PRA Group Reports First Quarter 2021 Results

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May 06, 2021, 16:05 ET

NORFOLK, Va., May 6, 2021 /PRNewswire/ -- PRA Group (Nasdaq: PRAA), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the first quarter of 2021. The Company reported net income attributable to PRA Group Inc. of $58.4 million in the first quarter, compared with $19.1 million in the prior year period. Diluted earnings per share were $1.27 versus $0.42 in the first quarter of 2020.

First Quarter Highlights (compared to the first quarter of 2020, unless otherwise indicated)

Record total cash collections which increased 12% to $555.9 million.
Record total revenues which increased 15% to $289.5 million.
Income from operations increased 83% to $110.8 million.
Cash efficiency ratio¹ of 68.0% during the quarter compared to 61.5% in the first quarter of 2020.
Net income attributable to PRA Group, Inc. increased 205% to $58.4 million.
Diluted earnings per share increased 202% to $1.27.
Debt to Adjusted EBITDA² for the last 12 months decreased to 1.77x from 1.99x at December 31, 2020.
Total portfolio purchases of $159.0 million.
Estimated remaining collections (ERC) of $6.1 billion.
$1.2 billion available for portfolio purchases.

"PRA started 2021 with another record setting quarter. We collected record levels of cash globally and had record revenues. In Europe, solid portfolio purchases in 2020 drove record collections. In the U.S., we continued to see strong collections particularly in our call centers and digital platform. These results combined with increases in productivity helped to produce a near record cash efficiency ratio for the quarter," said Kevin Stevenson, president and chief executive officer. "Portfolio purchases during the quarter increased sequentially in the U.S. The market remains stable with little change in seller behavior; however, lower charge off rates are pushing forward flow volumes to the lower end of the contracted range. In Europe, we were pleased with our investment volume in what is normally a seasonally slower quarter. We have solid volumes of forward flows secured, believe the pipeline in Europe is larger than what 2020 offered, and were awarded our first portfolio, a forward flow, in Australia."

1. Calculated by dividing cash receipts less operating expense by cash receipts.

2. A reconciliation of this non-GAAP financial measure to the most comparable GAAP measure can be
found at the end of this press release.

Cash Collections and Revenues

The following table presents cash collections by quarter and by source on an as reported and constant currency-adjusted basis:


Cash Collection Source	2021		2020
($ in thousands)	Q1		Q4		Q3		Q2		Q1
Americas and Australia Core	$	347,638	$	286,524	$	336,322	$	343,269	$	305,780
Americas Insolvency	35,253		36,048		37,344		38,685		43,210
Europe Core	149,486		141,471		131,702		115,145		131,340
Europe Insolvency	23,510		17,830		13,971		12,841		14,243
Total Cash Collections	$	555,887	$	481,873	$	519,339	$	509,940	$	494,573



Cash Collection Source -
Constant Currency Adjusted	2021								2020
($ in thousands)	Q1								Q1
Americas and Australia Core	$	347,638							$	301,696
Americas Insolvency	35,253								43,239
Europe Core	149,486								142,004
Europe Insolvency	23,510								15,366
Total Cash Collections	$	555,887							$	502,305

Cash collections in the quarter increased $61.3 million compared to the first quarter of 2020. The increase was primarily due to a 32% increase in U.S. call center and other cash collections and a 19% increase in Europe cash collections. This increase was partially offset by a decrease in U.S. legal and Americas Insolvency cash collections. While cash collections decreased in Other Americas Core, this decrease was primarily driven by foreign exchange rates.
Portfolio income was $231.7 million compared to $262.0 million in the first quarter of 2020. This decrease was primarily driven by the Company's assumption that the significant cash overperformance in 2020 was largely acceleration versus an increase in total estimated collections, combined with recent purchases not offsetting runoff, primarily in Americas Insolvency and Other Americas.
Changes in expected recoveries were a net positive of $50.1 million. This amount reflects $103.0 million in recoveries received in excess of forecast from overperformance during the quarter, partially offset by a negative $52.9 million adjustment for changes in expected future recoveries. The Company has assumed that the majority of the current quarter overperformance is acceleration of future collections and made cash forecast adjustments deemed appropriate given the current environment.

