10q10k10q10k.net

What changed in PRA GROUP INC's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of PRA GROUP INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+326 added−313 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-29)

Top changes in PRA GROUP INC's 2024 10-K

326 paragraphs added · 313 removed · 221 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

29 edited+22 added−22 removed4 unchanged
Biggest changeThe Dodd-Frank Act, along with the Unfair, Deceptive, or Abusive Acts or Practices ("UDAAP") provisions included therein, and the Federal Trade Commission Act, prohibit unfair, deceptive, and/or abusive acts and practices. • International data protection and privacy laws, which include relevant country specific legislation in the UK and other European countries where we operate that regulate the processing of information relating to individuals, including the obtaining, holding, use or disclosure of such information; the Personal Information Protection and Electronic Documents Act, which aims to protect personal information that is collected, used or disclosed in certain circumstances for purposes of electronic commerce in Canada; and the GDPR, which regulates the processing and free movement of personal data within the European Union ("EU") and transfer of such data outside the EU. • Consumer Credit Act 1974 (and its related regulations); Unfair Terms in Consumer Contracts Regulations of 1999; and the Financial Conduct Authority's: – consumer credit conduct of business rules , which apply to our UK operations and govern consumer credit agreements; – Consumer Duty, which sets higher and clearer standards of consumer protection across financial services; and – Senior Managers and Certification Regime ("SM&RC"), which aims to reduce harm to consumers and strengthen market integrity.
Biggest changeForeign Corrupt Practices Act ("FCPA"), UK Bribery Act and Similar Laws, which prohibit certain payments to governmental officials and other individuals. 6 • International data protection and privacy laws, which include relevant country specific legislation in the UK and other European countries where we operate that regulate the processing of information related to individuals, including the obtaining, holding, use, or disclosure of such information; the Personal Information Protection and Electronic Documents Act, which aims to protect personal information that is collected, used, or disclosed in certain circumstances for purposes of electronic commerce in Canada; the GDPR, which regulates the processing and free movement of personal data within the European Union ("EU") and the transfer of such data outside the EU; and in the UK, the Data Protection Act 2018, which implements the EU General Data Protection Regulation in the UK. • EU Directive 2021/2167 (the "Directive") , which creates a regulatory framework for the sale, purchase, and servicing of EU nonperforming loans and requires "credit servicing" to be subject to authorization and oversight processes.
We file claims or claim transfers securing our creditor rights in plans, and we actively manage these accounts through the entire life cycle of the insolvency proceeding to ensure that we participate in any distributions to creditors.
We file claims or claim transfers securing our creditor rights under these plans, and we actively manage these accounts through the entire life cycle of the insolvency proceeding to ensure that we participate in any distributions to creditors.
Significant laws and regulations applicable to our business include the following: • Fair Debt Collection Practices Act ("FDCPA"), which imposes certain obligations and restrictions on the practices of debt collectors, including specific restrictions regarding the time, place and manner of the communications. • Fair Credit Reporting Act ("FCRA"), which obligates credit information providers to verify the accuracy of information provided to credit reporting agencies and investigate consumer disputes concerning the accuracy of such information. • Gramm-Leach-Bliley Act ("GLBA"), which requires that certain financial institutions, including collection companies, develop policies to protect the privacy of consumers' private financial information and provide notices to consumers advising them of their privacy policies. • Electronic Funds Transfer Act, which regulates electronic fund transfer transactions, including a consumer’s right to stop payments on a pre-approved fund transfer and right to receive certain documentation of the transaction. • Telephone Consumer Protection Act ("TCPA"), which, along with similar state laws, places certain restrictions on users of certain automated dialing equipment and pre-recorded messages that place telephone calls to consumers. • Servicemembers Civil Relief Act ("SCRA"), which gives U.S. military service personnel relief from credit obligations they may have incurred prior to entering military service and may also apply in certain circumstances to obligations and liabilities incurred by a servicemember while serving on active duty. • Health Insurance Portability and Accountability Act ("HIPAA"), which provides standards to protect the confidentiality of patients' personal healthcare and financial information in the U.S. • U.S.
Significant laws and regulations applicable to our U.S. business include the following: • Fair Debt Collection Practices Act, which imposes certain obligations and restrictions on the practices of debt collectors, including specific restrictions regarding the time, place and manner of communications. • Fair Credit Reporting Act, which obligates credit information providers to verify the accuracy of information provided to credit reporting agencies and investigate consumer disputes concerning the accuracy of such information. • Gramm-Leach-Bliley Act ("GLBA"), which requires that certain financial institutions, including collection companies, develop policies to protect the privacy of consumers' private financial information and provide notices to consumers advising them of their privacy policies. • Electronic Funds Transfer Act, which regulates electronic fund transfer transactions, including a consumer’s right to stop payments on a pre-approved fund transfer and to receive certain documentation of the transaction. • Telephone Consumer Protection Act, which, along with similar state laws, places certain restrictions on the use of pre-recorded messages and certain automated dialing equipment that places telephone calls to consumers. • Servicemembers Civil Relief Act, which gives U.S. military service personnel relief from credit obligations they may have incurred prior to entering military service and may also apply in certain circumstances to obligations and liabilities incurred by a servicemember while serving on active duty. • Health Insurance Portability and Accountability Act, which provides standards to protect the confidentiality of patients' personal healthcare and financial information in the U.S. • U.S.
These accounts are managed under the relevant country's insolvency or bankruptcy codes and may have an associated payment plan that generally ranges from three to seven years. Accounts that are purchased while insolvent can be purchased at any stage in the insolvency or bankruptcy plan life cycle.
These accounts are managed under the relevant country's insolvency or bankruptcy codes and may have an associated payment plan that generally ranges from three to seven years. Accounts that are purchased while insolvent can be purchased at any stage of the insolvency or bankruptcy plan life cycle.
The accounts we manage are derived from two sources: (1) our purchased portfolios of insolvent nonperforming loans and (2) our Core purchased portfolios of nonperforming loans where our customers file for protection under insolvency or bankruptcy laws after we have purchased the account.
The accounts we manage are derived from two sources: (1) purchased portfolios of insolvent nonperforming loans and (2) Core nonperforming loans when our customers file for protection under insolvency or bankruptcy laws after we purchase the accounts.
These accounts fall under insolvency plans ranging from Individual Voluntary Arrangements ("IVAs") and Trust Deeds in the UK, to Consumer Proposals in Canada, to various forms of bankruptcy plans in the U.S., Canada, Germany and the UK.
These accounts fall under insolvency plans such as Individual Voluntary Arrangements ("IVAs") and Trust Deeds in the United Kingdom ("UK"), Consumer Proposals in Canada and various forms of bankruptcy plans in the U.S., Canada, Germany and the UK.
Whether the accounts are being serviced by internal staff or external vendors, except for accounts placed with a third-party debt collection agency, we utilize our proprietary analysis to proportionally direct work efforts to those customers most able and willing to pay.
Whether accounts are being serviced by internal staff or external vendors, except for accounts placed with a third-party debt collection agency, we utilize our proprietary models to proportionally direct work efforts to those customers most able and willing to pay, and ultimately, to achieve the highest correlation to profitable collections from our call activities.
Our Insolvency operation consists primarily of purchasing and collecting on nonperforming loans where the customer is involved in a bankruptcy proceeding, or the equivalent thereof, in certain European countries. We also provide fee-based services on class action claims recoveries in the United States ("U.S.").
Our Insolvency operation consists primarily of purchasing and collecting on nonperforming loans where the customer is involved in a bankruptcy or similar proceeding. We also purchase and provide fee-based services for class action claims recoveries in the U.S.
Seasonality Customer payment patterns in all of the countries in which we operate can be affected by, among other factors, seasonal employment trends, income tax refunds and holiday spending habits. Competition Competition is derived from both third-party contingent fee collection agencies and purchasers of debt that either manage their own nonperforming loans or outsource such servicing.
Seasonality In all of the countries in which we operate, customer payment patterns can be impacted by multiple factors, including seasonal employment trends, income tax refunds and holiday spending habits. COMPETITION Competition is derived primarily from other debt purchasers that either manage their own nonperforming loans or outsource such services.
Bankruptcy Code, which prohibits certain contacts with consumers after the filing of bankruptcy petitions and dictates what types of claims will or will not be allowed in a bankruptcy proceeding including how such claims may be discharged. • Americans with Disabilities Act, which requires that telecommunications companies operating in the U.S. take steps to ensure functionally equivalent services are available for their consumers with disabilities, and requires accommodation of consumers with disabilities, such as the implementation of telecommunications relay services. • U.S.
