PRA Group Reports Second Quarter 2021 Results

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Aug 05, 2021, 16:05 ET

NORFOLK, Va., Aug. 5, 2021 /PRNewswire/ -- PRA Group, Inc. (Nasdaq: PRAA), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the second quarter of 2021. The Company reported net income attributable to PRA Group, Inc. of $56.0 million in the second quarter, compared with $57.9 million in the prior year period. Diluted earnings per share were $1.22 versus $1.26 in the second quarter of 2020. For the six months ended June 30, 2021, net income attributable to PRA Group, Inc. was $114.4 million, or $2.48 per diluted share, compared with $77.0 million, or $1.68 per diluted share, during the same period in 2020.

Second Quarter Highlights (compared to the second quarter of 2020, unless otherwise indicated)

Total cash collections increased 7% to $543.8 million.
Total revenues increased 5% to $285.6 million.
Cash efficiency ratio¹ of 66.8%.
Diluted earnings per share were $1.22.
Debt to Adjusted EBITDA² for the last 12 months improved to 1.69x from 1.99x at December 31, 2020.
Total portfolio purchases of $219.7 million, an increase of $61 million, or 38%, from the first quarter of 2021.
Estimated remaining collections (ERC) of $6.1 billion.
$1.2 billion available for portfolio purchases.

"This quarter's strong performance is yet another in a line of outstanding results that we have delivered in the past year and a half. Global cash collections were only $12 million behind our record setting first quarter and Europe delivered the largest quarter ever. Portfolio purchases during the quarter increased on a sequential basis, with the Americas registering its largest quarter since the second quarter of 2020, and Europe recording its second best Q2 since PRA became a global enterprise in July 2014," said Kevin Stevenson, president and chief executive officer. "Based on our strong results and capital position, the Board of Directors approved a $150 million share repurchase program."

Calculated by dividing cash receipts less operating expense by cash receipts.
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)	Q2		Q1		Q4		Q3		Q2
Americas and Australia Core	$	324,845	$	347,638	$	286,524	$	336,322	$	343,269
Americas Insolvency	37,768		35,253		36,048		37,344		38,685
Europe Core	157,637		149,486		141,471		131,702		115,145
Europe Insolvency	23,579		23,510		17,830		13,971		12,841
Total Cash Collections	$	543,829	$	555,887	$	481,873	$	519,339	$	509,940



Cash Collection Source -
Constant Currency Adjusted	2021								2020
($ in thousands)	Q2								Q2
Americas and Australia Core	$	324,845							$	344,539
Americas Insolvency	37,768								38,732
Europe Core	157,637								128,859
Europe Insolvency	23,579								14,393
Total Cash Collections	$	543,829							$	526,523

Cash collections in the quarter increased $33.9 million compared to the second quarter of 2020. The increase was primarily due to a 42% increase in Europe cash collections and a 20% increase in Other Americas & Australia Core cash collections. This increase was partially offset by a decrease in U.S. call centers and U.S. legal cash collections. For the six months ended June 30, 2021, cash collections increased $95.2 million compared to the same period last year.
Total portfolio revenue was $282.7 million, an increase of $14.6 million, compared to $268.1 million during the second quarter of 2020. The Company has assumed that the majority of the current quarter overperformance was acceleration of future collections and made adjustments in some geographies to increase near term expected collections, bringing them in line with recent performance and trends in collections, with the corresponding reductions later in the forecast period.

Expenses

Operating expenses in the quarter increased $20.8 million compared to the second quarter of 2020. The increase is primarily driven by:

an increase in compensation and employee services primarily due to medical benefits, unfavorable foreign exchange and the timing of performance based compensation accruals;
an increase in agency fees due to increased fees outside the U.S.; and
an increase in other operating expenses primarily due to investments in digital and data.

For the six months ended June 30, 2021, operating expenses increased $8.3 million compared to the same period last year.
Interest expense, net decreased $4.6 million compared to the second quarter of 2020 primarily due to lower average borrowings this year and a change in accounting for convertible notes.
The effective tax rate for the six months ended June 30, 2021 was 19.3%.

Portfolio Acquisitions

The Company purchased $219.7 million in finance receivables in the second quarter of 2021.
At the end of the second quarter, the Company had in place forward flow commitments of up to $521.1 million with $377.2 million in the Americas and Australia and $143.9 million in Europe.


