diluted | $ 0.93 | $ 0.91 | 2% | $ 3.50 | $ 3.45 | 1% |
Weighted average number of shares outstanding - diluted | 50,444 | 50,375 | 0% | 50,421 | 50,873 | -1% |
Shares repurchased | 574 | -- | 100% | 574 | 1,203 | -52% |
Average price paid per share repurchased (including acquisitions costs) | $ 57.79 | $ -- | 100% | $ 57.79 | $ 48.62 | 19% |
Closing market price | $ 57.93 | $ 52.84 | 10% | $ 57.93 | $ 52.84 | 10% |
RATIOS AND OTHER DATA (dollars in thousands) | ||||||
Return on average equity (1) | 20.2% | 21.5% | -6% | 18.9% | 22.2% | -15% |
Return on revenue (2) | 18.7% | 24.8% | -24% | 20.0% | 24.1% | -17% |
Return on average assets (3) | 6.9% | 11.5% | -40% | 8.0% | 11.9% | -33% |
Operating margin (4) | 43.8% | 42.4% | 3% | 38.8% | 40.5% | -4% |
Operating expense to cash receipts (5) | 35.6% | 36.1% | -2% | 37.3% | 36.0% | 3% |
Debt to equity (6) | 164.3% | 52.0% | 216% | 164.3% | 52.0% | 216% |
Number of full-time equivalent collectors | 2,457 | 2,313 | 6% | 2,457 | 2,313 | 6% |
Number of full-time equivalent employees | 3,880 | 3,543 | 10% | 3,880 | 3,543 | 10% |
Cash receipts (5) | $ 396,228 | $ 295,051 | 34% | $ 1,444,487 | $ 1,213,969 | 19% |
Line of credit - unused portion at period end | 352,926 | 435,500 | -19% | 352,926 | 435,500 | -19% |
(1) Calculated as annualized net income divided by average equity for the period | ||||||
(2) Calculated as net income divided by total revenues | ||||||
(3) Calculated as annualized net income divided by average assets for the period | ||||||
(4) Calculated as income from operations divided by total revenues | ||||||
(5) "Cash receipts" is defined as cash collections plus fee income | ||||||
(6) For purposes of this ratio, "debt" equals borrowings |
FINANCIAL HIGHLIGHTS | ||||||
For the Quarter Ended | ||||||
December 31 2014 |
September 30 2014 |
June 30 2014 |
March 31 2014 |
December 31 2013 |
September 30 2013 |
|
EARNINGS (in thousands) | ||||||
Income recognized on finance receivables, net | $ 222,660 | $ 224,326 | $ 182,518 | $ 177,970 | $ 168,728 | $ 171,456 |
Fee income | 22,800 | 12,757 | 14,510 | 15,608 | 16,125 | 26,249 |
Other revenue | 5,271 | 1,890 | 315 | 344 | -- | 57 |
Total revenues | 250,731 | 238,973 | 197,343 | 193,922 | 184,853 | 197,762 |
Operating expenses | 140,871 | 150,784 | 124,906 | 122,340 | 106,509 | 118,297 |
Income from operations | 109,860 | 88,189 | 72,437 | 71,582 | 78,344 | 79,465 |
Net interest expense | 13,493 | 11,807 | 5,067 | 4,859 | 4,859 | 3,995 |
Net income | 46,991 | 51,167 | 37,507 | 40,840 | 45,777 | 49,211 |
Net income attributable to PRA Group, Inc. | 46,991 | 51,167 | 37,507 | 40,840 | 45,777 | 47,338 |
PERIOD-END BALANCES (in thousands) | ||||||
Cash and cash equivalents | $ 39,661 | $ 70,300 | $ 270,526 | $ 191,819 | $ 162,004 | $ 108,705 |
Finance receivables, net | 2,001,790 | 1,913,710 | 1,219,595 | 1,253,961 | 1,239,191 | 1,256,822 |
Goodwill and intangible assets, net | 538,378 | 606,716 | 118,927 | 118,800 | 119,610 | 119,636 |
Total assets | 2,778,751 | 2,757,429 | 1,695,362 | 1,642,613 | 1,601,232 | 1,547,985 |