Bankruptcy Code, which prohibits certain contacts with consumers after the filing of bankruptcy petitions and dictates what types of claims will or will not be allowed in a bankruptcy proceeding, including how such claims may be discharged. • Americans with Disabilities Act, which requires that telecommunications companies operating in the U.S. take steps to ensure functionally equivalent services are available for their consumers with disabilities and to accommodate consumers with disabilities through, for example, implementation of telecommunications relay services. • Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd Frank Act"), which restructured the regulation and supervision of the financial services industry in the U.S. and created the CFPB.
There are some markets, especially the Nordic countries, in which the collection process follows a prescribed, time-sensitive and sequential set of legal actions, but in the majority of instances, we use models and analysis to select those accounts reflecting a higher propensity to pay within a given legal environment.
There are some markets, especially in the Nordic countries, where the collection process follows a prescribed and time-sensitive set of legal actions, but in the majority of instances, we are able to use models and analysis to identify accounts with a higher propensity to pay.
Item 1. Business. General PRA Group Inc. is a global financial and business services company with operations based primarily in the Americas and Europe, and to a lesser extent, Australia. Our primary business is the purchase, collection and management of portfolios of nonperforming loans.
Item 1. Business. OVERVIEW PRA Group Inc. is a global financial services company with operations in the Americas, Europe and Australia. Our primary business is the purchase, collection and management of portfolios of nonperforming loans. The accounts we purchase are primarily the unpaid obligations of individuals owed to credit originators.
We use a combination of internal staff (attorneys and support), as well as external law firms and other third-party vendors, to pursue legal collections under certain circumstances, as we deem appropriate. Insolvency Operations Accounts that are in an insolvent or bankrupt status are managed by our Insolvency operations team.
We utilize a combination of internal resources (attorneys and supporting staff), external law firms and other third-party vendors to perform legal recovery and judicial collections. 4 Insolvency operation Accounts that are in an insolvent or bankrupt status are managed by our Insolvency operations team.
Legal Recovery - Core Portfolios An important component of our collection efforts involves our legal recovery operations and the judicial collection of balances from customers who, in general, we believe have the ability, but not the willingness, to resolve their obligations.
Another important component of our collection efforts involves legal recovery and the judicial collection of balances from customers who we generally believe have the ability to settle their obligations, but who are unwilling to pay.
While none of our North American employees are represented by a union or covered by a collective bargaining agreement, in Europe, we work closely with a number of works councils, and in countries where it is the customary local practice, such as Finland and Spain, we have collective bargaining agreements.
In Europe, we work closely with works councils, and in countries where it is the customary local practice, such as Finland and Spain, we have collective bargaining agreements.
The information contained on, or that can be accessed through our website, is not, and shall not be deemed to be a part of this Form 10-K or incorporated into any of our other SEC Filings. 8 Reports filed with, or furnished to, the SEC are also available free of charge upon request by contacting our corporate office at: PRA Group, Inc.
The information contained on, or that can be accessed through our website, is not, and shall not be deemed to be a part of this Form 10-K or incorporated into any of our other SEC Filings.
Our Core operation specializes in purchasing and collecting nonperforming loans, which we purchase since the credit originators have chosen not to pursue, or have been unsuccessful in, collecting the full balance owed.
We purchase nonperforming loans at a discount to face value for both our Core and Insolvency portfolios. Our Core operation specializes in purchasing and collecting nonperforming loans, which are sold by credit originators when they choose not to pursue, or have been unsuccessful in, collecting the full balance owed.
Our digital channels allow us to service our customers in a channel many of them prefer, providing convenient, user-friendly platforms for making payments, accessing account information, viewing documents and contacting an account representative. Equity Method Investment We have an 11.7% equity interest in RCB Investimentos S.A.
Our digital channels allow us to serve our customers in a way that many of them prefer, providing convenient, user-friendly platforms for receiving information, making payments, accessing account information, viewing documents and contacting account representatives.
Additionally, we offer tuition reimbursement assistance and have a robust suite of training and development offerings, both in person and through virtual learning technology for employees across the globe, many available in multiple languages. Management considers our employee relations to be good.
We offer tuition reimbursement assistance and have a robust suite of training and development offerings for employees across the globe, many available in multiple languages. Our performance management framework is designed to foster accountability, encourage interactive discussions about performance and expand the skills and capabilities of our employees.
We believe that our competitive strengths include our: • global presence, with portfolios in 18 countries; • strong relationships with credit originators; 6 • ability to close transactions in a timely fashion; • capital position; • extensive data set developed since our founding in 1996; • disciplined and proprietary underwriting process; • ability to bid on portfolios at appropriate prices; • compliance program; • reputation from previous portfolio purchase transactions; • quality customer service; and • ability to efficiently and effectively collect on various asset types.
We believe that our competitive strengths include our: • diverse global presence, with portfolios in 18 countries; • strong and longstanding relationships with credit originators globally; • strong capital position; • extensive data set informing our proprietary underwriting process and disciplined approach to bidding; • comprehensive compliance program; • reputation from previous portfolio purchase transactions; • customer service; and • ability to efficiently and effectively collect on various asset types. 5 GOVERNMENT REGULATION We are subject to a variety of federal, state, local and international laws, some of which establish specific guidelines and procedures for the collection, use, retention, security and transfer of personal information that debt collectors must follow when collecting on customer accounts.
We purchase portfolios of nonperforming loans through either single portfolio transactions, referred to as spot sales, or through the pre-arranged purchase of multiple portfolios over time, referred to as forward flow sales.
Credit originators sell nonperforming loans in either single portfolio transactions, referred to as spot sales, or through pre-arranged sales of multiple portfolios over time, referred to as forward flow sales. Under forward flows, portfolios are purchased on a periodic basis at a negotiated price over a specified term, typically ranging from six to 12 months.
Portfolios sold close to the filing of the insolvency or bankruptcy plan may take months to generate cash flow; however, aged portfolios sold years after the filing of the insolvency or bankruptcy plan will typically generate cash flows immediately.
Accounts sold close to the filing of the insolvency or bankruptcy plan may take months to generate cash flows, while accounts sold years after the filing of the insolvency or bankruptcy plan typically generate cash flows immediately. Digital channels We utilize digital platforms to support our inbound collection efforts, and where permitted by local regulations, our outbound communications.
In the U.S., regulatory complexity and burdens, combined with seller preference for experienced portfolio purchasers, create barriers to successful entry for new competitors. In Brazil, there are a small number of major purchasers of nonperforming loans, whose experience and access to capital also create barriers to successful entry for new competitors.
In the U.S., regulatory complexity and burdens, combined with seller preferences for experienced portfolio purchasers, create barriers to successful entry for new competitors, resulting in a fairly stable competitive landscape. In Europe, diverse regulatory environments create varying levels of competition, with some markets being more competitive than others.
These values are intended to foster a high-performing workforce and sense of belonging by working together to build an equitable and inclusive culture where employees can reach their full potential. In support of these values, we offer comprehensive total rewards programs, which include competitive pay and bonus structures, health and wellness benefits, retirement plans and an employee assistance program.
Total rewards and safety We are committed to creating a workplace that promotes the health, safety and wellness of our employees. We offer a comprehensive total rewards program, which includes competitive pay and bonus structures, health and wellness benefits, retirement plans and an employee assistance program.
Typically, invited purchasers, in either case, will have already successfully completed a qualification process that can include the seller's review of any or all of the following: the purchaser's experience, reputation, financial standing, operating procedures, business practices and compliance oversight.
The bidders form part of a panel of potential buyers that have qualified to participate through a process that includes review of any or all of the following: experience, reputation, financial standing, operating procedures, business practices, customer treatment and compliance oversight. Portfolios can also be sold on an exclusive basis directly to a seller's preferred buyer.
Portfolio Acquisitions To identify purchasing opportunities, we maintain an extensive marketing effort with our global investment team contacting known and prospective sellers of nonperforming loans. From these sellers, we acquire a variety of nonperforming loans, including Visa ® and Mastercard ® general purpose credit card accounts, private label credit card accounts, personal loans, automobile loans and small business loans.
PORTFOLIO PURCHASING To identify purchasing opportunities, our global investment team continuously engages with known and potential sellers, including major banks, consumer finance companies, auto finance providers and other creditors. The types of Core and Insolvency nonperforming loans we purchase include general purpose and private label credit cards, consumer loans, auto loans, overdrafts and small business loans.