Portfolio Purchase Source	2021				2020
($ in thousands)	Q2		Q1		Q4		Q3		Q2
Americas and Australia Core	$	98,901	$	88,912	$	67,460	$	84,139	$	110,474
Americas Insolvency	14,642		9,486		12,504		14,328		14,527
Europe Core	106,134		44,095		137,647		74,930		34,247
Europe Insolvency	—		16,468		72,171		4,203		5,251
Total Portfolio Acquisitions	$	219,677	$	158,961	$	289,782	$	177,600	$	164,499

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 August 5, 2022, or call 877-344-7529 in the U.S. or 412-317-0088 outside the U.S. and use access code 10158082 until August 12, 2021.

About PRA Group, Inc.
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 June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues:
Portfolio income	$	219,137	$	248,284	$	450,809	$	510,306
Changes in expected recoveries	63,548		19,801		113,684		6,985
Total portfolio revenue	282,685		268,085		564,493		517,291
Fee income	2,453		2,639		4,634		4,848
Other revenue	491		1,186		5,971		1,555
Total revenues	285,629		271,910		575,098		523,694
Operating expenses:
Compensation and employee services	79,632		70,472		153,616		145,643
Legal collection fees	12,289		13,742		25,215		28,314
Legal collection costs	18,469		19,507		39,781		53,954
Agency fees	15,908		10,343		31,499		23,719
Outside fees and services	20,973		18,683		41,733		38,077
Communication	10,594		8,812		23,257		22,323
Rent and occupancy	4,643		4,471		9,123		8,955
Depreciation and amortization	3,815		4,109		7,796		8,193
Other operating expenses	15,092		10,491		28,110		22,696
Total operating expenses	181,415		160,630		360,130		351,874
Income from operations	104,214		111,280		214,968		171,820
Other income and (expense):
Interest expense, net	(30,836)		(35,416)		(62,388)		(72,627)
Foreign exchange (loss)/gain	(1,079)		683		(1,105)		2,966
Other	183		(1,582)		209		(1,658)
Income before income taxes	72,482		74,965		151,684		100,501
Income tax expense	11,921		14,137		29,243		17,237
Net income	60,561		60,828		122,441		83,264
Adjustment for net income attributable to noncontrolling interests	4,565		2,914		8,039		6,215
Net income attributable to PRA Group, Inc.	$	55,996	$	57,914	$	114,402	$	77,049
Net income per common share attributable to PRA Group, Inc.:
Basic	$	1.22	$	1.27	$	2.50	$	1.69
Diluted	$	1.22	$	1.26	$	2.48	$	1.68
Weighted average number of shares outstanding:
Basic	45,807		45,548		45,738		45,500
Diluted	46,059		45,987		46,051		45,886

PRA Group, Inc.
Consolidated Balance Sheets
(Amounts in thousands)
	(unaudited)
	June 30, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	76,013	$	108,613
Restricted cash	4,631		12,434
Investments	87,631		55,759
Finance receivables, net	3,349,038		3,514,788
Other receivables, net	7,096		13,194
Income taxes receivable	21,366		21,928
Deferred tax assets, net	78,935		83,205
Right-of-use assets	50,068		52,951
Property and equipment, net	54,895		58,356
Goodwill	492,843		492,989
Other assets	38,777		38,844
Total assets	$	4,261,293	$	4,453,061
Liabilities and Equity
Liabilities:
Accounts payable	$	5,229	$	5,294
Accrued expenses	86,634		97,320
Income taxes payable	27,872		29,692
Deferred tax liabilities, net	35,682		40,867
Lease liabilities	54,506		57,348
Interest-bearing deposits	131,221		132,739
Borrowings	2,408,875		2,661,289
Other liabilities	36,334		54,986
Total liabilities	2,786,353		3,079,535
Equity:
Preferred stock, $0.01 par value, 2,000 shares authorized, 0 shares issued and outstanding	—		—
Common stock, $0.01 par value, 100,000 shares authorized, 45,837 shares issued and outstanding at June 30, 2021; 100,000 shares authorized, 45,585 shares issued and outstanding at December 31, 2020	458		456
Additional paid-in capital	51,206		75,282
Retained earnings	1,638,380		1,511,970
Accumulated other comprehensive loss	(235,359)		(245,791)
Total stockholders' equity - PRA Group, Inc.	1,454,685		1,341,917
Noncontrolling interest	20,255		31,609
Total equity	1,474,940		1,373,526
Total liabilities and equity	$	4,261,293	$	4,453,061

