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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2022
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________ to ________
Commission File Number: 000-50058
PRA Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware75-3078675
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

120 Corporate Boulevard
Norfolk, Virginia 23502
(Address of principal executive offices)

(888) 772-7326
(Registrant's Telephone No., including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per sharePRAANASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  þ   No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  þ   No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer  þ   Accelerated filer  ¨   Non-accelerated filer  ¨   Smaller reporting company   Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No  þ

The number of shares of the registrant's common stock outstanding as of August 3, 2022 was 38,975,989.



Table of Contents

Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Signatures
2


Part I. Financial Information
Item 1. Financial Statements (Unaudited)
PRA Group, Inc.
Consolidated Balance Sheets
June 30, 2022 and December 31, 2021
(Amounts in thousands)
(unaudited)
June 30,
2022
December 31,
2021
Assets
Cash and cash equivalents$67,974 $87,584 
Investments86,386 92,977 
Finance receivables, net3,183,632 3,428,285 
Income taxes receivable42,207 41,146 
Deferred tax assets, net63,810 67,760 
Right-of-use assets55,877 56,713 
Property and equipment, net54,182 54,513 
Goodwill437,032 480,263 
Other assets97,653 57,002 
Total assets$4,088,753 $4,366,243 
Liabilities and Equity
Liabilities:
Accounts payable$4,689 $3,821 
Accrued expenses97,139 127,802 
Income taxes payable15,575 19,276 
Deferred tax liabilities, net44,029 36,630 
Lease liabilities60,681 61,188 
Interest-bearing deposits114,383 124,623 
Borrowings2,481,622 2,608,714 
Other liabilities28,268 59,352 
Total liabilities2,846,386 3,041,406 
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, 39,639 shares issued and outstanding at June 30, 2022; 100,000 shares authorized, 41,008 shares issued and outstanding at December 31, 2021
396 410 
Additional paid-in capital  
Retained earnings1,554,237 1,552,845 
Accumulated other comprehensive loss(347,821)(266,909)
Total stockholders' equity - PRA Group, Inc.1,206,812 1,286,346 
Noncontrolling interest35,555 38,491 
Total equity1,242,367 1,324,837 
Total liabilities and equity$4,088,753 $4,366,243 
The accompanying notes are an integral part of these Consolidated Financial Statements.
3


PRA Group, Inc.
Consolidated Income Statements
For the Three and Six Months Ended June 30, 2022 and 2021
(unaudited)
(Amounts in thousands, except per share amounts)
Three Months EndedSix Months Ended
2022202120222021
Revenues:
Portfolio income$194,009 $219,137 $401,541 $450,809 
Changes in expected recoveries56,567 63,548 86,481 113,684 
Total portfolio revenue250,576 282,685 488,022 564,493 
Fee income6,467 2,453 8,297 4,634 
Other revenue1,219 491 2,548 5,971 
Total revenues258,262 285,629 498,867 575,098 
Operating expenses:
Compensation and employee services74,137 79,632 145,233 153,616 
Legal collection fees9,554 12,289 20,427 25,215 
Legal collection costs17,746 18,469 34,303 39,781 
Agency fees14,826 15,908 32,214 31,499 
Outside fees and services27,493 20,973 46,871 41,733 
Communication9,528 10,594 22,111 23,257 
Rent and occupancy4,633 4,643 9,620 9,123 
Depreciation and amortization3,865 3,815 7,643 7,796 
Other operating expenses12,743 15,092 24,741 28,110 
Total operating expenses174,525 181,415 343,163 360,130 
   Income from operations83,737 104,214 155,704 214,968 
Other income and (expense):
Interest expense, net(31,562)(30,836)(63,310)(62,388)
Foreign exchange gain/(loss)1,319 (1,079)787 (1,105)
Other(181)183 (671)209 
Income before income taxes53,313 72,482 92,510 151,684 
Income tax expense14,177 11,921 18,756 29,243 
Net income39,136 60,561 73,754 122,441 
Adjustment for net income/(loss) attributable to noncontrolling interests2,652 4,565 (2,702)8,039 
Net income attributable to PRA Group, Inc.$36,484 $55,996 $76,456 $114,402 
Net income per common share attributable to PRA Group, Inc.:
Basic$0.92 $1.22 $1.90 $2.50 
Diluted$0.91 $1.22 $1.88 $2.48 
Weighted average number of shares outstanding:
Basic39,779 45,807 40,278 45,738 
Diluted39,900 46,059 40,602 46,051 
The accompanying notes are an integral part of these Consolidated Financial Statements.
4