Borrowings | 1,482,456 | 1,425,409 | 448,785 | 450,278 | 451,780 | 452,229 |
Total liabilities | 1,876,536 | 1,797,569 | 743,106 | 732,395 | 731,756 | 721,001 |
Total equity | 902,215 | 959,860 | 952,256 | 910,218 | 869,476 | 816,647 |
FINANCE RECEIVABLE COLLECTIONS (dollars in thousands) | ||||||
Cash collections | $ 373,428 | $ 372,743 | $ 319,274 | $ 313,367 | $ 278,926 | $ 291,651 |
Cash collections on fully amortized pools | 17,785 | 17,105 | 16,943 | 16,516 | 9,801 | 8,762 |
Principal amortization without allowance (reversals)/charges | 149,753 | 150,115 | 139,055 | 137,350 | 110,626 | 122,776 |
Allowance (reversal)/charge | 1,015 | (1,698) | (2,299) | (1,953) | (429) | (2,581) |
Principal amortization with allowance (reversals)/charges | 150,768 | 148,417 | 136,756 | 135,397 | 110,197 | 120,195 |
Principal amortization w/ allowance charges as % of cash collections: | ||||||
Including fully amortized pools | 40.4% | 39.8% | 42.8% | 43.2% | 39.5% | 41.2% |
Excluding fully amortized pools | 42.4% | 41.7% | 45.2% | 45.6% | 40.9% | 42.5% |
Allowance (reversal)/charge to period-end net finance receivables | 0.1% | -0.1% | -0.2% | -0.2% | 0.0% | -0.2% |
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands) | ||||||
Purchase price - North America core | $ 119,714 | $ 118,018 | $ 91,904 | $ 79,085 | $ 65,759 | $ 89,044 |
Purchase price - North America insolvency | 24,949 | 38,535 | 16,187 | 72,003 | 31,987 | 41,794 |
Purchase price - Europe core | 123,194 | 734,803 | 1,121 | 1,626 | 1,763 | 11,037 |
Purchase price - Europe insolvency | 11,625 | -- | -- | -- | -- | -- |
Purchase price - total | 279,482 | 891,356 | 109,212 | 152,714 | 99,509 | 141,875 |
Number of portfolios - total | 142 | 125 | 85 | 104 | 83 | 79 |
ESTIMATED REMAINING COLLECTIONS (in thousands) | ||||||
Estimated remaining collections - North America core | $ 2,229,403 | $ 2,089,253 | $ 1,948,414 | $ 1,891,511 | $ 1,824,132 | $ 1,762,369 |
Estimated remaining collections - North America insolvency | 642,552 | 697,662 | 733,176 | 793,855 | 822,988 | 877,722 |
Estimated remaining collections - Europe core | 1,478,738 | 1,582,135 | 20,349 | 19,358 | 22,150 | 32,272 |
Estimated remaining collections - Europe insolvency | 15,021 | -- | -- | -- | -- | -- |
Estimated remaining collections - total | 4,365,714 | 4,369,050 | 2,701,939 | 2,704,724 | 2,669,270 | 2,672,363 |
SHARE DATA-ADJUSTED (7) (share amounts in thousands) | ||||||
Net income per common share - diluted | $ 0.93 | $ 1.01 | $ 0.74 | $ 0.81 | $ 0.91 | $ 0.93 |
Weighted average number of shares outstanding - diluted | 50,444 | 50,439 | 50,437 | 50,363 | 50,375 | 50,660 |
Shares repurchased | 574 | -- | -- | -- | -- | 989 |
Average price paid per share repurchased (including acquisitions costs) | $ 57.79 | $ -- | $ -- | $ -- | $ -- | $ 50.55 |
Closing market price | $ 57.93 | $ 52.23 | $ 59.53 | $ 57.86 | $ 52.84 | $ 59.93 |
RATIOS AND OTHER DATA (dollars in thousands) | ||||||
Return on average equity (1) | 20.2% | 21.1% | 16.0% | 18.2% | 21.5% | 23.5% |
Return on revenue (2) | 18.7% | 21.4% | 19.0% | 21.1% | 24.8% | 24.9% |