Depending on the characteristics of the account and the applicable 5 local collection laws, we determine whether to commence legal action to judicially collect on the account. In certain countries, the legal collection process has a lower cost.
We do not begin our collections activity with the legal collections channel, but consider using it if and when our customers do not engage with us voluntarily, and we determine whether to commence legal action to judicially collect based on the characteristics of an account and the applicable local collection laws.
In addition, certain of our EU subsidiaries are subject to capital adequacy, liquidity and other requirements imposed by regulators, such as the Swedish Financial Supervisory Authority. Human Capital As of December 31, 2023, we employed 3,155 full-time equivalents globally, with approximately 72% of our workforce located in the Americas and Australia and 28% in Europe.
Our workforce As of December 31, 2024, we employed 3,115 full-time equivalents globally, with approximately 71% of our workforce located in the Americas and Australia and 29% in Europe. None of our employees in North America are represented by a union or covered by a collective bargaining agreement.
Our employees share a common set of values and commitments that define how we treat each other, how we relate to our customers and the responsibilities we have to shareholders, regulators, clients and others. We refer to this shared set of values as CARES, which stands for Committed, Accountable, Respectful, Ethical and Successful.
Commitment to values and ethics We strive to foster a culture of respect and responsibility through a common set of values and commitments among all our employees referred to as "C.A.R.E.S", which stands for Committed, Accountable, Respectful, Ethical and Successful.
Removed
The accounts we purchase are primarily the unpaid obligations of individuals owed to credit originators, which include banks and other types of consumer, retail and auto finance companies. We purchase portfolios of nonperforming loans at a discount in two broad categories: Core and Insolvency.
Added
In valuing these loans, we consider several factors, including the type of asset, the age since charge-off, the geographic region, the sellers' selection criteria and collections activity up to the time of sale.
Removed
Sellers of nonperforming loans include major banks, credit unions, consumer finance companies, retailers, utilities, automobile finance companies and other credit originators.
Added
We leverage our extensive data set and modeling experience to determine the price we bid for a portfolio, which considers projected future cash collections, the estimated cost to collect, financing costs and the current market environment. All purchases are subject to approval by the applicable investment committee(s).
Removed
The price at which we purchase portfolios depends on a number of factors, including the age since charge-off of the portfolio, whether it is a Core or Insolvency portfolio, geographic region, the seller's selection criteria, our historical collections experience with a certain asset type or credit originator, our estimated cost to collect on the portfolio, our financing costs and the current market environment.
Added
In addition, forward flow agreements contain provisions establishing specific criteria for the loans to be purchased, and many allow for termination and/or price renegotiation should the underlying quality of the portfolio deteriorate over time. Nonperforming loan portfolios are sold through formal sales processes. Typically, the sellers assemble a portfolio and request prices from specific bidders.
Removed
We purchase portfolios of nonperforming loans from credit originators through auctions and negotiated sales. In an auction process, the seller will assemble a portfolio of nonperforming loans and will request purchase prices from specifically invited bidders.
Added
PORTFOLIO COLLECTIONS Core operation Our collection efforts are driven by a combination of internally staffed call centers and external vendors.
Removed
In a privately negotiated sale process, the credit originator will contact one or more purchasers directly, receive a bid and negotiate the terms of sale.
Added
As part of recent initiatives to enhance the performance of our U.S. business, we expanded our use of offshore collectors and conducted a successful work-from-home pilot program for a portion of our collections operations, which led to a planned reduction in the number of collection sites in the U.S. from six to three.
Removed
Under a forward flow agreement, we purchase statistically similar nonperforming loan portfolios from a credit originator on a periodic basis, at a negotiated price over a specified term, typically ranging from three to 12 months. Portfolio Collection Operations Call Center Operations In higher volume markets, our collection efforts have been driven by internally staffed call centers.
Added
In Brazil, there are a small number of large purchasers of nonperforming loans, whose experience and access to capital creates barriers to entry for new competitors. We compete with other debt purchasers on a number of individual factors, including price, reputation, industry experience and long-term performance.
Removed
In some newer markets, and in markets that have less consistent debt purchasing patterns, most notably outside the U.S., we also utilize external vendors to support some or all of our collection efforts.
Added
The most significant government regulations that impact our business are discussed below. For further discussion about how these regulations may impact our business, refer to Item 1A. Risk Factors.
Removed
As part of more recent efforts to enhance the performance of our U.S. business, we have expanded the outsourcing of collection efforts while also testing and piloting the offshoring of collections. Over time, we expect these initiatives will complement our internal resources and U.S. call centers.
Added
United States We are subject to supervision by the CFPB, which has primary regulatory authority over consumer debt collection in the U.S and is responsible for enforcing numerous financial statutes and regulations.
Removed
The analysis driving those decisions relies on models and variables that we believe will result in the highest correlation to profitable collections from call activity.
Added
After the recent change in presidential administration, there have been some indications that the regulatory and enforcement activities of the CFPB may change, but the extent to which these or other future developments may impact our business remains uncertain.
Removed
Digital As a complement to our collection operations, and in-line with macro trends demonstrating an increasingly digital consumer, we continue to implement digital platforms to support our collection efforts in all of our operating markets. These platforms provide for inbound collections, as well as outbound collections where permitted by local regulations.
Added
At the state and local levels, we are subject to a variety of statutes and regulations. These state and local rules regulate, among other things, collection activity, data collection and use, legal recovery and post-judgment processes, and licensing and bonding.
Removed
("RCB"), a portfolio servicer and manager that performs the underwriting and collections activities related to our Brazilian portfolios. Fees paid to RCB are included within Agency fees in our Consolidated Income Statements.
Added
International Our non-U.S. businesses are also subject to regulation by various regulators, including central banks and other regulatory bodies such as the UK Financial Conduct Authority, Swedish Financial Supervisory Authority, German Federal Financial Supervisory Authority, Bank of Italy, Polish Financial Supervision Authority and Australian Securities & Investments Commission.
Removed
Fee-Based Services In addition to the purchase, collection and management of portfolios of nonperforming loans, we provide fee-based services including class action claims recovery purchasing and servicing through our subsidiary, Claims Compensation Bureau, LLC ("CCB").
Added
Significant laws and regulations applicable to our international businesses include the following: • U.S.
Removed
In Europe, the diverse regulatory environment across different markets creates varying levels of competition, with some markets being more competitive than others. We compete in the purchasing of nonperforming loans on the basis of price, reputation, industry experience and performance.
Added
EU member states are required to establish regulatory frameworks for authorizations and registrations of all credit servicers and to set standards for consumer protection and fitness and propriety standards for business owners, among other things. • Consumer Credit Act 1974 (and its related regulations); Unfair Terms in Consumer Contracts Regulations of 1999; and the Financial Conduct Authority's Handbook of rules and guidance, which include the: • Consumer Credit Sourcebook, which governs regulated and consumer credit agreements and collection activities in the UK; • Consumer Duty, which sets higher and clearer standards of consumer protection across financial services in the UK and requires firms to act to deliver good outcomes for customers; and • Senior Managers and Certification Regime, which aims to reduce harm to consumers and strengthen market integrity in the UK by imposing additional obligations on certain individuals who have significant control or influence over the management of UK businesses to ensure accountability for their conduct and competence.
Removed
Government Regulation We are subject to a variety of federal, state, local and international laws that establish specific guidelines and procedures that debt collectors must follow when collecting on customer accounts, including laws relating to the collection, use, retention, security and transfer of personal information. It is our policy to comply with applicable laws in all of our activities.
Added
Our non-US businesses are subject to the tax laws and regulations of the countries in which they are organized and operate. Foreign governments from time-to-time consider legislation that could impact our business activities or the amount of taxes that we pay.
Removed
To promote compliance with applicable laws and regulations, we provide extensive training upon hire and additional training at least annually. We also monitor and evaluate our collectors and third-party service providers in order to provide meaningful and prompt feedback.
Added
For example, in 2021, as part of its Global Anti-Base Erosion Model Rules (Pillar Two), the Organization for Economic Cooperation and Development (“OECD”) recommended a minimum 15% tax on the income of large multinational enterprises in each jurisdiction in which they operate.
Removed
Our compliance management system and related controls, which are embedded in our business processes, are also tested regularly by our compliance and internal audit departments to foster compliance with laws, regulations and internal policy.
Added
Many of the jurisdictions in which we have operations, including the UK, EU, Canada and Australia, have enacted legislation to begin implementing Pillar Two for tax years beginning in 2024. Other jurisdictions, including Brazil, are taking steps to adopt Pillar Two for tax years beginning in 2025.