Expenses

Operating expenses in the quarter decreased $12.5 million compared to the first quarter of 2020. The decrease was primarily driven by a reduction in legal collection costs mainly as a result of a shift in collections from the legal channel to the call centers and digital platforms. This decrease was partially offset by an increase in agency fees primarily outside of the U.S.
Interest expense, net decreased $5.7 million compared to the first quarter of 2020 primarily due to the Company's early adoption of the new accounting for convertible debt as well as lower outstanding balances.
The effective tax rate for the first quarter of 2021 was 21.9%.

Portfolio Acquisitions

The Company purchased $159.0 million in finance receivables in the first quarter of 2021.
At the end of the first quarter, the Company had in place forward flow commitments of up to $640.7 million with $452.7 million in the Americas and Australia and $188.0 million in Europe.


Portfolio Purchase Source	2021		2020
($ in thousands)	Q1		Q4		Q3		Q2		Q1
Americas and Australia Core	$	88,912	$	67,460	$	84,139	$	110,474	$	172,697
Americas Insolvency	9,486		12,504		14,328		14,527		20,772
Europe Core	44,095		137,647		74,930		34,247		60,990
Europe Insolvency	16,468		72,171		4,203		5,251		18,778
Total Portfolio Acquisitions	$	158,961	$	289,782	$	177,600	$	164,499	$	273,237

Conference Call Information
PRA Group, Inc. will hold a conference call today at 5:00 p.m. ET to discuss results with institutional investors and stock analysts. To listen to a webcast of the call and view the accompanying slides, visit https://ir.pragroup.com/events-and-presentations. To listen by phone, call 844-835-9982 in the U.S. or 412-317-5267 outside the U.S. and ask for the PRA Group conference call. To listen to a replay of the call, either visit the same website until May 6, 2022, or call 877-344-7529 in the U.S. or 412-317-0088 outside the U.S. and use access code 10155063 until May 13, 2021.

About PRA Group
As a global leader in acquiring and collecting nonperforming loans, PRA Group, Inc. returns capital to banks and other creditors to help expand financial services for consumers in the Americas, Europe and Australia. With thousands of employees worldwide, PRA Group, Inc. companies collaborate with customers to help them resolve their debt. For more information, please visit www.pragroup.com.

About Forward Looking Statements
Statements made herein that are not historical in nature, including PRA Group, Inc.'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, Inc.'s future operations and financial 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, Inc. 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, Inc.'s filings with the Securities and Exchange Commission, including PRA Group, Inc.'s annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, which are available through PRA Group, Inc.'s website and contain a detailed discussion of PRA Group, Inc.'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 more 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 Group, Inc. assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA Group, Inc.'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
(Amounts in thousands, except per share amounts)

	Three Months Ended March 31,
	2021		2020
Revenues:
Portfolio income	$	231,672	$	262,022
Changes in expected recoveries	50,136		(12,816)
Fee income	2,181		2,209
Other revenue	5,480		369
Total revenues	289,469		251,784
Operating expenses:
Compensation and employee services	73,984		75,171
Legal collection fees	12,926		14,572
Legal collection costs	21,312		34,447
Agency fees	15,591		13,376
Outside fees and services	20,760		19,394
Communication	12,663		13,511
Rent and occupancy	4,480		4,484
Depreciation and amortization	3,981		4,084
Other operating expenses	13,018		12,205
Total operating expenses	178,715		191,244
Income from operations	110,754		60,540
Other income and (expense):
Interest expense, net	(31,552)		(37,211)
Foreign exchange (loss)/gain	(26)		2,283
Other	26		(76)
Income before income taxes	79,202		25,536
Income tax expense	17,322		3,100
Net income	61,880		22,436
Adjustment for net income attributable to noncontrolling interests	3,474		3,301
Net income attributable to PRA Group, Inc.	$	58,406	$	19,135
Net income per common share attributable to PRA Group, Inc.:
Basic	$	1.28	$	0.42
Diluted	$	1.27	$	0.42
Weighted average number of shares outstanding:
Basic	45,669		45,452
Diluted	46,045		45,784