PRA Group, Inc.
Consolidated Statements of Comprehensive (Loss)/Income
For the Three and Six Months Ended June 30, 2022 and 2021
(unaudited)
(Amounts in thousands)
Three Months EndedSix Months Ended
2022202120222021
Net income$39,136 $60,561 $73,754 $122,441 
Other comprehensive (loss)/income, net of tax:
Currency translation adjustments(115,536)19,087 (103,266)(5,444)
Cash flow hedges5,837 1,355 24,417 13,678 
Debt securities available-for-sale(242)(142)(402)(142)
Other comprehensive (loss)/income(109,941)20,300 (79,251)8,092 
Total comprehensive (loss)/income(70,805)80,861 (5,497)130,533 
Less comprehensive (loss)/income attributable to noncontrolling interests(3,177)6,648 (1,041)5,698 
Comprehensive (loss)/income attributable to PRA Group, Inc.$(67,628)$74,213 $(4,456)$124,835 
The accompanying notes are an integral part of these Consolidated Financial Statements.
5


PRA Group, Inc.
Consolidated Statements of Changes in Equity
For the Six Months Ended June 30, 2022
(unaudited)
(Amounts in thousands)

Common StockAdditional Paid-InRetainedAccumulated Other ComprehensiveNoncontrollingTotal
SharesAmountCapitalEarnings(Loss)InterestEquity
Balance at December 31, 202141,008 $410 $ $1,552,845 $(266,909)$38,491 $1,324,837 
Components of comprehensive income, net of tax:
Net income— — — 39,972 — (5,354)34,618 
Currency translation adjustments— — — — 4,780 7,490 12,270 
Cash flow hedges— — — — 18,580 — 18,580 
Debt securities available-for-sale— — — — (160)— (160)
Vesting of restricted stock262 3 (3)— — —  
Repurchase and cancellation of common stock(860)(9)4,527 (43,972)— — (39,454)
Share-based compensation expense— 3,891 — — — 3,891 
Employee stock relinquished for payment of taxes— — (8,415)— — — (8,415)
Balance at March 31, 202240,410 $404 $ $1,548,845 $(243,709)$40,627 $1,346,167 
Components of comprehensive income, net of tax:
Net income— — — 36,484 — 2,652 39,136 
Currency translation adjustments— — — — (109,707)(5,829)(115,536)
Cash flow hedges— — — — 5,837 — 5,837 
Debt securities available-for-sale— — — — (242)— (242)
Distributions to noncontrolling interest— — — — — (3,494)(3,494)
Contributions from noncontrolling interest— — — — — 1,599 1,599 
Vesting of restricted stock37   — — —  
Repurchase and cancellation of common stock(808)(8)(3,835)(31,092)— — (34,935)
Share-based compensation expense— — 3,849 — — — 3,849 
Employee stock relinquished for payment of taxes— — (14)— — — (14)
Balance at June 30, 202239,639 $396 $ $1,554,237 $(347,821)$35,555 $1,242,367 

The accompanying notes are an integral part of these Consolidated Financial Statements.



