PRA Group Reports First Quarter 2022 Results

NORFOLK, Va., May 9, 2022 - PRA Group, Inc. (Nasdaq: PRAA), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the first quarter of 2022. The Company reported net income attributable to PRA Group, Inc. of $40.0 million in the first quarter, compared with $58.4 million in the prior year period. Diluted earnings per share were $0.97 versus $1.27 in the first quarter of 2021.

First Quarter Highlights

•Total cash collections were $481.0 million.

•Total revenues were $240.6 million.

•Cash efficiency ratio1 of 65.1%.

•Diluted earnings per share were $0.97.

•Common stock repurchases2 of $39.5 million, or 0.9 million shares, at an average price of $45.88.

•At March 31, 2022, $127.7 million remaining under share repurchase authorization.

•Debt to Adjusted EBITDA3 for the last 12 months was1.94x.

•Available capacity under credit facilities of $1.4 billion; $571.1 million after considering borrowing base restrictions.

•Total portfolio purchases of $147.5 million.

•Estimated remaining collections (ERC) of $5.7 billion.

•Refinanced Europe's credit facilities.

“We invested $147 million in portfolio purchases in the first quarter, reflecting continuing lower levels of supply in the U.S. and increased competition in Europe. We also returned nearly $40 million of value to shareholders through share repurchases,” said Kevin Stevenson, president and chief executive officer. “We believe our strong balance sheet puts us in a great position to deploy capital as U.S. supply returns in the coming quarters. In the interim, we will continue to maintain our discipline and look for alternative ways to provide value to our shareholders."

Cash Collections and Revenues

•The following table presents cash collections by quarter and by source on an as reported and constant currency-adjusted basis:

1.Calculated by dividing cash receipts less operating expense by cash receipts.

2.Share repurchases are subject to market conditions and other factors, and the share repurchase program remains subject to the discretion of PRA Group, Inc.'s board of directors.

3.A reconciliation of this non-GAAP financial measure to the most comparable GAAP measure can be found at the end of this press release.

Cash Collection Source	2022		2021
($ in thousands)	Q1		Q4		Q3		Q2		Q1
Americas and Australia Core	$	270,284	$	257,705	$	276,691	$	324,845	$	347,638
Americas Insolvency	35,209		36,851		37,464		37,768		35,253
Europe Core	151,162		155,853		151,625		157,637		149,486
Europe Insolvency	24,325		23,262		22,574		23,579		23,510
Total Cash Collections	$	480,980	$	473,671	$	488,354	$	543,829	$	555,887
Cash Collection Source -
Constant Currency Adjusted	2022								2021
($ in thousands)	Q1								Q1
Americas and Australia Core	$	270,284							$	348,494
Americas Insolvency	35,209								35,252
Europe Core	151,162								142,230
Europe Insolvency	24,325								22,785
Total Cash Collections	$	480,980							$	548,761

•Cash collections in the quarter decreased $74.9 million, or $67.8 million on a currency adjusted basis, compared to the first quarter of 2021. This was driven by a decrease in U.S. call center and other collections of 27% and a 14% decrease in U.S. legal collections. The decrease in U.S. cash collections was due to the excess consumer liquidity in 2021 and lower levels of portfolio purchases during the pandemic. These decreases were partially offset by a 1% increase in Europe cash collections, 6% on a currency adjusted basis, driven by high levels of portfolio purchases in the last few years.

•Total portfolio revenue in the quarter was $237.4 million compared to $281.8 million during the first quarter of 2021.

Expenses

•Operating expenses in the quarter decreased $10.1 million compared to the first quarter of 2021. The decrease was primarily driven by:

◦a decrease in legal collection costs due to fewer accounts in the legal channel;

◦a decrease in compensation and employee services expenses primarily due to lower collector compensation expenses in the U.S. call centers; and

◦a decrease in legal collection fees due to lower external legal cash collections.

•The effective tax rate for the first quarter of 2022 was 11.7%, reflecting discrete items in the quarter.