PRA Group, Inc.
Consolidated Balance Sheets
(Amounts in thousands)

	(unaudited)
	March 31, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	92,798	$	108,613
Restricted cash	16,057		12,434
Investments	54,682		55,759
Finance receivables, net	3,372,666		3,514,788
Other receivables, net	3,223		13,194
Income taxes receivable	27,246		21,928
Deferred tax assets, net	72,523		83,205
Right-of-use assets	50,839		52,951
Property and equipment, net	56,825		58,356
Goodwill	492,751		492,989
Other assets	38,920		38,844
Total assets	$	4,278,530	$	4,453,061
Liabilities and Equity
Liabilities:
Accounts payable	$	4,817	$	5,294
Accrued expenses	76,684		97,320
Income taxes payable	31,853		29,692
Deferred tax liabilities, net	39,739		40,867
Lease liabilities	55,322		57,348
Interest-bearing deposits	124,998		132,739
Borrowings	2,501,133		2,661,289
Other liabilities	40,755		54,986
Total liabilities	2,875,301		3,079,535
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, 45,799 shares issued and outstanding at March 31, 2021; 100,000 shares authorized, 45,585 shares issued and outstanding at December 31, 2020	458		456
Additional paid-in capital	47,236		75,282
Retained earnings	1,582,384		1,511,970
Accumulated other comprehensive loss	(253,576)		(245,791)
Total stockholders' equity - PRA Group, Inc.	1,376,502		1,341,917
Noncontrolling interest	26,727		31,609
Total equity	1,403,229		1,373,526
Total liabilities and equity	$	4,278,530	$	4,453,061

Select Expenses (Income) Amounts in thousands, pre-tax
	Three Months Ended
	March 31, 2021	December 31, 2020	September 30, 2020	June 30, 2020	March 31, 2020	December 31, 2019	September 30, 2019	June 30, 2019
Acquisition/divestiture- related expenses	—	—	—	—	—	—	—	227
Legal costs not associated with normal operations	—	—	—	—	—	—	—	—
Noncash interest expense - amortization of debt discount	—	1,959	2,388	3,247	3,217	3,157	3,128	3,071
Noncash interest expense - amortization of debt issuance costs	2,256	2,393	2,476	2,743	2,640	2,649	2,649	2,655
Change in fair value of derivatives	3,102	3,875	3,701	3,284	2,039	1,247	1,126	1,645
Amortization of intangibles	181	1,792	360	351	349	407	400	418
Stock-based compensation expense	4,113	5,370	3,097	3,063	2,857	2,809	2,974	2,620