Select Expenses (Income) Amounts in thousands, pre-tax
	Three Months Ended
	June 30, 2021	March 31, 2021	December 31, 2020	September 30, 2020	June 30, 2020	March 31, 2020	December 31, 2019	September 30, 2019

Acquisition/divestiture-related expenses	—	—	—	—	—	—	—	—
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
Noncash interest expense - amortization of debt issuance costs	2,391	2,256	2,393	2,476	2,743	2,640	2,649	2,649
Change in fair value of derivatives	2,911	3,102	3,875	3,701	3,284	2,039	1,247	1,126
Amortization of intangibles	105	181	1,792	360	351	349	407	400
Stock-based compensation expense	4,040	4,113	5,370	3,097	3,063	2,857	2,809	2,974

Purchase Price Multiples as of June 30, 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	$	3,399,742	$	22,911	315%	240%
2011	209,602		719,746		13,914		343%	245%
2012	254,076		652,359		15,602		257%	226%
2013	390,826		894,134		24,948		229%	211%
2014	404,117		859,490		39,040		213%	204%
2015	443,114		908,215		90,848		205%	205%
2016	455,767		1,101,515		185,065		242%	201%
2017	532,851		1,213,368		292,041		228%	193%
2018	653,975		1,405,115		413,129		215%	202%
2019	581,476		1,245,056		555,835		214%	206%
2020	435,668		931,600		639,764		214%	213%
2021	187,751		372,447		351,984		198%	198%
Subtotal	5,627,442		13,702,787		2,645,081
Americas Insolvency
1996-2010	606,395		1,382,687		753		228%	180%
2011	180,432		370,168		428		205%	155%
2012	251,395		392,828		132		156%	136%
2013	227,834		355,056		545		156%	133%
2014	148,420		218,441		1,370		147%	124%
2015	63,170		87,122		562		138%	125%
2016	91,442		117,355		4,647		128%	123%
2017	275,257		349,729		40,051		127%	125%
2018	97,879		131,541		50,765		134%	127%
2019	123,077		158,965		95,913		129%	128%
2020	62,130		84,971		71,527		137%	136%
2021	24,133		33,183		32,819		138%	138%
Subtotal	2,151,564		3,682,046		299,512
Total Americas and Australia	7,779,006		17,384,833		2,944,593
Europe Core
2012	20,409		41,917		—		205%	187%
2013	20,334		25,881		—		127%	119%
2014	773,811		2,240,702		552,490		290%	208%
2015	411,340		724,135		238,174		176%	160%
2016	333,090		561,788		274,769		169%	167%
2017	252,174		353,405		175,394		140%	144%
2018	341,775		528,763		331,552		155%	148%
2019	518,610		775,304		560,752		149%	152%
2020	324,119		554,083		468,618		171%	172%
2021	148,907		262,529		254,428		176%	176%
Subtotal	3,144,569		6,068,507		2,856,177
Europe Insolvency
2014	10,876		18,258		79		168%	129%
2015	18,973		29,005		1,539		153%	139%
2016	39,338		56,883		7,124		145%	130%
2017	39,235		49,255		15,447		126%	128%
2018	44,908		52,080		29,309		116%	123%
2019	77,218		101,982		66,492		132%	130%
2020	105,440		135,895		113,782		129%	129%
2021	16,705		20,633		19,137		124%	124%
Subtotal	352,693		463,991		252,909
Total Europe	3,497,262		6,532,498		3,109,086
Total PRA Group	$	11,276,268	$	23,917,331	$	6,053,679