Portfolio Acquisitions

•The Company purchased $147.5 million in portfolios of nonperforming loans in the first quarter of 2022.

•At the end of the first quarter, the Company had in place maximum forward flow commitments of up to $618.9 million with $366.3 million in the Americas and Australia and $252.6 million in Europe.

Portfolio Purchase Source	2022		2021
($ in thousands)	Q1		Q4		Q3		Q2		Q1
Americas and Australia Core	$	90,639	$	90,263	$	162,451	$	98,901	$	88,912
Americas Insolvency	9,118		21,183		9,878		14,642		9,486
Europe Core	38,764		60,430		212,194		106,134		44,095
Europe Insolvency	8,929		29,820		7,424		—		16,468
Total Portfolio Acquisitions	$	147,450	$	201,696	$	391,947	$	219,677	$	158,961

Conference Call Information

PRA Group, Inc. will hold a conference call today at 5:00 p.m. ET to discuss results with institutional investors and stock analysts. To listen to a webcast of the call and view the accompanying slides, visit https://ir.pragroup.com/events-and-presentations. To listen by phone, call 844-835-9982 in the U.S. or 412-317-5267 outside the U.S. and ask for the PRA Group conference call. To listen to a replay of the call, either visit the same website until May 9, 2023, or call 877-344-7529 in the U.S. or 412-317-0088 outside the U.S. and use access code 5393948 until May 16, 2022.

The Company is also announcing that it currently plans to report second quarter 2022 results after market close on August 8, 2022.

About PRA Group, Inc.

As a global leader in acquiring and collecting nonperforming loans, PRA Group, Inc. returns capital to banks and other creditors to help expand financial services for consumers in the Americas, Europe and Australia. With thousands of employees worldwide, PRA Group, Inc. companies collaborate with customers to help them resolve their debt. For more information, please visit www.pragroup.com.

About Forward Looking Statements

Statements made herein that are not historical in nature, including PRA Group, Inc.’s or its management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

The forward-looking statements in this press release are based upon management's current beliefs, estimates, assumptions and expectations of PRA Group, Inc.’s future operations and financial and economic performance, taking into account currently available information. These statements are not statements of historical fact or guarantees of future performance, and there can be no assurance that anticipated events will transpire or that our expectations will prove to be correct. Forward-looking statements involve risks and uncertainties, some of which are not currently known to PRA Group, Inc. Actual events or results may differ materially from those expressed or implied in any such forward-looking statements as a result of various factors, including risk factors and other risks that are described from time to time in PRA Group, Inc.’s filings with the Securities and Exchange Commission, including PRA Group, Inc.’s annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, which are available through PRA Group, Inc.'s website and contain a detailed discussion of PRA Group, Inc.'s business, including risks and uncertainties that may affect future results.

Due to such uncertainties and risks, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of today. Information in this press release may be superseded by more recent information or statements, which may be disclosed in later press releases, subsequent filings with the Securities and Exchange Commission or otherwise. Except as required by law, PRA Group, Inc. assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA Group, Inc.’s expectations with regard thereto or to reflect any

change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part.

PRA Group, Inc.

Unaudited Consolidated Income Statements

(Amounts in thousands, except per share amounts)

	Three Months Ended March 31,
	2022		2021
Revenues:
Portfolio income	$	207,532	$	231,672
Changes in expected recoveries	29,914		50,136
Total portfolio revenue	237,446		281,808
Fee income	1,830		2,181
Other revenue	1,329		5,480
Total revenues	240,605		289,469
Operating expenses:
Compensation and employee services	71,096		73,984
Legal collection fees	10,873		12,926
Legal collection costs	16,557		21,312
Agency fees	17,388		15,591
Outside fees and services	19,378		20,760
Communication	12,583		12,663
Rent and occupancy	4,987		4,480
Depreciation and amortization	3,778		3,981
Other operating expenses	11,998		13,018
Total operating expenses	168,638		178,715
Income from operations	71,967		110,754
Other income and (expense):
Interest expense, net	(31,748)		(31,552)
Foreign exchange loss	(532)		(26)
Other	(490)		26
Income before income taxes	39,197		79,202
Income tax expense	4,579		17,322
Net income	34,618		61,880
Adjustment for net (loss)/income attributable to noncontrolling interests	(5,354)		3,474
Net income attributable to PRA Group, Inc.	$	39,972	$	58,406
Net income per common share attributable to PRA Group, Inc.:
Basic	$	0.98	$	1.28
Diluted	$	0.97	$	1.27
Weighted average number of shares outstanding:
Basic	40,777		45,669
Diluted	41,304		46,045

PRA Group, Inc.