Removed
Our failure to comply with these laws could result in an enforcement action against us, the payment of significant fines and penalties, restrictions upon our operations or our inability to recover amounts owed to us.
Added
In addition, certain of our EU and UK subsidiaries are subject to capital adequacy, liquidity, and other requirements imposed by regulators. HUMAN CAPITAL MANAGEMENT Our Company’s values and culture are central to our ability to attract, hire and retain talented employees.
Removed
Foreign Corrupt Practices Act ("FCPA"), United Kingdom Bribery Act ("UK Bribery Act") and Similar Laws. Our operations outside the U.S. are subject to various U.S. and international laws and regulations, such as the FCPA and the UK Bribery Act, which prohibit certain payments to governmental officials and other individuals.
Added
Our human capital management objectives are grounded in our commitment to these values and ethics and are focused on supporting employee health, safety and wellness and furthering talent development, performance management and engagement.
Removed
The FCPA prohibits U.S. companies and their agents and employees from providing anything of value to a foreign official for the purposes of influencing any act or decision of these individuals in order to obtain an unfair advantage or help obtain or retain business.
Added
Our C.A.R.E.S values guide how we treat each other, how we relate to our customers and the responsibilities we have to other key stakeholders such as our stockholders, sellers and regulators. These values are also reflected in our Code of Conduct.
Removed
Although similar to the FCPA, the UK Bribery Act is broader in scope and covers bribes given to or received by any person with improper intent. 7 • Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), which restructured the regulation and supervision of the financial services industry in the U.S. and created the CFPB.
Added
In 2024, our U.S. business received the “Safe Workplace Certification” from the Center of Personal Protection and Safety, which demonstrates our commitment to the physical safety of our employees. Talent development and engagement We believe that talent development, performance management and engagement of our employees are key to our future success.
Removed
The CFPB has rulemaking, supervisory, and enforcement authority over larger consumer debt collectors.
Added
We conduct an annual employee survey to measure engagement and inform action plans to address employee concerns and 7 celebrate accomplishments. We believe that our employees are one of our greatest assets and encourage them to be their best and to be themselves, which fosters an inclusive workplace that values diverse experiences, perspectives and abilities.
Removed
Attn: Investor Relations 120 Corporate Boulevard, Suite 100 Norfolk, Virginia 23502
Added
Reports filed with, or furnished to, the SEC are also available free of charge upon request by contacting our corporate office at: PRA Group, Inc. Attn: Investor Relations 120 Corporate Boulevard, Suite 100 Norfolk, Virginia 23502

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

83 edited+27 added−20 removed24 unchanged
Biggest changeThe global nature of our operations expands the risks and uncertainties described elsewhere in this section, including the following: • changes in local political, economic, social and labor conditions in the markets in which we operate; • foreign exchange controls on currency conversion and the transfer of funds that might prevent us from repatriating cash earned in countries outside the U.S. in a tax-efficient manner; • currency exchange rate fluctuations, currency restructurings, inflation or deflation and our ability to manage these fluctuations through a foreign exchange risk management program; • different employee/employer relationships, laws and regulations, union recognition and the existence of employment tribunals and works councils; • laws and regulations imposed by international governments, including those governing data security, sharing and transfer; • potentially adverse tax consequences resulting from changes in tax laws in the jurisdictions in which we operate or challenges to our interpretations and application of complex international tax laws; • logistical, communications and other challenges caused by distance and cultural and language differences, each making it harder to do business in certain jurisdictions; • volatility of global credit markets and the availability of consumer credit and financing in our international markets; • uncertainty as to the enforceability of contract rights under local laws; • the potential of forced nationalization of certain industries, or the impact on creditors' rights, consumer disposable income levels, flexibility and availability of consumer credit and the ability to enforce and collect aged or charged-off debts stemming from international governmental actions, whether through austerity or stimulus measures or initiatives, intended to control or influence macroeconomic factors such as wages, unemployment, national output or consumption, inflation, investment, credit, finance, taxation or other economic drivers; • the presence of varying levels of business corruption in international markets and the effect of various anti-corruption and other laws on our international operations; • the impact on our day-to-day operations and our ability to staff our international operations given long-term trends towards higher wages in developed and emerging international markets as well as the potential impact of union organizing efforts; • the potential for a widening military conflict in Europe; • potential damage to our reputation due to non-compliance with international and local laws; and • the complexity and necessity of using non-U.S. representatives, consultants and other third-party vendors.
Biggest changeThe global nature of our operations expands the risks and uncertainties described elsewhere in this section, including the following: • changes in geopolitical conditions and the political, economic, social and labor conditions in the markets in which we operate; • foreign exchange controls on currency conversion and the transfer of funds that might prevent us from repatriating cash earned in countries outside the U.S. in a tax-efficient manner; • currency exchange rate fluctuations, currency restructurings, inflation or deflation and our ability to manage these fluctuations through a foreign exchange risk management program; • different employee/employer relationships, laws and regulations, union recognition and the existence of employment tribunals and works councils; • laws and regulations imposed by international governments, including those governing data security, sharing and transfer; • potentially adverse tax consequences resulting from changes in tax laws in the jurisdictions in which we operate, or challenges to our interpretation and application of complex international tax laws; • logistical, communication and other challenges caused by distance and cultural and language differences, each making it harder to do business in certain jurisdictions; • volatility of global credit markets and the availability of consumer credit and financing in our international markets; • uncertainty as to the enforceability of contract rights under local laws; • the potential of forced nationalization of certain industries, or the impact on creditors' rights, consumer disposable income levels, flexibility and availability of consumer credit and the ability to enforce and collect aged or charged-off debts stemming from international governmental actions, whether through austerity or stimulus measures or initiatives, intended to control or influence macroeconomic factors such as wages, unemployment, national output or consumption, inflation, investment, credit, finance, taxation or other economic drivers; • the potential for widening military conflicts; • the potential damage to our reputation due to non-compliance with international and local laws; and • the complexity and necessity of using non-U.S. representatives, consultants and other third-party vendors.
Some laws and regulations applicable to credit issuers may preclude us from collecting on nonperforming loans we acquire if the credit issuer previously failed to comply with applicable laws in generating or servicing those accounts. Collection laws and regulations also directly apply to our business. Such laws and regulations are extensive and subject to change.
Some laws and regulations applicable to credit issuers may preclude us from collecting on nonperforming loans we acquire if the credit issuer previously failed to comply with applicable laws in generating or servicing those accounts. Collection laws and regulations also directly apply to our business, and such laws and regulations are extensive and subject to change.
We operate on a global basis with offices and activities in a number of jurisdictions throughout the Americas, Europe and Australia. We face increased exposure to risks inherent in conducting business internationally, including compliance with complex international and U.S. laws and regulations that apply to our international operations, which could increase our cost of doing business in international jurisdictions.
We operate on a global basis with offices and activities in a number of jurisdictions in the Americas, Europe and Australia. We face increased exposure to risks inherent in conducting business internationally, including compliance with complex international and U.S. laws and regulations that apply to our international operations, which could increase our cost of doing business in international jurisdictions.
The CFPB has the authority to obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief), recover costs, and impose monetary penalties (ranging from $5,000 per day to over $1 million per day, depending on the nature and gravity of the violation).
The CFPB has the authority to obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief), recover costs, and impose monetary penalties (ranging from $5,000 per day to over $1.0 million per day, depending on the nature and gravity of the violation).
Our insurance policies may 14 be insufficient to insure us against such risks, and future escalations in premiums and deductibles under these policies may render them uneconomical. Changes in tax provisions or exposures to additional tax liabilities could have an adverse effect on our financial condition.
Our insurance policies may be insufficient to insure us against such risks, and future escalations in premiums and deductibles under these policies may render them uneconomical. Changes in tax provisions or exposures to additional tax liabilities could have an adverse effect on our financial condition.
Legal and Regulatory Risks Our ability to collect and enforce our nonperforming loans may be limited under federal, state and international laws, regulations and policies. Our operations are subject to licensing and regulation by governmental and regulatory bodies in the many jurisdictions in which we operate.
LEGAL AND REGULATORY RISKS Our ability to collect and enforce our nonperforming loans may be limited under federal, state and international laws, regulations and policies. Our operations are subject to licensing and regulation by governmental and regulatory bodies in many of the jurisdictions in which we operate.
U.S. federal and state laws, and the laws and regulations of the international countries in which we operate, may limit our ability to collect on and enforce our rights with respect to our nonperforming loans regardless of any act or omission on our part.