6


PRA Group, Inc.
Consolidated Statements of Changes in Equity
For the Six Months Ended June 30, 2021
(unaudited)
(Amounts in thousands)

Common StockAdditional Paid-InRetainedAccumulated Other ComprehensiveNoncontrollingTotal
SharesAmountCapitalEarnings(Loss)InterestEquity
Balance at December 31, 202045,585 $456 $75,282 $1,511,970 $(245,791)$31,609 $1,373,526 
Effect of change in accounting principle (1)
— — (26,697)12,008 — — (14,689)
Balance at January 1, 202145,585 456 48,585 1,523,978 (245,791)31,609 1,358,837 
Components of comprehensive income, net of tax:
Net income— — — 58,406 — 3,474 61,880 
Currency translation adjustments— — — — (20,108)(4,423)(24,531)
Cash flow hedges— — — — 12,323 — 12,323 
Distributions to noncontrolling interest— — — — — (3,933)(3,933)
Vesting of restricted stock214 2 (2)— — —  
Share-based compensation expense— — 4,113 — — — 4,113 
Employee stock relinquished for payment of taxes— — (5,460)— — — (5,460)
Balance at March 31, 202145,799 $458 $47,236 $1,582,384 $(253,576)$26,727 $1,403,229 
Components of comprehensive income, net of tax:
Net income— — — 55,996 — 4,565 60,561 
Currency translation adjustments— — — — 17,004 2,083 19,087 
Cash flow hedges— — — — 1,355 — 1,355 
Debt securities available-for-sale— — — — (142)— (142)
Distributions to noncontrolling interest— — — — — (13,120)(13,120)
Vesting of restricted stock38 — — — — — — 
Share-based compensation expense— — 4,040 — — — 4,040 
Employee stock relinquished for payment of taxes— — (70)— — — (70)
Balance at June 30, 202145,837 $458 $51,206 $1,638,380 $(235,359)$20,255 $1,474,940 
(1) Reflects adjustments recorded for the January 1, 2021 adoption of an accounting update. Refer to the Company's 2021 Annual Report on Form 10-K for more information.

The accompanying notes are an integral part of these Consolidated Financial Statements.



7


PRA Group, Inc.
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2022 and 2021
(unaudited)
(Amounts in thousands)
Six Months Ended
20222021
Cash flows from operating activities:
Net income$73,754 $122,441 
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense7,740 8,153 
Depreciation and amortization7,643 7,796 
Amortization of debt discount and issuance costs5,098 4,647 
Changes in expected recoveries(86,481)(113,684)
Deferred income taxes484 (246)
Net unrealized foreign currency transactions(22,597)948 
Fair value in earnings for equity securities(148)307 
Other(614)(180)
Changes in operating assets and liabilities:
Other assets(490)5,901 
Accounts payable1,288 (18)
Income taxes payable, net(5,941)(1,724)
Accrued expenses(16,505)(11,142)
Other liabilities(5,382)(1,598)
Right of use asset/lease liability387 36 
Net cash (used)/provided by operating activities(41,764)21,637 
Cash flows from investing activities:
Purchases of property and equipment, net(8,212)(4,098)
Purchases of finance receivables(378,798)(379,406)
Recoveries applied to negative allowance535,537 657,344 
Purchases of investments(2,292)(63,730)
Proceeds from sales and maturities of investments775 31,220 
Business acquisition, net of cash acquired (647)
Net cash provided by investing activities147,010 240,683 
Cash flows from financing activities:
Proceeds from lines of credit1,262,320 219,416 
Principal payments on lines of credit(1,267,470)(496,700)
Principal payments on long-term debt(5,000)(5,000)
Repurchases of common stock(86,371) 
Payments of origination cost and fees(7,727)(260)
Tax withholdings related to share-based payments(8,428)(5,529)
Distributions paid to noncontrolling interest(3,493)(17,052)
Contributions from noncontrolling interest1,599  
Net increase in interest-bearing deposits4,326 3,715 
Net cash used in financing activities(110,244)(301,410)
Effect of exchange rate on cash(14,958)(1,313)
Net decrease in cash and cash equivalents(19,956)(40,403)
Cash and cash equivalents beginning of period89,072 121,047 
Cash and cash equivalents, end of period$69,116 $80,644 
Supplemental disclosure of cash flow information:
Cash paid for interest$59,487 $58,648 
Cash paid for income taxes24,127 31,093 
Cash, cash equivalents and restricted cash reconciliation:
Cash and cash equivalents per Consolidated Balance Sheets$67,974 $76,013 
Restricted cash included in Other assets per Consolidated Balance Sheets1,142 4,631 
Total cash, cash equivalents and restricted cash$69,116 $80,644 
The accompanying notes are an integral part of these Consolidated Financial Statements.
8