Return on average assets (3) | 6.9% | 7.3% | 9.0% | 10.0% | 11.5% | 12.5% |
Operating margin (4) | 43.8% | 36.9% | 36.7% | 36.9% | 42.4% | 40.2% |
Operating expense to cash receipts (5) | 35.6% | 39.1% | 37.4% | 37.2% | 36.1% | 37.2% |
Debt to equity (6) | 164.3% | 148.5% | 47.1% | 49.5% | 52.0% | 55.4% |
Number of collectors | 2,457 | 2,498 | 2,258 | 2,379 | 2,313 | 2,054 |
Number of full-time equivalent employees | 3,880 | 3,913 | 3,567 | 3,621 | 3,543 | 3,223 |
Cash receipts (5) | $ 396,228 | $ 385,500 | $ 333,784 | $ 328,975 | $ 295,051 | $ 317,900 |
Line of credit - unused portion at period end | 352,926 | 513,800 | 650,000 | 435,500 | 435,500 | 435,500 |
(1) Calculated as annualized net income divided by average equity for the period | ||||||
(2) Calculated as net income divided by total revenues | ||||||
(3) Calculated as annualized net income divided by average assets for the period | ||||||
(4) Calculated as income from operations divided by total revenues | ||||||
(5) "Cash receipts" is defined as cash collections plus fee income | ||||||
(6) For purposes of this ratio, "debt" equals borrowings |
Use of Non-GAAP Financial Measures
Management believes that the presentation of certain financial information in this press release, excluding the costs associated with Aktiv Kapital acquisition and certain acquisition related foreign exchange losses that were recorded during the three and twelve months ended December 31, 2014, is useful to investors and improves the comparability of the Company's ongoing operational results between periods. The foreign exchange losses are related to foreign currency forward contracts put in place between signing and closing of the Aktiv Kapital acquisition to mitigate the risk of converting US dollars to Euros. The non-GAAP information should be considered in addition to, not as a substitute for, financial information prepared in accordance with GAAP.
PRA Group, Inc. | |||
Reconciliation of Net Income, Earnings Per Share and Financial Ratios to GAAP Net Income, Earnings Per Share and Financial Ratios | |||
(in thousands, except per share amounts) | |||
GAAP Three Months Ended December 31, 2014 |
Less: Adjustments Related to Aktiv Kapital Acquisition |
Adjusted Three Months Ended December 31, 2014 |
|
Revenues: | |||
Income recognized on finance receivables, net | $ 222,660 | $ 222,660 | |
Fee income | 22,800 | 22,800 | |
Other revenue | 5,271 | 5,271 | |
Total revenues | 250,731 | 250,731 | |
Operating expenses: | |||
Compensation and employee services | 65,448 | 65,448 | |
Legal collection fees | 15,125 | 15,125 | |
Legal collection costs | 15,725 | 15,725 | |
Agency fees | 7,497 | 7,497 | |
Outside fees and services | 15,707 | (2,379) | 13,328 |
Communication | 7,715 | 7,715 | |
Rent and occupancy | 3,477 | 3,477 | |
Depreciation and amortization | 5,307 | 5,307 | |
Other operating expenses | 4,870 | 4,870 | |
Impairment of goodwill | -- | ||
Total operating expenses | 140,871 | (2,379) | 138,492 |
Income from operations | 109,860 | 2,379 | 112,239 |
Other income and (expense): | |||