Consolidated Balance Sheets

(Amounts in thousands)

	(unaudited)
	March 31, 2022		December 31, 2021
Assets
Cash and cash equivalents	$	79,089	$	87,584
Investments	93,249		92,977
Finance receivables, net	3,310,747		3,428,285
Income taxes receivable	49,064		41,146
Deferred tax assets, net	63,965		67,760
Right-of-use assets	55,093		56,713
Property and equipment, net	54,401		54,513
Goodwill	483,380		480,263
Other assets	68,845		57,002
Total assets	$	4,257,833	$	4,366,243
Liabilities and Equity
Liabilities:
Accounts payable	$	6,339	$	3,821
Accrued expenses	90,282		127,802
Income taxes payable	13,743		19,276
Deferred tax liabilities, net	45,365		36,630
Lease liabilities	59,706		61,188
Interest-bearing deposits	117,035		124,623
Borrowings	2,539,462		2,608,714
Other liabilities	39,734		59,352
Total liabilities	2,911,666		3,041,406
Equity:
Preferred stock, $0.01 par value, 2,000 shares authorized, 0 shares issued and outstanding	—		—
Common stock, $0.01 par value, 100,000 shares authorized, 40,410 shares issued and outstanding at March 31, 2022; 100,000 shares authorized, 41,008 shares issued and outstanding at December 31, 2021	404		410
Additional paid-in capital	—		—
Retained earnings	1,548,845		1,552,845
Accumulated other comprehensive loss	(243,709)		(266,909)
Total stockholders' equity - PRA Group, Inc.	1,305,540		1,286,346
Noncontrolling interest	40,627		38,491
Total equity	1,346,167		1,324,837
Total liabilities and equity	$	4,257,833	$	4,366,243

Select Expenses (Income) Amounts in thousands, pre-tax
	Three Months Ended
	March 31, 2022	December 31, 2021	September 30, 2021	June 30, 2021	March 31, 2021	December 31, 2020	September 30, 2020	June 30, 2020
Noncash interest expense - amortization of debt discount	—	—	—	—	—	1,959	2,388	3,247
Noncash interest expense - amortization of debt issuance costs	2,627	2,455	2,406	2,391	2,256	2,393	2,476	2,743
Change in fair value of derivatives	2,726	3,115	2,982	2,911	3,102	3,875	3,701	3,284
Amortization of intangibles	83	(269)	104	105	181	1,792	360	351
Stock-based compensation expense	3,891	3,470	4,317	4,040	4,113	5,370	3,097	3,063