U.S. federal and state laws, and the laws and regulations of the countries in which we operate, may limit our ability to collect on and enforce our rights with respect to our nonperforming loans regardless of any act or omission on our part.
The application and enforcement of these evolving legal requirements is uncertain and may require us to further change or update our information practices, and could impose additional compliance costs and regulatory scrutiny.
The application and enforcement of these evolving legal requirements is uncertain and may require us to further change or update 14 our information practices, and could impose additional compliance costs and regulatory scrutiny.
Many of these systems contain sensitive and confidential information, including personal data, our trade secrets and proprietary business information, and information and materials owned by or pertaining to our customers, vendors and business partners.
Many of these IT systems contain sensitive and confidential information, including personal data, our trade secrets and proprietary business information, and information and materials owned by or pertaining to our customers, vendors and business partners.
Such legal requirements and government actions also may impede our development of new services or businesses, make existing services or businesses unprofitable, increase our operating costs, require substantial management resources, result in adverse publicity and subject us to remedies that harm our business or profitability, including penalties or orders that may change or terminate current business practices.
Such legal requirements and government actions also may impede the development of our business, make existing services or businesses unprofitable, increase our operating costs, require substantial management resources, result in adverse publicity and subject us to remedies that harm our business or profitability, including penalties or orders that may change or terminate current business practices.
Our debt collection activities and business practices are subject to review from time to time by various governmental authorities and regulators, including the CFPB, which may commence investigations, reviews or enforcement actions targeted at businesses in the financial services industry. These investigations or reviews may involve individual consumer complaints or our debt collection policies and practices generally.
Our debt collection activities and business practices are subject to review by various governmental authorities and regulators, including the CFPB, which may commence investigations, reviews or enforcement actions targeted at businesses in the financial services industry. These investigations or reviews may involve individual consumer complaints or our debt collection policies and practices generally.
Any such breach or other 16 incident also could result in the personal data or other confidential or proprietary information stored on our systems and networks, or our vendors’ systems and networks, being improperly accessed, acquired or modified, publicly disclosed, lost, or stolen, which could subject us to liability to our customers, vendors, business partners and others.
Any such breach or other incident could result in the personal data or other confidential or proprietary information stored on our systems and networks, or our vendors’ systems and networks, being improperly accessed, acquired or modified, publicly disclosed, lost, or stolen, which could subject us to liability to our customers, vendors, business partners and others.
We seek to detect and investigate such incidents and to prevent their recurrence where practicable through preventive and remedial measures, but such measures may not be successful. Should a cybersecurity incident occur, we may be required to expend significant resources to notify affected parties, modify our protective measures or investigate and remediate vulnerabilities or other exposures.
We seek to detect and investigate such incidents and to prevent their occurrence where practicable through preventive and remedial measures, but such measures may not be successful. Should a cybersecurity incident occur, we may be required to expend significant resources to notify affected parties, modify our protective measures, or investigate and remediate vulnerabilities or other exposures.
Our goodwill impairment testing involves the use of estimates and the exercise of judgment, including judgments regarding expected future business performance and market conditions. Based on our October 1, 2023, impairment test, we concluded that the goodwill of our reporting units was not impaired.
Our goodwill impairment testing involves the use of estimates and the exercise of judgment, including judgments regarding expected future business performance and market conditions. Based on our October 1, 2024, impairment test, we concluded that the goodwill of our reporting units was not impaired.
Our failure to comply with existing licensing requirements, changing interpretations of existing requirements, or adoption of new licensing requirements, could restrict our ability to collect in certain jurisdictions, subject us to increased regulation, increase our costs or adversely affect our ability to purchase, own and/or collect our nonperforming loans.
Our failure to comply with existing licensing requirements, changing interpretations of existing requirements, or the adoption of new licensing requirements, could restrict our ability to collect in certain jurisdictions, subject us to increased regulation, increase our costs, or adversely affect our ability to purchase, own and/or collect on our nonperforming loans.
Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms or on a timely basis, would materially affect our business, financial condition or results of operations and may delay or prevent the expansion of our business.
Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms or on a timely basis, could materially affect our business, financial condition and results of operations, and may delay or prevent the expansion of our business.
These laws and regulations create certain privacy rights for individuals and impose prescriptive operational requirements for covered businesses relating to the processing and protection of personal data and may also impose substantial penalties for non-compliance.
These laws and regulations create certain privacy rights for individuals and impose prescriptive operational requirements for covered businesses relating to the processing and protection of personal data, the use of AI and may also impose substantial penalties for non-compliance.
These laws, among others, may limit our ability to recover amounts owing with respect to the nonperforming loans, whether or not we committed any wrongful act or omission in connection with the account.
These laws, among others, may limit our ability to recover amounts owed with respect to our nonperforming loans, whether or not we committed any wrongful act or omission in connection with the account.
We cannot provide assurance that any refinancing would be possible, that any assets could be sold, or, if sold, of the timeliness and amount of proceeds realized from those sales, that additional financing could be obtained on acceptable terms, if at all, or that additional financing would be permitted under the terms of our various debt instruments then in effect.
We cannot provide assurance that any refinancing would be possible, that any assets could be sold, or, if sold, of the timeliness and amount of proceeds that would be realized from those sales, that additional financing could be obtained on acceptable terms, if at all, or that additional financing would be permitted under the terms of our various debt instruments then outstanding.
Violations of these laws and regulations by us, any of our employees or our third-party vendors, either inadvertently or intentionally, could result in fines and penalties, criminal sanctions, restrictions on our operations and ability to offer our services in one or more countries.
Violations of these laws and regulations by us, any of our employees, or our third-party vendors, either inadvertently or intentionally, could result in fines and penalties, criminal sanctions, restrictions on our operations and the inability to offer our services in one or more countries.
The credit originators have typically made numerous attempts to recover on their accounts, often using a combination of in-house recovery efforts and third-party collection agencies. These nonperforming loans are difficult to collect, and we may not collect a sufficient enough amount to cover our investment and the costs of running our business.
The credit originators have typically made numerous attempts to recover on these accounts, often using a combination of in-house recovery efforts and third-party collection agencies. These nonperforming loans are difficult to collect, and we may not collect a sufficient amount to cover our investment and the costs of operating our business.
Our business is highly dependent on our ability to process and monitor a large number of transactions across markets and in multiple currencies. We rely on information technology systems to conduct our business, including systems developed and administered by third parties.
Our business is highly dependent on our ability to process and monitor a large number of transactions across markets and in multiple currencies. We rely on IT systems to conduct our business, including IT systems developed and administered by third parties.
Item 1A. Risk Factors. You should carefully read the following discussion of material factors, events and uncertainties when evaluating our business and the forward-looking information contained in this Form 10-K. The events and consequences discussed in these risk factors could materially and adversely affect our business, operating results, liquidity and financial condition.
Item 1A. Risk Factors. You should carefully read the following discussion of material factors, events and uncertainties when evaluating our business and the forward-looking information contained in this Form 10-K. The events and consequences discussed in these risk factors could materially and adversely affect our business, results of operations, liquidity, cash flow and financial condition.
Incurring a substantial amount of debt could have important consequences for our business, including: • making it more difficult for us to satisfy our obligations with respect to our debt or to our trade or other creditors; • increasing our vulnerability to adverse economic or industry conditions; • limiting our ability to obtain additional financing to fund capital expenditures and acquisitions, particularly when the availability of financing in the capital markets is constrained; • requiring a substantial portion of our cash flows from operations and reducing our ability to use our cash flows to fund working capital, capital expenditures, acquisitions and general corporate requirements; • increasing the amount of interest expense because the indebtedness under our credit facilities bears interest at floating rates, which, if interest rates increase, will result in higher interest expense; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and • placing us at a competitive disadvantage compared to less leveraged competitors.
Incurring a substantial amount of indebtedness could have consequences for our business, including: • making it more difficult for us to satisfy our obligations with respect to our debt and to our trade and other creditors; • increasing our vulnerability to adverse changes in economic or industry conditions, including higher interest rate environments; • limiting our ability to obtain additional financing to fund capital expenditures and acquisitions, particularly when the availability of financing in the capital markets is constrained; • requiring us to use a substantial portion of our cash flows from operations to repay our indebtedness, which reduces our ability to use our cash flows to fund working capital, capital expenditures, acquisitions and general corporate requirements; • increasing the amount of interest expense owed since the indebtedness under our credit facilities bears interest at floating rates, which, if interest rates increase, will result in higher interest expense; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and 15 • placing us at a competitive disadvantage compared to less leveraged competitors.
