PRA GROUP INC Q3 FY2025 earnings call

• Cost efficiency: Implemented a cost reduction program in the U.S., reducing headcount by over 115 employees, with gross annualized cost savings ~$20 million. U.S. call center headcount reduced by 170 agents. - U.S. operations reorganization: Fully implemented a new cross-functional structure led by a Global Operations Officer with collections experience. - Talent hub: Set up a second talent hub in Charlotte, NC, starting to hire specialized talent. - Office return: Brought headquarters staff back to the office post-Labor Day. - IT modernization: Assessing technology stack, leveraging European cloud platform, piloting AI applications. - U.S. vintages analysis: Positive changes in expected future recoveries despite challenges in COVID vintages. - Poland team: Celebrated 10-year anniversary.

In Q3, portfolio purchases totaled $255 million, with $154 million (60%) in the Americas and $101 million (40%) in Europe. Cash collections grew 14% year-over-year to $542 million, with Americas exceeding expectations by 6% and U.S. legal cash collections up 27% to $125 million. A nonrecurring noncash goodwill impairment charge of $413 million was recorded. Adjusted EBITDA for the last 12 months was $1.3 billion, up 15% year-over-year. ERC at quarter end was $8.4 billion, up 15% year-over-year and 1% sequentially.

• Target to purchase $1.2 billion of portfolios for the year. - Expect cash collections growth in the high single digits and cash efficiency of 60% plus for the full year 2025. - Need to invest $952 million globally over the next 12 months to replenish and maintain current ERC levels. - Portfolio supply expected to be elevated in the U.S. and stable in Europe.

• Goodwill impairment triggered by sustained decline in stock price. - Dependence on portfolio purchases and market conditions affecting financial performance. - Impact of COVID vintages on U.S. ERC with continued monitoring needed. - Regulatory and market risks that could affect collections and investment strategies.

Q: Regarding the $50 million payment, are there other similar contract modifications anticipated?

A: Martin Sjolund stated it's a unique one-off situation developed with a long-time partner, very unusual. Rakesh Sehgal added it's a unique, economically positive opportunity.

Q: On Q4 collections guidance, is there a deceleration expected?

A: Martin Sjolund said Q4 is typically slightly lower than Q3 but they're comfortable with the full-year high single-digit growth target.

Q: About Southern Europe opportunities, will there be greater deployments?

A: Rakesh Sehgal explained Southern Europe's competitive dynamics have stabilized, but no dramatic shifts expected, with disciplined investment based on market opportunities.