Purchase Price Multiples as of March 31, 2022 Amounts in thousands
Purchase Period	Purchase Price (1)(2)		Total Estimated Collections (3)		Estimated Remaining Collections (4)		Current Purchase Price Multiple	Original Purchase Price Multiple (5)
Americas and Australia Core
1996-2011	$	1,287,821	$	4,120,576	$	23,760	320%	240%
2012	254,076		652,359		9,692		257%	226%
2013	390,826		895,469		15,406		229%	211%
2014	404,117		860,995		26,686		213%	204%
2015	443,114		909,879		73,147		205%	205%
2016	455,767		1,111,717		149,697		244%	201%
2017	532,851		1,215,288		215,435		228%	193%
2018	653,975		1,392,227		257,838		213%	202%
2019	581,476		1,262,829		390,874		217%	206%
2020	435,668		940,908		465,621		216%	213%
2021	435,846		815,458		705,018		187%	191%
2022	92,317		161,069		158,656		174%	174%
Subtotal	5,967,854		14,338,774		2,491,830
Americas Insolvency
1996-2011	786,827		1,752,738		628		223%	174%
2012	251,395		393,135		48		156%	136%
2013	227,834		355,374		303		156%	133%
2014	148,420		218,938		1,175		148%	124%
2015	63,170		87,501		318		139%	125%
2016	91,442		116,398		798		127%	123%
2017	275,257		354,405		16,594		129%	125%
2018	97,879		135,030		31,899		138%	127%
2019	123,077		164,379		70,431		134%	128%
2020	62,130		86,298		58,929		139%	136%
2021	55,187		74,991		66,027		136%	136%
2022	9,118		11,880		11,846		130%	130%
Subtotal	2,191,736		3,751,067		258,996
Total Americas and Australia	8,159,590		18,089,841		2,750,826
Europe Core
2012	20,409		42,893		—		210%	187%
2013	20,334		26,454		—		130%	119%
2014	773,811		2,240,226		419,645		290%	208%
2015	411,340		718,933		184,673		175%	160%
2016	333,090		561,591		230,564		169%	167%
2017	252,174		353,518		144,408		140%	144%
2018	341,775		526,571		264,369		154%	148%
2019	518,610		775,328		448,151		150%	152%
2020	324,119		554,006		381,766		171%	172%
2021	412,411		701,400		620,962		170%	170%
2022	37,943		62,847		61,040		166%	166%
Subtotal	3,446,016		6,563,767		2,755,578
Europe Insolvency
2014	10,876		18,447		15		170%	129%
2015	18,973		28,979		628		153%	139%
2016	39,338		56,750		3,280		144%	130%
2017	39,235		49,398		8,401		126%	128%
2018	44,908		50,640		18,113		113%	123%
2019	77,218		102,101		46,840		132%	130%
2020	105,440		135,908		82,789		129%	129%
2021	53,230		71,526		60,699		134%	134%
2022	8,778		11,829		11,810		135%	135%
Subtotal	397,996		525,578		232,575
Total Europe	3,844,012		7,089,345		2,988,153
Total PRA Group	$	12,003,602	$	25,179,186	$	5,738,979

(1)Includes the acquisition date finance receivables portfolios that were acquired through our business acquisitions.

(2)Non-U.S. amounts are presented at the exchange rate at the end of the year in which the portfolio was purchased. In addition, any purchase price adjustments that occur throughout the life of the portfolio are presented at the year-end exchange rate for the respective year of purchase.

(3)Non-U.S. amounts are presented at the year-end exchange rate for the respective year of purchase.

(4)Non-U.S. amounts are presented at the March 31, 2022 exchange rate.

(5)The Original Purchase Price Multiple represents the purchase price multiple at the end of the year of acquisition.