Laws and regulations relating to privacy, cybersecurity and data protection are quickly evolving, and any such proposed or new legal frameworks could significantly impact our operations, financial performance and business.
Laws and regulations relating to privacy, AI, cybersecurity and data protection are rapidly evolving, and any such proposed or new legal frameworks could significantly impact our operations, financial performance and business.
We may not be able to collect sufficient amounts to fund our operations due to the purchase of nonperforming loans that ultimately prove to be unprofitable. Our principal business consists of purchasing and collecting nonperforming loans that consumers or others have failed to pay.
We may not be able to collect sufficient amounts to fund our operations due to the purchase of nonperforming loans that ultimately prove to be unprofitable. Our principal business consists of purchasing and collecting on nonperforming loans from credit originators that consumers or others have failed to pay.
These restrictions may interfere with our ability to engage in other necessary or desirable business activities, which could materially affect our business, financial condition or results of operations.
These restrictions may interfere with our ability to engage in other necessary or desirable business activities, which could adversely affect our business, financial condition and results of operations.
We will consider a number of factors when evaluating our level of indebtedness and when making decisions about incurring any new indebtedness, including the purchase price of assets to be acquired with debt financing, the estimated market value of our assets and the ability of particular assets, and the Company as a whole, to generate cash flow to cover the expected debt service.
We consider a number of factors when evaluating our level of indebtedness and when making decisions about incurring any new indebtedness, including the purchase price of assets to be acquired with debt financing and the ability of those assets, and the Company as a whole, to generate cash flow to cover the expected debt service.
Goodwill is required to be tested for impairment annually and between annual tests if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
Goodwill is required to be tested for impairment annually, or more frequently if events or circumstances indicate that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount.
We are monitoring the enactment of Pillar Two legislation in EU countries and elsewhere to determine the potential impact on our financial results, as well as monitoring U.S. amendments to the U.S. global intangible low-tax income ("GILTI"), if any.
We are monitoring the enactment and implementation of Pillar Two legislation to determine the potential impact on our financial results, as well as monitoring U.S. amendments to the U.S. global intangible low-tax income ("GILTI"), if any.
While we currently do not expect the implementation of Pillar Two and amendments to GILTI will significantly increase our U.S. and international income taxes, there is a risk the final enactment could cause a material increase in our income tax expense and payments.
While we currently do not expect that implementation of Pillar Two and any amendments to GILTI will significantly increase our U.S. and international income taxes, there is a risk that the final enactment and implementation throughout our global operations could cause a material increase in our income tax expense.
Failure to satisfy any one of these covenants could result in negative consequences, including the following: • acceleration of outstanding indebtedness; • exercise by our lenders of rights with respect to the collateral pledged under certain of our outstanding indebtedness; • our inability to continue to purchase nonperforming loans needed to operate our business; or • our inability to secure alternative financing on favorable terms, if at all.
The failure to satisfy any of these covenants could have negative consequences, including the following: • acceleration of outstanding indebtedness; • exercise by our lenders of rights with respect to the collateral pledged under certain of our outstanding indebtedness; • our inability to continue to purchase nonperforming loans; or • our inability to secure alternative financing on favorable terms, if at all.
In our U.S. business, we continue to identify and implement initiatives that we believe will position our business for long-term sustainable growth and profitability by allowing us to achieve a lower marginal cost structure and to execute effectively, particularly around customer contact strategies and post-judgment legal collection processes.
In our U.S. business, we continue to identify and implement initiatives that we believe will position our business for long-term sustainable growth and profitability by allowing us to achieve a lower marginal cost structure and to execute effectively, particularly in the areas of customer contact strategies and post-judgment legal collections.
Although we believe that we will comply with the requirements of the 2023 Order, there can be no assurance we will implement each requirement to the satisfaction of the CFPB or that additional litigation or new industry regulations currently under consideration by the CFPB would not have an adverse effect on our business, results of operations and financial condition.
There can be no assurance we will implement each requirement to the satisfaction of the CFPB or that additional litigation or new industry regulations currently under consideration by the CFPB would not have an adverse effect on our business, results of operations and financial condition.
If our tax filing positions are successfully challenged, payments could be required that are in excess of reserved amounts or we may be required to reduce the carrying amount of our net deferred tax asset, either of which could be significant to our financial condition or results of operations.
If any tax filing positions are successfully challenged, payments could be required that are in excess of the amounts accrued, or we may be required to reduce the carrying amount of our deferred tax assets, either of which could be significant to our financial condition or results of operations.
Furthermore, we may not be able to find alternative third parties in a timely manner on terms that are acceptable to us or because of contractual restrictions that limit our flexibility in responding to disruptions at these vendors, resulting in operational inefficiencies.
Furthermore, we may not be able to find alternative third parties in a timely manner on terms that are acceptable to us, or because of contractual restrictions that limit our flexibility in responding to disruptions from these third parties.
A variety of jurisdictions in which we operate have laws and regulations concerning privacy, cybersecurity and the protection of personal data, including the EU GDPR, the UK GDPR, the U.S. GLBA, and the California Consumer Privacy Act of 2018.
A variety of jurisdictions in which we operate have laws and regulations concerning privacy, AI, cybersecurity and the protection of personal data, including the EU GDPR, the UK GDPR, the U.S. GLBA, the EU Artificial Intelligence Act, the EU Digital Operational Resilience Act, and the California Consumer Privacy Act of 2018.
We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us through capital markets financings, under credit facilities or otherwise, in an amount sufficient to enable us to repay our indebtedness, repurchase our Senior Notes upon a change of control or fund our other liquidity needs.
Our business may not generate sufficient cash flow from operations, and future borrowings may not be available to us through capital markets financings, under credit facilities or otherwise, in an amount sufficient to enable us to repay our indebtedness, repurchase our senior notes upon a change of control, or fund our other liquidity needs.
If we do not generate sufficient cash flow from operations to satisfy our debt obligations, including interest payments and the payment of principal at maturity, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets or seeking to raise additional capital.
If we do not generate sufficient cash flow from operations to satisfy our debt obligations, including interest payments and the payment of principal at maturity, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets or seeking additional debt or equity, or reducing or delaying capital expenditures, strategic acquisitions, investments and alliances.
While we believe we have identified and discussed below the material risk factors affecting our business, these risk factors do not identify all the risks we face, and there may be additional risks and uncertainties that we do not presently know or that we do not currently believe to be material that may have an adverse effect on our business, performance or financial condition in the future.
While we believe we have identified and discussed below the material risk factors affecting our business, these risk factors do not identify all of the risks we face, and there could be additional risks and uncertainties that we do not presently know or that we do not currently believe to be material that could have an adverse effect on our business, results of operations, liquidity, cash flow or financial condition in the future.
The secure maintenance of this information, and the information technology systems on which they reside, is critical to our business strategy as well as our operations and financial performance. As we expand geographically, and our reliance on information technology systems increases, maintaining the security of such systems and our data becomes more significant and challenging.
The secure maintenance of this information, and the IT systems on which they reside, is critical to our business strategy and our operations and financial performance. As our reliance on IT systems increases, maintaining the security of such IT systems and our data becomes more challenging.
Furthermore, our ability to refinance would depend upon the condition of the finance and credit markets.
Furthermore, our ability to refinance depends upon the condition of the finance and credit markets.
Any one of these factors could adversely affect our business, results of operations and financial condition. Compliance with complex and evolving international and U.S. laws and regulations that apply to our international operations could increase our cost of doing business in international jurisdictions.
Any one of these factors could adversely affect our business, results of operations, liquidity, cash flow and financial condition. 12 Compliance with complex and evolving international and U.S. laws and regulations governing our international operations could increase our cost of doing business in international jurisdictions.
For a discussion of whether and how any risks from cybersecurity threats are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition, refer to Item 1A. Risk Factors – "Cybersecurity and Technology Risks," which is incorporated by reference into this
For a discussion of whether and how risks from cybersecurity threats could materially and adversely affect us, including our business, results of operations or financial condition, refer to Item 1A. Risk Factors – "Operational and Industry Risks," which is incorporated by reference into this
Regulations and statutes applicable to our industry further provide that, in some cases, consumers cannot be held liable for, or their liability may be limited with respect to, charges to their debit or credit card accounts that resulted from unauthorized use of their credit.