PRA Group, Inc.
Notes to Consolidated Financial Statements

1. Organization and Business:
Nature of operations: As used herein, the terms "PRA Group," the "Company," or similar terms refer to PRA Group, Inc. and its subsidiaries.
PRA Group, Inc., a Delaware corporation, is a global financial and business services company with operations in the Americas, Europe and Australia. The Company's primary business is the purchase, collection and management of portfolios of nonperforming loans. The Company also provides fee-based services on class action claims recoveries and by servicing consumer bankruptcy accounts in the United States ("U.S.").
Basis of presentation: The Consolidated Financial Statements of the Company are prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The accompanying interim financial statements have been prepared in accordance with the instructions for Quarterly Reports on Form 10-Q and, therefore, do not include all information and Notes to the Consolidated Financial Statements necessary for a complete presentation of financial position, results of operations, comprehensive income/(loss) and cash flows in conformity with GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the Company's Consolidated Balance Sheets as of June 30, 2022, its Consolidated Income Statements and Statements of Comprehensive (Loss)/Income for the three and six months ended June 30, 2022 and 2021, and its Consolidated Statements of Changes in Equity and Statements of Cash Flows for the six months ended June 30, 2022 and 2021 have been included. The Company's Consolidated Income Statements for the three and six months ended June 30, 2022 may not be indicative of future results.
These unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 Form 10-K").
Consolidation: The Consolidated Financial Statements include the accounts of PRA Group and other entities in which the Company has a controlling interest. All significant intercompany accounts and transactions have been eliminated.
Entities in which the Company has a controlling financial interest, through ownership of the majority of the entities’ voting equity interests, or through other contractual rights that give the Company control, consist of entities which purchase and collect on portfolios of nonperforming loans.
Investments in companies in which the Company has significant influence over operating and financing decisions, but does not own a majority of the voting equity interests, are accounted for in accordance with the equity method of accounting, which requires the Company to recognize its proportionate share of the entity’s net earnings. These investments are included in Other assets, with income or loss included in Other revenue.
The Company performs on-going reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with an entity cause the Company’s consolidation conclusion to change.
Segments: The Company has determined that it has two operating segments that meet the aggregation criteria of Accounting Standards Codification ("ASC") 280, Segment Reporting ("ASC 280") and, therefore, it has one reportable segment, accounts receivable management. This conclusion is based on similarities among the operating units, including economic characteristics, the nature of the products and services, the nature of the production processes, the types or class of customer for their products and services, the methods used to distribute their products and services and the nature of the regulatory environment.
The following tables show the amount of revenue generated for the three and six months ended June 30, 2022 and 2021, and long-lived assets held at June 30, 2022 and 2021, both for the U.S., the Company's country of domicile, and outside of the U.S. (amounts in thousands):
As of and for theAs of and for the
Three Months Ended June 30, 2022Three Months Ended June 30, 2021
Revenues (2)
Long-Lived Assets
Revenues (2)
Long-Lived Assets
United States$136,852 $82,927 $168,689 $90,423 
United Kingdom45,880 12,105 42,459 2,299 
Other (1)
75,530 15,027 74,481 12,241 
Total$258,262 $110,059 $285,629 $104,963 
9