Purchase Price Multiples as of March 31, 2021 Amounts in thousands
Purchase Period	Purchase Price ⁽¹⁾⁽²⁾		Total Estimated Collections⁽³⁾		Estimated Remaining Collections ⁽⁴⁾		Current Estimated Purchase Price Multiple	Original Estimated Purchase Price Multiple ⁽⁵⁾
Americas and Australia Core
1996-2010	$	1,078,219	$	3,397,952	$	24,585	315%	240%
2011	209,602		719,618		15,897		343%	245%
2012	254,076		652,293		18,061		257%	226%
2013	390,826		894,640		30,051		229%	211%
2014	404,117		859,775		45,345		213%	204%
2015	443,114		913,857		106,551		206%	205%
2016	455,767		1,098,295		207,608		241%	201%
2017	532,851		1,211,584		325,675		227%	193%
2018	653,975		1,368,879		447,682		209%	202%
2019	581,476		1,239,777		622,713		213%	206%
2020	435,668		931,493		717,342		214%	213%
2021	88,822		188,644		184,196		212%	212%
Subtotal	5,528,513		13,476,807		2,745,706
Americas Insolvency
1996-2010	606,395		1,382,677		920		228%	180%
2011	180,432		370,183		493		205%	155%
2012	251,395		392,723		184		156%	136%
2013	227,834		354,943		651		156%	133%
2014	148,420		218,432		1,695		147%	124%
2015	63,170		87,087		876		138%	125%
2016	91,442		117,159		6,736		128%	123%
2017	275,257		349,209		51,318		127%	125%
2018	97,879		131,461		58,999		134%	127%
2019	123,077		158,692		105,361		129%	128%
2020	62,130		84,972		75,489		137%	136%
2021	9,486		13,185		13,168		139%	139%
Subtotal	2,136,917		3,660,723		315,890
Total Americas and Australia	7,665,430		17,137,530		3,061,596
Europe Core
2012	20,409		41,543		—		204%	187%
2013	20,334		25,653		—		126%	119%
2014	773,811		2,240,653		586,113		290%	208%
2015	411,340		725,713		250,732		176%	160%
2016	333,090		562,194		285,405		169%	167%
2017	252,174		354,024		184,108		140%	144%
2018	341,775		529,154		346,370		155%	148%
2019	518,610		776,604		587,133		150%	152%
2020	324,119		557,506		491,301		172%	172%
2021	43,635		77,780		76,397		178%	178%
Subtotal	3,039,297		5,890,824		2,807,559
Europe Insolvency
2014	10,876		18,228		130		168%	129%
2015	18,973		29,018		1,997		153%	139%
2016	39,338		56,926		8,784		145%	130%
2017	39,235		49,255		17,707		126%	128%
2018	44,908		52,080		32,060		116%	123%
2019	77,218		101,866		72,242		132%	130%
2020	105,440		135,896		121,891		129%	129%
2021	16,621		20,786		20,151		125%	125%
Subtotal	352,609		464,055		274,962
Total Europe	3,391,906		6,354,879		3,082,521
Total PRA Group	$	11,057,336	$	23,492,409	$	6,144,117


(1)	Includes the acquisition date finance receivables portfolios that were acquired through our business acquisitions.
(2)	For our non-U.S. amounts, purchase price is 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)	For our non-U.S. amounts, TEC is presented at the year-end exchange rate for the respective year of purchase.
(4)	For our non-U.S. amounts, ERC is presented at the March 31, 2021 exchange rate.
(5)	The Original Estimated Purchase Price Multiple represents the purchase price multiple at the end of the year of acquisition.