(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 June 30, 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 June 30, 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 June 30, 2021⁽³⁾
Americas and Australia Core
1996-2010	$	7,190	$	4,282	$	1,944	$	6,226	$	5,173
2011	4,371		2,586		1,146		3,732		2,503
2012	5,310		2,364		1,042		3,406		4,857
2013	9,565		4,580		(493)		4,087		10,810
2014	13,130		6,135		(2,361)		3,774		15,970
2015	21,951		11,424		(8,717)		2,707		36,653
2016	45,983		22,459		3,354		25,813		72,898
2017	77,310		34,297		7,802		42,099		130,286
2018	141,054		47,049		24,688		71,737		216,883
2019	166,716		65,539		18,558		84,097		299,328
2020	159,431		67,614		35,441		103,055		341,846
2021	20,472		13,641		148		13,789		180,575
Subtotal	672,483		281,970		82,552		364,522		1,317,782
Americas Insolvency
1996-2010	357		352		5		357		—
2011	126		138		(12)		126		—
2012	347		124		225		349		—
2013	421		287		134		421		—
2014	633		652		(117)		535		125
2015	795		383		(167)		216		319
2016	5,031		867		447		1,314		3,707
2017	23,539		4,792		1,113		5,905		34,136
2018	16,125		3,380		932		4,312		43,837
2019	18,361		4,768		(1,467)		3,301		82,243
2020	6,920		3,755		637		4,392		55,112
2021	366		566		(92)		474		24,153
Subtotal	73,021		20,064		1,638		21,702		243,632
Total Americas and Australia	745,504		302,034		84,190		386,224		1,561,414
Europe Core
2012	604		—		604		604		—
2013	363		—		363		363		—
2014	77,988		50,288		15,601		65,889		153,921
2015	26,926		14,276		(7,091)		7,185		124,109
2016	24,620		12,632		(597)		12,035		158,984
2017	18,839		6,259		(3,049)		3,210		119,645
2018	36,684		12,439		5,101		17,540		217,182
2019	63,968		19,814		7,106		26,920		376,028
2020	48,947		18,892		6,322		25,214		282,525
2021	8,184		2,474		1,680		4,154		144,787
Subtotal	307,123		137,074		26,040		163,114		1,577,181
Europe Insolvency
2014	171		79		36		115		34
2015	989		406		64		470		1,115
2016	3,449		1,012		295		1,307		5,454
2017	4,874		754		298		1,052		13,865
2018	5,962		1,224		(655)		569		25,789
2019	12,523		3,017		880		3,897		55,338
2020	17,618		4,713		1,545		6,258		92,948
2021	1,503		496		991		1,487		15,900
Subtotal	47,089		11,701		3,454		15,155		210,443
Total Europe	354,212		148,775		29,494		178,269		1,787,624
Total PRA Group	$	1,099,716	$	450,809	$	113,684	$	564,493	$	3,349,038


(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 June 30, 2021 exchange rate.

