PRA GROUP INC Q4 FY2024 earnings call

• Record portfolio purchases of $1.4 billion in 2024, up 22% YOY, with strong U.S. portfolio supply and pricing discipline. • Cash collections of $1.9 billion in 2024, 13% YOY growth, with 89% from prior-year portfolios. • Net income of $71 million, return on average tangible equity of 10%, a substantial improvement from 2023. • Expanded senior leadership team in 2024 with new Global Operations, Chief Data and Analytics, and Chief Risk and Compliance Officers. • European business strong with discipline, efficiency, and profitability; Brazil business expanded to leading player, with equity sale in RCB expected to yield ~$25M after-tax gain in H1 2025. • Three strategic pillars: optimizing investments (ERC at $7.5B in 2024), operational execution (U.S. call center optimizations, legal collections channel investments), and managing expenses (offshoring strategy with offshore collectors accounting for over 30% of base, aiming for 50% in H2 2025).

In the full year 2024, PRA Group achieved record portfolio purchases of $1.4 billion, up 22% year-over-year. Global cash collections were $1.9 billion, representing a 13% year-over-year growth. Net income attributable to PRA was $71 million, translating to a return on average tangible equity of 10%. On a regional basis, the Americas (including Australia) saw $796 million in portfolio purchases for the full year, while Europe had $508 million. 89% of total cash collections in 2024 were generated from portfolios purchased prior to 2024.

• Raised 2025 portfolio purchases target to $1.2 billion from previous disclosures. • Expect high single-digit cash collections growth. • Anticipate cash efficiency above 60% for full year 2025. • Target return on average tangible equity of approximately 12% in 2025, up from 10% in 2024. • Excludes impact of Brazil transaction.

• Forward-looking statements subject to risks, uncertainties, assumptions, and other factors that could cause actual results to differ materially from expectations. • Regulatory landscape and competition could impact business. • Macroeconomic factors affecting U.S. consumers could influence collections.

Q: Good afternoon. Wondering about Europe's competitive environment and supply.

A: There was an unusually large volume of market supply in Europe's fourth quarter, and no meaningful change in competition seen yet.

Q: Thoughts on cash efficiency ratio through cycles and margin upside?

A: Short-term expects improvements with offshoring, longer-term technology/digital migration (like AI) could influence, but specifics far off.

Q: Regulatory front and new competitors?

A: Regulatory landscape unpredictable; setting up capability for competitors is multiyear effort, and seller communities are disciplined on who they invite.

Q: Fair to say U.S. pricing is stable?

A: Purchase multiples stabilized at ~2.1 level, but transformation and cash-generating initiatives may affect multiples.

Q: Legal spending and efficiency ratio?

A: Legal spending is an investment in future cash, expected efficiency ratio to move up in 2025.

Q: Productivity and cost of international collectors?

A: Offshore collectors have lower attrition than onshore, and are performing on track relative to tenured U.S. collectors.

Q: U.S. consumer health and emerging signs?

A: Tax refund trends early days; monitoring earned income tax credit release in early March.

Q: AI and digital efficiency efforts?

A: No dramatic new initiatives, but moving fast across enterprise in digital efforts.