In addition, local requirements and court rulings in various jurisdictions may affect our ability to collect. 13 Regulations and statutes applicable to our industry further provide that, in some cases, consumers cannot be held liable for, or their liability may be limited with respect to, charges to their debit or credit card accounts that resulted from unauthorized use.
In April 2023, Portfolio Recovery Associates, LLC ("PRA"), our wholly owned subsidiary, entered into an order with the CFPB settling a previously disclosed investigation of certain debt collection practices of PRA (the "2023 Order"). We are currently implementing our redress plan and have submitted our compliance plan to the CFPB for review.
In April 2023, Portfolio Recovery Associates, LLC, our wholly owned subsidiary, entered into an order with the CFPB settling a previously disclosed investigation of certain debt collection practices (the "2023 Order"). We are currently executing both our redress plan and our compliance plan as required by the 2023 Order.
These laws and regulations include those related to taxation and anti-corruption laws such as the FCPA and the UK Bribery Act. Given the complexity of these laws, there is a risk that we may inadvertently breach certain provisions of these laws, such as through the negligent behavior of an employee or our failure to comply with certain formal documentation requirements.
Given the complexity of these laws, there is a risk that we may inadvertently breach certain provisions of these laws, such as through the negligent behavior of an employee, or our failure to comply with certain formal documentation requirements.
Item 1B. Unresolved Staff Comments. None. Item 1C. Cybersecurity. We rely heavily on information technology systems to operate our business, including processing and monitoring a large number of transactions across markets and in multiple currencies. To date, we have not experienced a cybersecurity incident that we deemed to be material.
We rely heavily on IT systems to operate our business, including processing and monitoring a large number of transactions across different markets and multiple currencies. To date, we have not experienced a cybersecurity incident that we deemed to be material.
Although we periodically upgrade, streamline and integrate our systems and have invested in strategies to prevent a failure, our systems are susceptible to outages due to natural disasters, power loss, computer viruses, security breaches, hardware or software vulnerabilities, disruptions, and similar events.
Although we have invested in strategies to prevent failures, our IT and telecommunication systems are vulnerable to outages due to natural disasters, power loss, computer viruses, security breaches, hardware or software vulnerabilities, disruptions, and similar events.
We have recorded a significant amount of goodwill as a result of our business acquisitions. Goodwill is not amortized, but rather, is tested for impairment at the reporting unit level.
We have a significant amount of goodwill which, if impaired in the future, would adversely impact our results of operations. We have recorded a significant amount of goodwill as a result of our business acquisitions. Goodwill is not amortized, but rather, is tested for impairment at the reporting unit level.
A significant portion of our operations is conducted outside the U.S. This could expose us to adverse economic, industry and political conditions that may have a negative impact on our ability to manage our existing operations, which could have a negative effect on our business, results of operations and financial condition.
This could expose us to adverse economic, industry and political conditions that may have a negative impact on our ability to manage our international operations, which could have a negative impact on our business, results of operations and financial condition.
A downgrade in our credit ratings may restrict or discontinue our ability to access capital markets at attractive rates and increase our borrowing costs, which could adversely affect our business, results of operations and financial condition. Cybersecurity and Technology Risks A cybersecurity incident could damage our reputation and adversely impact our business and financial results.
A downgrade in our credit ratings may restrict or discontinue our ability to access capital markets at attractive rates and increase our borrowing costs, which could adversely affect our business, financial condition and results of operations. Item 1B. Unresolved Staff Comments. None. Item 1C. Cybersecurity.
If we are unable to maintain our business or adapt to changing market needs as well as our current or future competitors, we may experience reduced access to nonperforming loan portfolios at appropriate prices and, therefore, reduced profitability.
If we are unable to maintain our business or adapt to changing market needs as well as our current or future competitors, we may experience reduced access to nonperforming loan portfolios at appropriate prices, which could adversely impact our business, liquidity, results of operations and cash flow.
Our loss contingency accruals may not be adequate to cover actual losses. We are involved in judicial, regulatory and arbitration proceedings or investigations concerning matters arising from our business activities. We establish accruals for potential liability arising from legal proceedings when it is probable that such liability has been incurred and the amount of the loss can be reasonably estimated.
From time-to-time, we are involved in judicial, regulatory and arbitration proceedings or investigations concerning matters arising from our business activities. We establish accruals for potential liability arising from legal proceedings when both the loss is probable and the amount of the loss can be reasonably estimated.
We outsource and offshore certain activities related to our business to third parties. Any disruption or failure of these third parties to provide these services could adversely affect our business operations, financial condition and reputation. We use third parties to conduct collection and other activities through outsourcing and offshoring.
Any disruption or failure of these third parties to provide these services could adversely affect our business operations, financial condition and reputation. We rely on third-party service providers to conduct collection and other activities on our behalf through both outsourcing and offshoring arrangements.
To operate profitably, we must purchase and service a sufficient amount of nonperforming loans to generate revenue that exceeds our expenses.
Our ability to operate profitably is dependent on our ability to purchase and service a sufficient volume of nonperforming loans to generate revenue that exceeds our expenses.
We record reserves for uncertain tax positions based on our assessment of the probability of successfully sustaining tax filing positions. Management exercises significant judgment when assessing the probability of successfully sustaining tax filing positions, in determining whether a tax liability should be recorded and, if so, estimating that amount.
We record reserves for uncertain tax positions based on our assessment of the probability of being able to successfully sustain the positions taken. Management may be required to exercise significant judgment when making these assessments, in determining whether a tax liability should be recorded and, if so, estimating the amount.
To date, disruptions to our information technology systems, due to outages, security breaches or other causes, including cybersecurity incidents, have not had a material impact on our business, results of operations or financial condition.
To date, disruptions to our IT systems, due to outages, security breaches or other causes, including cybersecurity incidents, have not had a material impact on our business, results of operations or financial condition. 10 The failure of our IT or telecommunication systems could result in a loss in productivity, loss of competitive advantage or business disruption.
Total availability under these credit facilities as of December 31, 2023, was $1.3 billion, comprised of $344.4 million based on current estimated remaining collections ("ERC"), and $938.5 million of additional availability subject to debt covenants, including advance rates.
Total availability under our credit facilities as of December 31, 2024 was $1.0 billion, comprised of $564.3 million based on current ERC and subject to debt covenants, and $462.0 million of additional availability subject to borrowing base and debt covenants, including advance rates.
However, we estimated that our Debt Buying and Collection ("DBC") reporting unit’s fair value exceeded its carrying value by 6%, and therefore, the reporting unit may be at-risk for future impairment if our cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including adverse changes in the debt sales market and an increase in the discount rate.
Under the prior year impairment test, the excess of our Debt Buying and Collection ("DBC") reporting unit’s fair value over its carrying value was 6%, and although the excess increased to 11% under our most recent test, if our cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including adverse changes in the debt sales market and an increase in the discount rate, the reporting unit may be at-risk for future impairment. 11 Our loss contingency accruals may not be adequate to cover actual losses.
These risks include: • adverse changes in macroeconomic conditions, the business climate, or the market for the entity's services; • significant variances between actual and expected financial results; • negative or declining cash flows; • lowered expectations of future results; • significant expense increases; • a more likely-than-not expectation of selling or disposing all, or a portion of, a reporting unit; • an adverse action or assessment by a regulator; • significant increase in discount rates; or • a sustained decrease in the price per share of our common stock.
There are numerous risks that may cause the fair value of a reporting unit to fall below its carrying amount, which could lead to the recognition of a goodwill impairment charge, including: • adverse changes in macroeconomic conditions, the business climate or the market for the entity's services; • significant variances between actual and expected financial results; • negative or declining cash flows; • lowered expectations of future results; • significant expense increases; • an adverse action or assessment by a regulator; • a significant increase in discount rates; or • a sustained decrease in the price per share of our common stock.
Our future growth depends, in part, on our ability to generate higher cash collections at a lower marginal cost through effective execution.
Our ability to successfully compete depends, in part, on our ability to optimize cash collections at lower marginal costs through effective execution.
Although we believe our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may adversely or beneficially affect our financial results in the period(s) for which such determination is made. Financial and Liquidity Risks We expect to use leverage in executing our business strategy, which may have adverse consequences.
Although we believe our estimates are reasonable, the ultimate tax outcomes may differ from the amounts recorded in our financial statements and may adversely or beneficially affect our financial results in the period(s) in which such outcomes are determined.
If any of these third-party service providers violate laws, regulatory requirements, contractual obligations, or act inappropriately in the conduct of their business, our operations and reputation could be negatively impacted and result in regulatory fines and penalties. Any of these factors could cause our business, financial condition, operations and reputation to be adversely affected.
