William Blair 38 th Annual Growth Stock Conference June 12, 2018

Transcription

1 William Blair 38 th Annual Growth Stock Conference June 12,

2 Statements herein, other than statements of historical fact, are forward-looking statements, which are based on our current beliefs, projections, assumptions and expectations concerning future operations and financial performance. Such statements involve uncertainties and risks, some of which are not currently known to us, and may be superseded by future events that could cause actual results to differ materially from those expressed or implied herein. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of today, and are qualified in their entirety by these cautionary statements. Information regarding risk factors and other information that could change our projections or impact our actual results can be found in our most recent Annual Report on Form 10-K and in subsequent public filings, and should be considered in evaluating the forward looking statements herein. Except as required by law, we assume no obligation to update or revise these statements to reflect changes in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part. 2

3 AGENDA Company Overview Financial Overview 3

4 GLOBAL LEADER IN PURCHASE & COLLECTION OF NONPERFORMING LOANS Diversified geographically and by product type Experience through economic cycles Over 5,600 employees worldwide Headquarters Own portfolios in 16 countries, 13 languages and 11 currencies European banking license Invested $1.11 billion in 2017 Estimated remaining collections of $5.78 billion at March 31,

5 OPERATIONS HIGHLIGHTS Q Almost 3,100 full-time U.S. based collectors reached appropriate capacity at March 31, 2018 and will fluctuate based on collector tenure and productivity and portfolio investment Cash collections increased 12% to $426.6 million in Q US call center cash collections increased 22% Second quarter in a row of record Europe Core cash collections Invested $168 million in Q1 2018, $1.11 billion in portfolios in full year 2017 Increased estimated remaining collections by 12% compared to Q to a record $5.78 billion at March 31,

6 20+ YEARS OF DATA GUIDING OPERATIONAL DECISIONS Portfolio sales have never been a part of our business plan Prefer in-house collections Utilize data and analytics to drive collection efforts Insight into how collections occur over 20+ years Better customer journey because they are not constantly transferred Lower risk to data integrity Insight into consumer behavior Insight into what action drives each payment Better customer experience Daily updates allow for efficiency More targeted collection efforts Identify customers that can pay allowing for better customer experience 6

7 LETTER TO SHAREHOLDER HIGHLIGHTS We founded PRA with a premise that we could build a great company by recruiting the right people and by running the business the right way, for the right reasons, for the long term. Customer Experience and Compliance I believe moments of truth are more important in our business than in many others because no one chooses PRA to be a customer, and that circumstance amplifies the importance of a positive experience. People and Talent PRA will continue to be a company where our employees are valued and respected and can carry our culture through to our customers. Data and Analytics In nearly every interaction with investors, I reiterate the importance of our ability to drive better results and customer experience through data and analytics. I have challenged this group to expand our capabilities further and to question historical assumptions to improve our business. Long-Term Value In every decision we make, we focus on the long term since it is critical to value creation. We acknowledge that striking the right balance between today and tomorrow is both necessary and difficult. PRA will be known as the industry leader and partner that is collectively responsible, compliant and solutionoriented, thereby changing the world s perception of the nonperforming loan industry for the better. Operational Excellence I am committed to learning from both our successes and our failures, and I hold myself and my team accountable for the execution of our strategy. Going Forward We are one of the leading nonperforming-loan buyers and collectors in the world, with diversified capabilities and geographic markets. 7

8 CEO S PERSPECTIVE Continue to drive results through current Company strengths Increased focus on three additional areas Employee Retention and Tenure Government Relations Seller Relations 8

9 AGENDA Company Overview Financial Overview 9

10 FINANCIAL RESULTS - GAAP ($ in millions, except per share results) Q FY 2017 Cash Collections $426.6 $1,512.6 Total Revenues $223.2 $813.6 Operating Expenses $169.6 $602.6 Net Income $21.1 $162.3 Diluted EPS $0.47 $

11 LONG HISTORY OF GENERATING SUBSTANTIAL CASH RECEIPTS (USD in millions) $2,000 Global Financial Crisis * $1,500 $1,000 $500 $ YTD Americas Core Insolvency Europe Core Fee * Timing defined by the Federal Reserve Bank of St. Louis

12 CASH EFFICIENCY PERFORMANCE IS STEADY (USD in millions) 66% 64% 62% 60% 58% 56% 54% 52% 50% Cash Efficiency Ratio Insolvency as a % of Cash Collections 64% 63% 63% 61% 41% 61% 61% 61% 61% 59% 39% 39% 58% 33% 35% 57% 57% 23% 23% 56% 17% 18% 16% 53% 53% 54% 15% 11% 10% 0% 4% 0% Q % 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Cash efficiency ratio expands as Insolvency becomes a higher percent of cash collections Steady, strong operating efficiency ratios maintained through regulatory overhaul of the industry and Insolvency declining as a percent of cash collections * Cash efficiency ratio = (cash receipts operating expenses)/cash receipts 12

13 DEPLOYING CAPITAL EFFECTIVELY PURCHASING NPLS (USD in millions) Capital Available for Portfolio Purchases - $922 million Q1 Q2 Q3 Q4 $1,467 $992 $947 $1,109 $656 $542 $62 $61 $150 $112 $264 $280 $289 $367 $408 $168 (a) (b) (c) (a) (b) (c) Includes finance receivables associated with the Mackenzie Hall acquisition Includes finance receivables associated with the Aktiv Kapital acquisition and investment in securitized fund in Poland of $34.7 million Includes investment in securitized fund in Poland of $27.9 million 13

14 Vintage Year PURCHASE PRICE MULTIPLES SHOW 20 YEAR TRACK RECORD Americas Core Purchase Price Multiple at the End of the Time Period Referenced Year Q Q

15 ESTIMATED REMAINING COLLECTIONS AND CAPITAL DEPLOYMENT ($ in millions) Estimated Remaining Collections United States - $3,184.8 United Kingdom - $1,016.4 Central Europe - $585.6 Northern Europe - $559.1 Southern Europe - $249.3 Other Americas - $

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