PRA Group (PRAA) investor relations material

Industry overview and market dynamics

• Non-performing loans (NPLs) arise when borrowers default, creating opportunities for debt buyers to acquire and collect on these portfolios.

• The U.S. NPL market is the largest globally, with over $1 trillion in credit card balances and stable charge-off rates.

• Both U.S. and European markets offer attractive supply environments, with regulatory complexity in the U.S. creating barriers to entry.

• Economic cycles impact both collections and NPL supply, with resilience observed among customers repaying debts.

• European regulation encourages NPL sales, while the U.S. faces multi-level regulatory scrutiny.

Strategic initiatives and operational changes

• A new PRA 3.0 strategy focuses on disciplined capital allocation, technology modernization, and a high-performance culture.

• Major U.S. cost restructurings included eliminating 215 overhead and 575 call center roles, closing multiple sites, and launching a cloud-based contact platform.

• Annualized net savings from restructuring are projected at $35 million by late next year.

• A talent hub was established in Charlotte to attract financial services expertise and support future technology needs.

• Management incentives have been realigned to better match shareholder interests.

Financial performance and capital allocation

• Record portfolio purchases in 2024 ($1.4B) and strong collections ($559M in Q2), with ERC at $8.9B.

• Adjusted EBITDA up 35% since 2023, outpacing cash collections and demonstrating operating leverage.

• Net leverage declined to 2.67, marking seven consecutive quarters of deleveraging.

• Funding is diversified with no maturities until 2028 and $1B in liquidity; recent euro bond issuance highlights global access.

• $40M in share repurchases over 15 months, with a new $150M buyback program authorized.