PRA Group, Inc.
Notes to Consolidated Financial Statements

As of and for theAs of and for the
Six Months Ended June 30, 2022Six months ended June 30, 2021
Revenues (2)
Long-Lived Assets
Revenues (2)
Long-Lived Assets
United States$288,277 $82,927 $346,870 $90,423 
United Kingdom89,834 12,105 90,636 2,299 
Other (1)
120,756 15,027 137,592 12,241 
Total$498,867 $110,059 $575,098 $104,963 
(1) None of the countries included in "Other" comprise greater than 10% of the Company's consolidated revenues or long-lived assets.
(2) Based on the Company’s financial statement information used to produce the Company's general-purpose financial statements, it is impracticable to report further breakdowns of revenues from external customers by product or service.
Revenues are attributed to countries based on the location of the related operations. Long-lived assets consist of net property and equipment and right-of-use assets. The Company reports revenues earned from collection activities on nonperforming loans, fee-based services and investments. For additional information on the Company's investments, see Note 3.
2. Finance Receivables, net:
Finance receivables, net consisted of the following at June 30, 2022 and December 31, 2021 (amounts in thousands):
June 30, 2022December 31, 2021
Amortized cost$ $ 
Negative allowance for expected recoveries (1)
3,183,632 3,428,285 
Balance at end of period$3,183,632 $3,428,285 
(1) The negative allowance balance includes certain portfolios of nonperforming loans for which the Company holds a beneficial interest representing approximately 0.9% of the balance.
Three Months Ended June 30, 2022 and 2021
Changes in the negative allowance for expected recoveries by portfolio segment for the three months ended June 30, 2022 and 2021 were as follows (amounts in thousands):
Three Months Ended June 30, 2022
CoreInsolvencyTotal
Balance at beginning of period$2,902,321 $408,426 $3,310,747 
Initial negative allowance for expected recoveries - portfolio acquisitions (1)
223,776 7,570 231,346 
Foreign currency translation adjustment(143,630)(14,132)(157,762)
Recoveries applied to negative allowance (2)
(211,028)(46,238)(257,266)
Changes in expected recoveries (3)
43,322 13,245 56,567 
Balance at end of period$2,814,761 $368,871 $3,183,632 
Three Months Ended June 30, 2021
CoreInsolvencyTotal
Balance at beginning of period$2,891,474 $481,192 $3,372,666 
Initial negative allowance for expected recoveries - portfolio acquisitions (1)
205,035 14,642 219,677 
Foreign currency translation adjustment20,512 1,420 21,932 
Recoveries applied to negative allowance (2)
(282,240)(46,545)(328,785)
Changes in expected recoveries (3)
60,182 3,366 63,548 
Balance at end of period$2,894,963 $454,075 $3,349,038 

10

PRA Group, Inc.
Notes to Consolidated Financial Statements
(1) Initial negative allowance for expected recoveries - portfolio acquisitions
Portfolio acquisitions for the three months ended June 30, 2022 and 2021 were as follows (amounts in thousands):
Three Months Ended June 30, 2022
CoreInsolvencyTotal
Face value$1,108,890 $36,076 $1,144,966 
Noncredit discount(145,332)(3,250)(148,582)
Allowance for credit losses at acquisition(739,782)(25,256)(765,038)
Purchase price$223,776 $7,570 $231,346 
Three Months Ended June 30, 2021
CoreInsolvencyTotal
Face value$1,275,628 $60,316 $1,335,944 
Noncredit discount(172,655)(5,515)(178,170)
Allowance for credit losses at acquisition(897,938)(40,159)(938,097)
Purchase price$205,035 $14,642 $219,677 
The initial negative allowance recorded on portfolio acquisitions for the three months ended June 30, 2022 and 2021 was as follows (amounts in thousands):
Three Months Ended June 30, 2022
CoreInsolvencyTotal
Allowance for credit losses at acquisition$(739,782)$(25,256)$(765,038)
Writeoffs, net739,782 25,256 765,038 
Expected recoveries223,776 7,570 231,346 
Initial negative allowance for expected recoveries$223,776 $7,570 $