Portfolio Financial Information Year-to-date as of March 31, 2021 Amounts in thousands
Purchase Period	Cash Collections⁽¹⁾		Portfolio Income ⁽¹⁾		Change in Expected Recoveries ⁽¹⁾		Total Portfolio Revenue⁽¹⁾⁽²⁾		Net Finance Receivables as of March 31, 2021⁽³⁾
Americas and Australia Core
1996-2010	$	3,726	$	2,319	$	447	$	2,766	$	5,178
2011	2,259		1,405		309		1,714		2,596
2012	2,786		1,286		375		1,661		5,638
2013	4,968		2,526		(351)		2,175		13,495
2014	6,937		3,494		(2,154)		1,340		19,677
2015	11,958		6,355		(4,961)		1,394		45,306
2016	24,893		11,990		3,908		15,898		84,015
2017	41,722		18,236		3,937		22,173		145,799
2018	75,462		25,404		10,591		35,995		245,467
2019	88,246		35,129		6,417		41,546		331,169
2020	80,231		35,446		16,613		52,059		369,418
2021	4,450		2,728		838		3,566		87,902
Subtotal	347,638		146,318		35,969		182,287		1,355,660
Americas Insolvency
1996-2010	181		186		(5)		181		—
2011	76		73		3		76		—
2012	190		72		120		192		—
2013	201		181		20		201		—
2014	298		355		(90)		265		190
2015	446		247		(202)		45		497
2016	2,727		491		241		732		5,429
2017	11,752		2,621		468		3,089		43,107
2018	7,812		1,778		751		2,529		50,368
2019	8,594		2,488		(1,786)		702		89,380
2020	2,960		1,897		535		2,432		57,174
2021	16		101		(14)		87		9,553
Subtotal	35,253		10,490		41		10,531		255,698
Total Americas and Australia	382,891		156,808		36,010		192,818		1,611,358
Europe Core
2012	283		—		283		283		—
2013	171		—		171		171		—
2014	37,843		25,589		7,184		32,773		159,401
2015	13,464		7,427		(6,091)		1,336		130,541
2016	11,956		6,431		(649)		5,782		164,228
2017	9,565		3,191		(1,076)		2,115		127,233
2018	18,365		6,289		4,576		10,865		226,773
2019	32,020		10,111		2,450		12,561		390,892
2020	24,425		9,595		4,578		14,173		293,315
2021	1,394		210		1,015		1,225		43,431
Subtotal	149,486		68,843		12,441		81,284		1,535,814
Europe Insolvency
2014	88		48		6		54		55
2015	530		225		5		230		1,335
2016	1,762		546		118		664		6,487
2017	2,484		398		140		538		15,696
2018	2,967		640		(764)		(124)		27,919
2019	6,222		1,554		183		1,737		59,244
2020	8,817		2,410		850		3,260		98,227
2021	640		200		1,147		1,347		16,531
Subtotal	23,510		6,021		1,685		7,706		225,494
Total Europe	172,996		74,864		14,126		88,990		1,761,308
Total PRA Group	$	555,887	$	231,672	$	50,136	$	281,808	$	3,372,666


(1)	For our non-U.S. amounts, amounts are presented using the average exchange rates during the current reporting period.
(2)	Total Portfolio Revenue refers to Portfolio Income and Changes in Expected Recoveries combined.
(3)	For our non-U.S. amounts, Net Finance Receivables are presented at the March 31, 2021 exchange rate.