Portfolio Financial Information Year-to-date as of March 31, 2022 Amounts in thousands
Purchase Period	Cash Collections (1)		Portfolio Income (1)		Change in Expected Recoveries (1)		Total Portfolio Revenue (1)		Net Finance Receivables as of March 31, 2022 (2)
Americas and Australia Core
1996-2011	$	4,896	$	2,552	$	1,720	$	4,272	$	5,808
2012	2,175		818		879		1,697		3,969
2013	3,784		1,309		1,157		2,466		7,444
2014	4,536		1,656		1,562		3,218		10,945
2015	6,225		3,667		(697)		2,970		28,192
2016	12,851		8,970		(2,899)		6,071		51,370
2017	25,253		12,009		1,300		13,309		96,421
2018	46,510		15,233		21,013		36,246		157,922
2019	55,143		22,294		11,704		33,998		223,137
2020	58,529		25,954		5,189		31,143		272,211
2021	48,010		32,061		(31,445)		616		371,339
2022	2,372		1,872		(518)		1,354		91,253
Subtotal	270,284		128,395		8,965		137,360		1,320,011
Americas Insolvency
1996-2011	129		162		(33)		129		—
2012	136		19		117		136		—
2013	169		70		99		169		—
2014	203		241		(63)		178		118
2015	167		62		98		160		210
2016	575		116		(78)		38		522
2017	7,694		996		1,121		2,117		14,715
2018	6,845		1,055		1,032		2,087		28,539
2019	10,167		1,748		1,228		2,976		62,299
2020	4,735		1,610		226		1,836		47,568
2021	4,353		1,831		(11)		1,820		51,125
2022	36		60		—		60		9,142
Subtotal	35,209		7,970		3,736		11,706		214,238
Total Americas and Australia	305,493		136,365		12,701		149,066		1,534,249
Europe Core
2012	259		—		259		259		—
2013	151		—		151		151		—
2014	32,690		20,539		7,829		28,368		125,532
2015	12,028		5,533		41		5,574		98,264
2016	10,513		5,142		100		5,242		135,768
2017	7,257		2,496		395		2,891		99,579
2018	15,099		4,961		791		5,752		175,277
2019	25,771		7,894		2,138		10,032		304,920
2020	19,694		7,668		1,359		9,027		234,001
2021	25,868		11,318		2,086		13,404		371,587
2022	1,832		409		1,033		1,442		37,385
Subtotal	151,162		65,960		16,182		82,142		1,582,313
Europe Insolvency
2014	84		8		71		79		9
2015	223		78		(21)		57		472
2016	935		231		(87)		144		2,531
2017	2,093		204		163		367		7,715
2018	2,781		402		(708)		(306)		16,303
2019	5,574		1,091		331		1,422		40,308
2020	8,997		1,800		801		2,601		70,849
2021	3,620		1,344		458		1,802		47,173
2022	18		49		23		72		8,825
Subtotal	24,325		5,207		1,031		6,238		194,185
Total Europe	175,487		71,167		17,213		88,380		1,776,498
Total PRA Group	$	480,980	$	207,532	$	29,914	$	237,446	$	3,310,747

(1)Non-U.S. amounts are presented using the average exchange rates during the current reporting period.

(2)Non-U.S. amounts are presented at the March 31, 2022 exchange rate.