Cash Collections by Year, By Year of Purchase ⁽¹⁾ as of June 30, 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	$	7.2	$	3,369.5
2011	209.6		—		62.0		174.5		152.9		108.5		73.8		48.7		32.0		21.6		16.6		10.9		4.4		705.9
2012	254.1		—		—		56.9		173.6		146.2		97.3		60.0		40.0		27.8		17.9		11.8		5.3		636.8
2013	390.8		—		—		—		101.6		247.8		194.0		120.8		78.9		56.4		36.9		23.2		9.6		869.2
2014	404.1		—		—		—		—		92.7		253.4		170.3		114.2		82.2		55.3		31.9		13.1		813.1
2015	443.1		—		—		—		—		—		117.0		228.4		185.9		126.6		83.6		57.2		22.0		820.7
2016	455.8		—		—		—		—		—		—		138.7		256.5		194.6		140.6		105.9		46.0		882.3
2017	532.9		—		—		—		—		—		—		—		107.3		278.7		256.5		192.5		77.3		912.3
2018	654.0		—		—		—		—		—		—		—		—		122.7		361.9		337.7		141.1		963.4
2019	581.5		—		—		—		—		—		—		—		—		—		143.8		349.0		166.7		659.5
2020	435.7		—		—		—		—		—		—		—		—		—		—		133.0		159.4		292.4
2021	187.8		—		—		—		—		—		—		—		—		—		—		—		20.4		20.4
Subtotal	5,627.6		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		672.5		10,945.5
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		0.4		1,381.9
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		0.3		392.6
2013	227.8		—		—		—		52.5		82.6		81.7		63.4		47.8		21.9		2.9		1.3		0.4		354.5
2014	148.4		—		—		—		—		37.0		50.9		44.3		37.4		28.8		15.8		2.2		0.6		217.0
2015	63.2		—		—		—		—		—		3.4		17.9		20.1		19.8		16.7		7.9		0.8		86.6
2016	91.4		—		—		—		—		—		—		18.9		30.4		25.0		19.9		14.4		5.0		113.6
2017	275.3		—		—		—		—		—		—		—		49.1		97.3		80.9		58.8		23.6		309.7
2018	97.9		—		—		—		—		—		—		—		—		6.7		27.4		30.5		16.1		80.7
2019	123.1		—		—		—		—		—		—		—		—		—		13.3		31.4		18.4		63.1
2020	62.1		—		—		—		—		—		—		—		—		—		—		6.6		6.9		13.5
2021	24.1		—		—		—		—		—		—		—		—		—		—		—		0.4		0.4
Subtotal	2,151.5		390.9		276.4		354.2		469.9		458.4		344.2		249.8		222.4		207.9		180.9		155.3		73.0		3,383.3
Total Americas and Australia	7,779.1		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		745.5		14,328.8
Europe Core
2012	20.4		—		—		11.6		9.0		5.6		3.2		2.2		2.0		2.0		1.5		1.2		0.6		38.9
2013	20.3		—		—		—		7.1		8.5		2.3		1.3		1.2		1.3		0.9		0.7		0.4		23.7
2014	773.8		—		—		—		—		153.2		292.0		246.4		220.8		206.3		172.9		149.8		78.0		1,519.4
2015	411.3		—		—		—		—		—		45.8		100.3		86.2		80.9		66.1		54.3		26.9		460.5
2016	333.1		—		—		—		—		—		—		40.4		78.9		72.6		58.0		48.3		24.6		322.8
2017	252.2		—		—		—		—		—		—		—		17.9		56.0		44.1		36.1		18.8		172.9
2018	341.8		—		—		—		—		—		—		—		—		24.3		88.7		71.2		36.7		220.9
2019	518.6		—		—		—		—		—		—		—		—		—		47.9		125.7		64.0		237.6
2020	324.1		—		—		—		—		—		—		—		—		—		—		32.4		48.9		81.3
2021	148.9		—		—		—		—		—		—		—		—		—		—		—		8.2		8.2
Subtotal	3,144.5		—		—		11.6		16.1		167.3		343.3		390.6		407.0		443.4		480.1		519.7		307.1		3,086.2
Europe Insolvency
2014	10.9		—		—		—		—		—		4.3		3.9		3.2		2.6		1.5		0.8		0.2		16.5
2015	19.0		—		—		—		—		—		3.0		4.4		5.0		4.8		3.9		2.9		1.0		25.0
2016	39.3		—		—		—		—		—		—		6.2		12.7		12.9		10.7		7.9		3.4		53.8
2017	39.2		—		—		—		—		—		—		—		1.2		7.9		9.2		9.8		4.9		33.0
2018	44.9		—		—		—		—		—		—		—		—		0.6		8.4		10.3		6.0		25.3
2019	77.2		—		—		—		—		—		—		—		—		—		5.1		21.1		12.5		38.7
2020	105.4		—		—		—		—		—		—		—		—		—		—		6.1		17.6		23.7
2021	16.7		—		—		—		—		—		—		—		—		—		—		—		1.5		1.5
Subtotal	352.6		—		—		—		—		—		7.3		14.5		22.1		28.8		38.8		58.9		47.1		217.5
Total Europe	3,497.1		—		—		11.6		16.1		167.3		350.6		405.1		429.1		472.2		518.9		578.6		354.2		3,303.7
Total PRA Group	$	11,276.2	$	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	$	1,099.7	$	17,632.5


(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 June 30, 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)	June 30, 2021		December 31, 2020
Net income attributable to PRA Group, Inc.	$	187	$	149
Adjustments:
Income tax expense	53		41
Foreign exchange losses/(gains)	2		(2)
Interest expense, net	131		142
Other expense	(1)		1
Depreciation and amortization	18		18
Adjustment for net income attributable to noncontrolling interests	20		18
Recoveries applied to negative allowance less Changes in expected recoveries	1,017		968
Adjusted EBITDA	$	1,428	$	1,337

Additionally, management evaluates the Company's 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 reflects our Debt to Adjusted EBITDA for LTM as of June 30, 2021 and for the year ended December 31, 2020 (amounts in millions):

Debt to Adjusted EBITDA
	LTM		For the Year Ended
	June 30, 2021		December 31, 2020
Borrowings	$	2,409	$	2,661
LTM Adjusted EBITDA	1,428		1,337
Debt to LTM Adjusted EBITDA	1.69		1.99