Cash Collections by Year, By Year of Purchase ⁽¹⁾ as of March 31, 2021 Amounts in millions
			Cash Collections
Purchase Period	Purchase Price ⁽²⁾⁽³⁾		1996- 2010		2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		Total
Americas and Australia Core
1996-2010	$	1,078.2	$	1,990.5	$	367.1	$	311.5	$	228.4	$	157.7	$	109.3	$	70.2	$	46.0	$	34.4	$	28.4	$	18.8	$	3.7	$	3,366.0
2011	209.6		—		62.0		174.5		152.9		108.5		73.8		48.7		32.0		21.6		16.6		10.9		2.3		703.8
2012	254.1		—		—		56.9		173.6		146.2		97.3		60.0		40.0		27.8		17.9		11.8		2.8		634.3
2013	390.8		—		—		—		101.6		247.8		194.0		120.8		78.9		56.4		36.9		23.2		5.0		864.6
2014	404.1		—		—		—		—		92.7		253.4		170.3		114.2		82.2		55.3		31.9		6.9		806.9
2015	443.1		—		—		—		—		—		117.0		228.4		185.9		126.6		83.6		57.2		12.0		810.7
2016	455.8		—		—		—		—		—		—		138.7		256.5		194.6		140.6		105.9		24.9		861.2
2017	532.9		—		—		—		—		—		—		—		107.3		278.7		256.5		192.5		41.7		876.7
2018	654.0		—		—		—		—		—		—		—		—		122.7		361.9		337.7		75.5		897.8
2019	581.5		—		—		—		—		—		—		—		—		—		143.8		349.0		88.2		581.0
2020	435.7		—		—		—		—		—		—		—		—		—		—		133.0		80.2		213.2
2021	88.8		—		—		—		—		—		—		—		—		—		—		—		4.4		4.4
Subtotal	5,528.6		1,990.5		429.1		542.9		656.5		752.9		844.8		837.1		860.8		945.0		1,141.5		1,271.9		347.6		10,620.6
Americas Insolvency
1996-2010	606.4		390.9		261.2		270.4		231.0		158.9		51.2		8.6		4.6		2.5		1.4		0.8		0.2		1,381.7
2011	180.4		—		15.2		66.4		82.8		85.8		76.9		36.0		3.7		1.6		0.7		0.5		0.1		369.7
2012	251.4		—		—		17.4		103.6		94.1		80.1		60.7		29.3		4.3		1.9		0.9		0.2		392.5
2013	227.8		—		—		—		52.5		82.6		81.7		63.4		47.8		21.9		2.9		1.3		0.2		354.3
2014	148.4		—		—		—		—		37.0		50.9		44.3		37.4		28.8		15.8		2.2		0.3		216.7
2015	63.2		—		—		—		—		—		3.4		17.9		20.1		19.8		16.7		7.9		0.4		86.2
2016	91.4		—		—		—		—		—		—		18.9		30.4		25.0		19.9		14.4		2.7		111.3
2017	275.3		—		—		—		—		—		—		—		49.1		97.3		80.9		58.8		11.8		297.9
2018	97.9		—		—		—		—		—		—		—		—		6.7		27.4		30.5		7.8		72.4
2019	123.1		—		—		—		—		—		—		—		—		—		13.3		31.4		8.6		53.3
2020	62.1		—		—		—		—		—		—		—		—		—		—		6.6		3.0		9.6
2021	9.5		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal	2,136.9		390.9		276.4		354.2		469.9		458.4		344.2		249.8		222.4		207.9		180.9		155.3		35.3		3,345.6
Total Americas and Australia	7,665.5		2,381.4		705.5		897.1		1,126.4		1,211.3		1,189.0		1,086.9		1,083.2		1,152.9		1,322.4		1,427.2		382.9		13,966.2
Europe Core
2012	20.4		—		—		11.6		9.0		5.6		3.2		2.2		2.0		2.0		1.5		1.2		0.3		38.6
2013	20.3		—		—		—		7.1		8.5		2.3		1.3		1.2		1.3		0.9		0.7		0.2		23.5
2014	773.8		—		—		—		—		153.2		292.0		246.4		220.8		206.3		172.9		149.8		37.8		1,479.2
2015	411.3		—		—		—		—		—		45.8		100.3		86.2		80.9		66.1		54.3		13.4		447.0
2016	333.1		—		—		—		—		—		—		40.4		78.9		72.6		58.0		48.3		12.0		310.2
2017	252.2		—		—		—		—		—		—		—		17.9		56.0		44.1		36.1		9.6		163.7
2018	341.8		—		—		—		—		—		—		—		—		24.3		88.7		71.2		18.4		202.6
2019	518.6		—		—		—		—		—		—		—		—		—		47.9		125.7		32.0		205.6
2020	324.1		—		—		—		—		—		—		—		—		—		—		32.4		24.4		56.8
2021	43.6		—		—		—		—		—		—		—		—		—		—		—		1.4		1.4
Subtotal	3,039.2		—		—		11.6		16.1		167.3		343.3		390.6		407.0		443.4		480.1		519.7		149.5		2,928.6
Europe Insolvency
2014	10.9		—		—		—		—		—		4.3		3.9		3.2		2.6		1.5		0.8		0.1		16.4
2015	19.0		—		—		—		—		—		3.0		4.4		5.0		4.8		3.9		2.9		0.5		24.5
2016	39.3		—		—		—		—		—		—		6.2		12.7		12.9		10.7		7.9		1.8		52.2
2017	39.2		—		—		—		—		—		—		—		1.2		7.9		9.2		9.8		2.5		30.6
2018	44.9		—		—		—		—		—		—		—		—		0.6		8.4		10.3		3.0		22.3
2019	77.2		—		—		—		—		—		—		—		—		—		5.1		21.1		6.2		32.4
2020	105.4		—		—		—		—		—		—		—		—		—		—		6.1		8.8		14.9
2021	16.7		—		—		—		—		—		—		—		—		—		—		—		0.6		0.6
Subtotal	352.6		—		—		—		—		—		7.3		14.5		22.1		28.8		38.8		58.9		23.5		193.9
Total Europe	3,391.8		—		—		11.6		16.1		167.3		350.6		405.1		429.1		472.2		518.9		578.6		173.0		3,122.5
Total PRA Group	$	11,057.3	$	2,381.4	$	705.5	$	908.7	$	1,142.5	$	1,378.6	$	1,539.6	$	1,492.0	$	1,512.3	$	1,625.1	$	1,841.3	$	2,005.8	$	555.9	$	17,088.7