Cash Collections by Year, By Year of Purchase (1) as of March 31, 2022 Amounts in millions
			Cash Collections
Purchase Period	Purchase Price (2)(3)		1996-2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		Total
Americas and Australia Core
1996-2011	$	1,287.8	$	2,419.5	$	486.0	$	381.3	$	266.3	$	183.1	$	119.0	$	78.0	$	56.0	$	45.0	$	29.7	$	20.8	$	4.9	4,089.6
2012	254.1		—		56.9		173.6		146.2		97.3		60.0		40.0		27.8		17.9		11.8		9.0		2.2		642.7
2013	390.8		—		—		101.6		247.8		194.0		120.8		78.9		56.4		36.9		23.2		16.7		3.8		880.1
2014	404.1		—		—		—		92.7		253.4		170.3		114.2		82.2		55.3		31.9		22.3		4.5		826.8
2015	443.1		—		—		—		—		117.0		228.4		185.9		126.6		83.6		57.2		34.9		6.2		839.8
2016	455.8		—		—		—		—				138.7		256.5		194.6		140.6		105.9		74.2		12.9		923.4
2017	532.9		—		—		—		—		—		—		107.3		278.7		256.5		192.5		130.0		25.3		990.3
2018	654.0		—		—		—		—		—		—		—		122.7		361.9		337.7		239.9		46.5		1,108.7
2019	581.5		—		—		—		—		—		—		—		—		143.8		349.0		289.8		55.1		837.7
2020	435.7		—		—		—		—		—		—		—		—		—		133.0		284.3		58.5		475.8
2021	435.8		—		—		—		—		—		—		—		—		—		—		85.0		48.0		133.0
2022	92.3		—		—		—		—		—		—		—		—		—		—		—		2.4		2.4
Subtotal	5,967.9		2,419.5		542.9		656.5		753.0		844.8		837.2		860.8		945.0		1,141.5		1,271.9		1,206.9		270.3		11,750.3
Americas Insolvency
1996-2011	786.8		667.4		336.8		313.7		244.7		128.2		44.6		8.4		4.0		2.1		1.3		0.8		0.1		1,752.1
2012	251.4		—		17.4		103.6		94.1		80.1		60.7		29.3		4.3		1.9		0.9		0.6		0.1		393.0
2013	227.8		—		—		52.5		82.6		81.7		63.4		47.8		21.9		2.9		1.3		0.8		0.2		355.1
2014	148.4		—		—		—		37.0		50.9		44.3		37.4		28.8		15.8		2.2		1.1		0.2		217.7
2015	63.2		—		—		—		—		3.4		17.9		20.1		19.8		16.7		7.9		1.3		0.2		87.3
2016	91.4		—		—		—		—		—		18.9		30.4		25.0		19.9		14.4		7.4		0.6		116.6
2017	275.3		—		—		—		—		—		—		49.1		97.3		80.9		58.8		44.0		7.7		337.8
2018	97.9		—		—		—		—		—		—		—		6.7		27.4		30.5		31.6		6.8		103.0
2019	123.1		—		—		—		—		—		—		—		—		13.4		31.4		39.1		10.2		94.1
2020	62.1		—		—		—		—		—		—		—		—		—		6.5		16.1		4.7		27.3
2021	55.2		—		—		—		—		—		—		—		—		—		—		4.5		4.4		8.9
2022	9.1		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal	2,191.7		667.4		354.2		469.8		458.4		344.3		249.8		222.5		207.8		181.0		155.2		147.3		35.2		3,492.9
Total Americas and Australia	8,159.6		3,086.9		897.1		1,126.3		1,211.4		1,189.1		1,087.0		1,083.3		1,152.8		1,322.5		1,427.1		1,354.2		305.5		15,243.2
Europe Core
2012	20.4		—		11.6		9.0		5.6		3.2		2.2		2.0		2.0		1.5		1.2		1.2		0.3		39.8
2013	20.3		—		—		7.1		8.5		2.3		1.3		1.2		1.3		0.9		0.7		0.7		0.2		24.2
2014	773.8		—		—		—		153.2		292.0		246.4		220.8		206.3		172.9		149.8		149.2		32.7		1,623.3
2015	411.3		—		—		—		—		45.8		100.3		86.2		80.9		66.1		54.3		51.4		12.0		497.0
2016	333.1		—		—		—		—		—		40.4		78.9		72.6		58.0		48.3		46.7		10.5		355.4
2017	252.2		—		—		—		—		—		—		17.9		56.0		44.1		36.1		34.8		7.3		196.2
2018	341.8		—		—		—		—		—		—		—		24.3		88.7		71.2		69.1		15.1		268.4
2019	518.6		—		—		—		—		—		—		—		—		47.9		125.7		121.4		25.8		320.8
2020	324.1		—		—		—		—		—		—		—		—		—		32.4		91.7		19.7		143.8
2021	412.4		—		—		—		—		—		—		—		—		—		—		48.4		25.9		74.3
2022	37.9		—		—		—		—		—		—		—		—		—		—		—		1.7		1.7
Subtotal	3,445.9		—		11.6		16.1		167.3		343.3		390.6		407.0		443.4		480.1		519.7		614.6		151.2		3,544.9
Europe Insolvency
2014	10.9		—		—		—		—		4.3		3.9		3.2		2.6		1.5		0.8		0.3		0.1		16.7
2015	19.0		—		—		—		—		3.0		4.4		5.0		4.8		3.9		2.9		1.6		0.2		25.8
2016	39.3		—		—		—		—		—		6.2		12.7		12.9		10.7		7.9		6.0		0.9		57.3
2017	39.2		—		—		—		—		—		—		1.2		7.9		9.2		9.8		9.4		2.1		39.6
2018	44.9		—		—		—		—		—		—		—		0.6		8.4		10.3		11.7		2.8		33.8
2019	77.2		—		—		—		—		—		—		—		—		5.1		21.1		23.9		5.6		55.7
2020	105.4		—		—		—		—		—		—		—		—		—		6.1		34.6		9.0		49.7
2021	53.3		—		—		—		—		—		—		—		—		—		—		5.4		3.6		9.0
2022	8.8		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal	398.0		—		—		—		—		7.3		14.5		22.1		28.8		38.8		58.9		92.9		24.3		287.6
Total Europe	3,843.9		—		11.6		16.1		167.3		350.6		405.1		429.1		472.2		518.9		578.6		707.5		175.5		3,832.5
Total PRA Group	$	12,003.5	$	3,086.9	$	908.7	$	1,142.4	$	1,378.7	$	1,539.7	$	1,492.1	$	1,512.4	$	1,625.0	$	1,841.4	$	2,005.7	$	2,061.7	$	481.0	$	19,075.7

