PRAA

• PRA 3.0 Strategic Framework: The firm's multi-year strategy is organized around three core focus areas: disciplined capital allocation to drive higher net returns; modernization of operations, technology and data to build a leaner, variable cost structure; and investment in people and culture to align incentives with shareholder value.

• Capital Allocation Milestones: Following 26 consecutive quarters (six full years) of cash collection overperformance in Europe (9% over target in the last 12 months), management completed a comprehensive portfolio review that increased European ERC by $349 million. This adjustment will add ~$216 million in additional portfolio income over the remaining 10+ year life of the portfolios, for an average ~$25 million annualized increase in near-term portfolio income. The board authorized a new $150 million opportunistic share repurchase program; $10 million in shares were repurchased in Q2 2026, bringing total repurchases to $40 million over the prior 12 months. The firm completed refinancing of its 730 million European credit facility, extending maturity by five years while maintaining existing commitment levels and pricing, with no debt maturities until 2028.

• Operational and Cost Reduction Progress: The firm implemented a second wave of U.S. cost restructuring, eliminating 100 U.S. corporate/overhead roles and 35 offshore roles. Combined with prior Q4 2025 cost cuts, total corporate/overhead headcount has been reduced by 25% (over 215 roles) and more than 575 call center roles have been cut, for a total expected $35 million in net annualized cost savings. The U.S. onshore call center footprint was reduced from 7 sites in 2023 to 1 remaining site, with operations transitioned to work-from-home; two offshore third-party collection sites were also consolidated to one, shifting to a more variable cost structure.

• Technology and Digital Progress: The firm successfully launched its cloud-based omnichannel customer contact platform in the U.S., unifying voice, chat, email and digital interactions on a single global platform already used in Europe, improving customer experience and operational consistency. A centralized dedicated global AI team was established in Charlotte to accelerate deployment of AI for automation, analytics and operational efficiency. Digital collections growth continues, with nearly half of all new customer payment plans in Q2 originating from the digital channel, driving lower operational costs.

• Full-year 2026 annualized legal collection cost growth is expected to moderate to a lower rate than the 40% growth seen in 2024 and 30% growth seen in 2025, as investments in the channel mature.
• The 1-1.3 billion annual global portfolio purchase target range is maintained, with capital allocated globally based on which opportunities meet the firm's return hurdles, rather than fixed regional volume targets.
• Management continues to target a net leverage ratio in the mid-2x range over time, down from the current 2.67x.
• Full-year 2026 effective tax rate is expected to be approximately 30%.
• Following the $349 million European ERC uplift, management expects significantly more moderate changes to expected future recoveries in Europe over the long term.
• Cloud migration of the firm's core technology infrastructure is expected to be completed by the end of 2026.

PRA Group reports performance across two core geographic segments: U.S. and Europe. Total portfolio purchases in Q2 2026 were $297 million: Europe accounted for $174 million (58.6% of total purchases), and the U.S. accounted for $109 million (36.7% of total purchases). Total cash collections grew 4% YoY to $559 million: U.S. cash collections grew 6% YoY, with legal channel cash collections growing 26% to $150 million (now representing over 50% of U.S. core cash collections), while Europe cash collections grew 4% YoY. Ending total Estimated Remaining Collections (ERC) hit a record $8.9 billion, up 7% YoY: Europe represented 54% of total ERC, and the U.S. represented 40% of total ERC. Total quarterly revenues increased 29% YoY to $372 million, portfolio income grew 7% YoY to $268 million, net income attributable to PRA Group was $58 million ($1.51 per diluted share), and trailing 12-month adjusted EBITDA increased 10% YoY to $1.4 billion. Net leverage at quarter end was 2.67x, down from 2.71x in Q1 2026 and a 2024 Q3 peak of 2.87x.

• Forward-looking statements, including portfolio collection forecasts and ERC estimates, are inherently uncertain, and actual results may differ materially from current projections due to market conditions, regulatory changes and other unforeseen factors.
• Both U.S. and European portfolio markets are competitive, which could pressure purchase price multiples and reduce available high-return investment opportunities if the firm does not maintain strict discipline.
• Economic downturns or changes in consumer financial health could impact customer ability to pay and reduce cash collections relative to forecasts.
• Multi-year technology modernization projects carry execution risk, and cost savings from operational restructuring and AI adoption may be lower than currently projected.

Q: What is the current competitive and supply environment for European portfolios, and how is PRA navigating competition? / A: Management notes that overall portfolio supply is healthy and stable in both Europe and the U.S., and both markets remain consistently competitive. PRA maintains a disciplined approach to capital allocation, prioritizing meeting return hurdles over growing volume for growth's sake. The firm invested in line with its planned target in Q2 2026, with leverage declining even as purchase multiples ticked up, consistent with its strategy.

Q: What is the reasonable upper ceiling for the share of U.S. collections coming from the legal channel, and what is the outlook for legal cost growth? / A: Legal is not PRA's preferred customer engagement channel: the firm only uses it for customers who do not respond to voluntary outreach but are projected to have the ability to pay, based on internal data and modeling. Prior investments in the legal channel have driven 26% YoY Q2 cash growth, and costs will continue to rise as more accounts move through the channel, but full-year 2026 cost growth will be far lower than the 40% and 30% growth seen in 2024 and 2025, respectively.

Q: Does the $349 million European ERC adjustment capture all accumulated historical overperformance, leaving no unrecognized upside for the future? / A: The comprehensive review covered nearly all European vintages market-by-market and portfolio-by-portfolio, and the new adjusted ERC level represents management's current best estimate of future recoveries. While there will always be some natural forecast volatility for future collections, the adjustment fully incorporates the 26-quarter streak of overperformance, and more moderate changes to expectations are projected going forward.

Q: How far along is PRA on its technology modernization roadmap, and how much additional investment is required over coming years? / A: Significant milestones including the U.S. omnichannel contact platform launch have been completed in 2026, and full cloud migration is on track for year-end. Remaining technology projects will span multiple years, but total investment will be in the low tens of millions spread over that period, and is not material relative to ongoing investments in the legal channel. Most overhead cost reduction has already been completed, though the firm will continue pursuing incremental efficiency gains.