(1)	For our non-U.S. amounts, cash collections are presented using the average exchange rates during the cash collection period.
(2)	Includes the finance receivables portfolios that were acquired through our business acquisitions.
(3)	For our non-U.S. amounts, purchase price is 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.

Use of Non-GAAP Financial Measures

PRA Group, Inc. reports financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management uses certain non-GAAP financial measures, including Adjusted EBITDA, internally to evaluate the Company's performance and to set performance goals. Adjusted EBITDA is calculated as net income attributable to PRA Group, Inc. plus income tax expense; less foreign exchange gain (or plus foreign exchange loss); plus interest expense, net; plus other expense; plus depreciation and amortization; plus adjustment for net income attributable to noncontrolling interests; and plus recoveries applied to negative allowance less changes in expected recoveries. Adjusted EBITDA is a supplemental measure of performance that is not required by, or presented in accordance with, GAAP. PRA Group, Inc. presents Adjusted EBITDA because the Company considers it an important supplemental measure of operations and financial performance. Management believes Adjusted EBITDA helps provide enhanced period-to-period comparability of operations and financial performance 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. Set forth below is a reconciliation of Adjusted EBITDA for the last twelve months (LTM) ended March 31, 2021 and for the year ended December 31, 2020, to net income, the most directly comparable financial measure calculated and reported in accordance with GAAP. The calculation of Adjusted EBITDA below may not be comparable to the calculation of similarly titled measures reported by other companies.

Reconciliation of Non-GAAP Financial Measures
	LTM		For the Year Ended
Adjusted EBITDA for PRA Group ($ in millions)	March 31, 2021		December 31, 2020
Net income attributable to PRA Group, Inc.	$	189	$	149
Adjustments:
Income tax expense	55		41
Foreign exchange losses/(gains)	—		(2)
Interest expense, net	136		142
Other expense	1		1
Depreciation and amortization	18		18
Adjustment for net income attributable to noncontrolling interests	19		18
Recoveries applied to negative allowance less Changes in expected recoveries	997		968
Adjusted EBITDA	$	1,416	$	1,337

Additionally, The Company evaluates our business using certain ratios that use Adjusted EBITDA. Debt to Adjusted EBITDA is calculated by dividing borrowings by Adjusted EBITDA. The following table reflects our Debt to Adjusted EBITDA for LTM as of March 31, 2021 and for the year ended December 31, 2020 (amounts in millions):

Debt to Adjusted EBITDA
	LTM		For the Year Ended
	March 31, 2021		December 31, 2020
Borrowings	$	2,501	$	2,661
LTM Adjusted EBITDA	1,416		1,337
Debt to LTM Adjusted EBITDA	1.77		1.99