(1)Non-U.S. amounts are presented using the average exchange rates during the cash collection period.

(2)Includes the nonperforming loan portfolios that were acquired through our business acquisitions.

(3)Non-U.S. amounts are presented at the exchange rate at the end of the year in which the portfolio was purchased. In addition, any purchase price adjustments that occur throughout the life of the pool are presented at the year-end exchange rate for the respective year of purchase.

Use of Non-GAAP Financial Measures

PRA Group, Inc. reports financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management uses certain non-GAAP financial measures, including Adjusted EBITDA, internally to evaluate the Company’s performance and to set performance goals. Adjusted EBITDA is calculated as net income attributable to PRA Group, Inc. plus income tax expense; less foreign exchange gain (or plus foreign exchange loss); plus interest expense, net; plus other expense (or less other income); plus depreciation and amortization; plus adjustment for net income attributable to noncontrolling interests; and plus recoveries applied to negative allowance less changes in expected recoveries. Adjusted EBITDA is a supplemental measure of performance that is not required by, or presented in accordance with, GAAP. PRA Group, Inc. presents Adjusted EBITDA because the Company considers it an important supplemental measure of operations and financial performance. Management believes Adjusted EBITDA helps provide enhanced period-to-period comparability of operations and financial performance and is useful to investors as other companies in the industry report similar financial measures. Adjusted EBITDA should not be considered as an alternative to net income determined in accordance with GAAP. Set forth below is a reconciliation of Adjusted EBITDA for the last twelve months (LTM) ended March 31, 2022 and for the year ended December 31, 2021, to net income, the most directly comparable financial measure calculated and reported in accordance with GAAP. The calculation of Adjusted EBITDA below may not be comparable to the calculation of similarly titled measures reported by other companies.

Reconciliation of Non-GAAP Financial Measures
	LTM		For the Year Ended
Adjusted EBITDA for PRA Group ($ in millions)	March 31, 2022		December 31, 2021
Net income attributable to PRA Group, Inc.	$	165	$	183
Adjustments:
Income tax expense	42		55
Foreign exchange losses/(gains)	1		1
Interest expense, net	124		124
Other expense	—		—
Depreciation and amortization	15		15
Adjustment for net income attributable to noncontrolling interests	4		12
Recoveries applied to negative allowance less Changes in expected recoveries	958		988
Adjusted EBITDA	$	1,309	$	1,378

Additionally, management evaluates the Company's business using certain ratios that use Adjusted EBITDA, including Debt to Adjusted EBITDA, which is calculated by dividing borrowings by Adjusted EBITDA. The following table reflects our Debt to Adjusted EBITDA for LTM as of March 31, 2022 and for the year ended December 31, 2021 (amounts in millions):

Debt to Adjusted EBITDA
	LTM		For the Year Ended
	March 31, 2022		December 31, 2021
Borrowings	$	2,539	$	2,609
LTM Adjusted EBITDA	1,309		1,378
Debt to LTM Adjusted EBITDA	1.94		1.89

Investor Contact:

Lauren Partin

Senior Vice President, Finance and Investor Relations

(757) 431-7913

IR@PRAGroup.com

News Media Contact:

Elizabeth Kersey

Senior Vice President, Communications and Public Policy

(757) 431-3398

Elizabeth.Kersey@PRAGroup.com