Interest income | 1 | 1 | |
Interest expense | (13,494) | (13,494) | |
Foreign exchange (loss)/gain | (2,898) | (2,898) | |
Income before income taxes | 93,469 | 2,379 | 95,848 |
Provision for income taxes | 46,478 | 1,183 | 47,661 |
Net income | $ 46,991 | $ 1,196 | $ 48,187 |
Adjustment for net income attributable to redeemable noncontrolling interest | -- | -- | |
Net income attributable to PRA Group, Inc. | $ 46,991 | $ 1,196 | $ 48,187 |
Net income per common share attributable to PRA Group, Inc.: | |||
Basic | $ 0.94 | $ 0.02 | $ 0.97 |
Diluted | $ 0.93 | $ 0.02 | $ 0.96 |
Weighted average number of shares outstanding: | |||
Basic | 49,892 | 49,892 | 49,892 |
Diluted | 50,444 | 50,444 | 50,444 |
Operating margin: | 43.82% | 44.76% | |
Net income margin: | 18.7% | 19.2% | |
Return on average equity: | 20.2% | 20.7% |
PRA Group, Inc. | |||
Reconciliation of Net Income, Earnings Per Share and Financial Ratios to GAAP Net Income, Earnings Per Share and Financial Ratios | |||
(in thousands, except per share amounts) | |||
GAAP Year Ended December 31, 2014 |
Less: Adjustments Related to Aktiv Kapital Acquisition |
Adjusted Year Ended December 31, 2014 |
|
Revenues: | |||
Income recognized on finance receivables, net | $ 807,474 | $ 807,474 | |
Fee income | 65,675 | 65,675 | |
Other revenue | 7,820 | 7,820 | |
Total revenues | 880,969 | 880,969 | |
Operating expenses: | |||
Compensation and employee services | 234,531 | 234,531 | |
Legal collection fees | 51,107 | 51,107 | |
Legal collection costs | 88,054 | 88,054 | |
Agency fees | 16,399 | 16,399 | |
Outside fees and services | 55,821 | (17,214) | 38,607 |
Communication | 33,085 | 33,085 | |
Rent and occupancy | 11,509 | 11,509 | |
Depreciation and amortization | 18,414 | 18,414 | |
Other operating expenses | 29,981 | 29,981 | |
Impairment of goodwill | -- | ||
Total operating expenses | 538,901 | (17,214) | 521,687 |
Income from operations | 342,068 | 17,214 | 359,282 |
Other income and (expense): | |||
Interest income | 4 | 4 | |
Interest expense | (35,230) | (35,230) | |
Foreign exchange (loss)/gain | (5,829) | 8,240 | 2,411 |
Income before income taxes | 301,013 | 25,454 | 326,467 |
Provision for income taxes | 124,508 | 10,529 | 135,037 |
Net income | $ 176,505 | $ 14,925 | $ 191,430 |
Adjustment for net income attributable to redeemable noncontrolling interest | -- | -- | |
Net income attributable to PRA Group, Inc. | $ 176,505 | $ 14,925 | $ 191,430 |
Net income per common share attributable to PRA Group, Inc.: | |||
Basic | $ 3.53 | $ 0.30 | $ 3.83 |
Diluted | $ 3.50 | $ 0.30 | $ 3.80 |
Weighted average number of shares outstanding: | |||
Basic | 49,990 | 49,990 | 49,990 |
Diluted | 50,421 | 50,421 | 50,421 |
Operating margin: | 38.83% | 40.78% | |
Net income margin: | 20.0% | 21.7% | |
Return on average equity: | 18.9% | 20.5% |
CONTACT: Investor Contact: Darby Schoenfeld Director of Investor Relations (757) 431-7913 DCSchoenfeld@PRAGroup.com News Media Contact: Nancy Porter Vice President, Corporate Communications (757) 431-7950 NAPorter@PRAGroup.com