If any of these third-party service providers fail to implement proper controls to meet our industry’s regulatory requirements, violate laws, do not fulfill their contractual obligations, or act inappropriately in conducting their services on our behalf, our operations and reputation could be negatively impacted and result in regulatory fines and penalties.
Failure to comply with government regulation of the collections industry could result in penalties, fines, litigation, damage to our reputation or the suspension or termination of our ability to conduct our business. The collections industry throughout the markets in which we operate is governed by various laws and regulations, many of which require us to be a licensed debt collector.
The collections industry throughout the markets in which we operate is governed by various laws and regulations, many of which require us to be a licensed debt collector.
If we fail to comply with any applicable laws and regulations discussed above, such failure could result in penalties, litigation losses and expenses, damage to our reputation, or otherwise impact our ability to conduct collections efforts, which could adversely affect our business, results of operations and financial condition. 13 Investigations, reviews or enforcement actions by governmental authorities may result in changes to our business practices, negatively impact our nonperforming loan portfolio acquisition volume, make collection of nonperforming loans more difficult or expose us to the risk of fines, penalties, restitution payments and litigation .
If we fail to comply with any applicable laws and regulations, including those discussed above, such failure could result in penalties, litigation losses and expenses, damage to our reputation, or otherwise impact our ability to conduct collections efforts, which could adversely affect our business, results of operations and financial condition.
Some laws, among other things, also may limit the interest rate and fees we may impose on our consumers, limit the time in which we may file legal actions to enforce consumer accounts and require specific account information for certain collection activities. In addition, local requirements and court rulings in various jurisdictions may affect our ability to collect.
Some laws, among other things, may limit the interest rates and fees we can impose on our customers, limit the amount of time we have to file legal actions to enforce customer accounts and require specific account information for certain collection activities.
Our failure to comply with laws or regulations applicable to us could limit our ability to collect on our nonperforming loans, which could reduce our profitability and adversely affect our business.
Our failure to comply with laws or regulations could limit our ability to collect on our nonperforming loans, which could reduce our profitability and adversely affect our business. Failure to comply with government regulation of the collections industry could result in penalties, fines, litigation, damage to our reputation or the suspension or termination of our ability to conduct our business.
If global credit market conditions and the stability of global banks deteriorate, the amount of consumer or commercial lending and financing could be reduced, thus reducing the volume of nonperforming loans available for purchase, which could adversely affect our business, financial results and ability to succeed in the markets in which we operate.
In addition, levels of consumer or commercial lending and financing could decline, thus reducing the volume of nonperforming loans available for purchase, which could adversely affect our business and financial results in the markets in which we operate. 8 We may not be able to purchase a sufficient volume of nonperforming loans at favorable pricing, which could adversely impact our profitability.
Furthermore, if the statistical models we use to make cash flow projections as part of our underwriting process are inaccurate, we may acquire nonperforming loan portfolios that ultimately prove to be unprofitable. Moreover, if we experience operational issues in making collections on our nonperforming loan portfolios, we may incur losses on portfolios that would have otherwise been profitable.
We use statistical models to make cash flow projections as part of our underwriting process, and if they prove to be inaccurate, we may acquire nonperforming loan portfolios that ultimately prove to be below our return thresholds or unprofitable.
We may not be successful in implementing, or in anticipating, the impact of our cash collections generating and cost-related operational initiatives in our U.S. business, and our plans for implementing such initiatives may be altered or delayed due to various factors, which could have an adverse impact on our business and results of operations.
Additional risks related to offshoring are further discussed within this section under International Operations Risks. We may not be successful in implementing or realizing the expected benefits from our cash generating and cost savings initiatives in our U.S. business, which could have an adverse impact on our business and results of operations.
Failure to adequately implement or maintain effective and efficient information systems with sufficiently advanced technological capabilities, or our failure to efficiently and effectively consolidate our information systems to eliminate redundant or obsolete applications, could cause us to lose our competitive advantage, divert management’s time, result in a loss of productivity or disrupt business operations, which could have a material adverse effect on our business, financial condition and results of operations.
We may not be able to successfully implement certain updates or upgrades to our systems without experiencing difficulties, which could cause us to lose our competitive advantage, divert management’s time, result in a loss of productivity or disrupt business operations, which could have a material adverse effect on our business, financial condition and results of operations.
The availability of nonperforming loan portfolios at prices that generate an appropriate return on our investment depends on a number of factors, including the following: • consumer debt levels; • sales of nonperforming loan portfolios by credit originators; and • competitive factors affecting potential purchasers and credit originators of nonperforming loans. 9 Furthermore, heightened regulation of the credit card and consumer lending industry, or changing credit origination strategies, may result in decreased availability of credit to consumers, potentially leading to a future reduction in nonperforming loans available for purchase from credit originators.
The availability of nonperforming loan portfolios at prices that generate an appropriate return on our investment depends on a number of factors, including: • consumer debt levels; • sales of nonperforming loan portfolios by credit originators; • competitive factors affecting potential purchasers and credit originators of nonperforming loans; • our ability to obtain and analyze portfolio data efficiently and to accurately predict collectability; and • changes in credit and financial lending laws and regulations.
An unfavorable resolution of a legal proceeding or claim could adversely impact our business, financial condition, results of operations or liquidity. A disease outbreak could have an adverse effect on our business, results of operations and financial condition.
An unfavorable resolution of a legal proceeding or claim could adversely impact our business, financial condition, results of operations or liquidity. INTERNATIONAL OPERATIONS RISKS Our international operations expose us to risks, which could harm our business, results of operations and financial condition. We are a global business with operations in 18 countries.
Although we take a number of steps to protect our information technology systems, the attacks that companies have experienced have increased in number, sophistication and complexity over the past few years, including threats from the malicious use of new artificial intelligence tools.
Our IT systems and infrastructure may be vulnerable to computer viruses, cyber-attacks, security breaches caused by employee error or malfeasance, or other disruptions. Although we take a number of steps to protect our IT systems, the attacks that companies have experienced have increased in number, sophistication and complexity in recent years, including threats from the malicious use of AI.
Violations of these laws could also adversely affect our business, brand, international expansion efforts, ability to attract and retain employees and results of operations. 12 Additionally, pending international regulations, such as the EU Directive (2021/2167) on Credit Servicers and Credit Purchasers, could adversely affect our operations in Europe once they are effective and require implementation.
Violations of these laws could also adversely affect our business, brand, international expansion efforts, ability to attract and retain employees and our results of operations.
We cannot assure you that any such actions, if necessary, could be effected on commercially reasonable terms or at all, or on terms that would be advantageous to our stockholders or on terms that would not require us to breach the terms and conditions of our existing or future debt agreements. 15 We may not be able to generate sufficient cash flow or complete alternative financing plans, including raising additional capital, to meet our debt service obligations.
Furthermore, we may need to refinance all or a portion of our indebtedness at or before its scheduled maturity, but we may not be able to do so on commercially reasonable terms or at all. We may not be able to generate sufficient cash flow or complete alternative financing plans, including raising additional capital, to meet our debt service obligations.
Accordingly, we may suffer data security incidents or other cybersecurity incidents, which could compromise our systems and networks, creating system disruptions and exploiting vulnerabilities in our services.
Additionally, as we shift more employees to work-from-home arrangements, remote access to our systems has increased significantly, which exposes us to additional cybersecurity risks. As a result of our reliance on IT systems, we may suffer data security incidents or other cybersecurity incidents, which could compromise our IT systems and networks, creating disruptions and exploiting vulnerabilities in our services.
These third parties include law firms, collection agencies, data providers, tracing service providers, business process outsourcing and information technology firms. One or more of these third parties could fail to meet its obligations and service level expectations, become insolvent or cease operations, which could adversely impact our business operations and financial condition.
These third parties include law firms, collection agencies, data providers, tracing service providers, business process outsourcing companies and information technology firms.
As of December 31, 2023, we had total consolidated indebtedness of $2.9 billion, all of which, except for $298.0 million outstanding principal amount of our 7.375% Senior Notes due 2025 (the "2025 Notes"), $398.0 million outstanding principal amount of our 8.375% Senior Notes due 2028 (the "2028 Notes") and $350.0 million outstanding principal amount of our 5.00% Senior Notes due 2029 (the "2029 Notes", and together with the 2028 Notes and 2025 Notes, the "Senior Notes"), was secured indebtedness.
Our unsecured indebtedness consisted of the $398.0 million outstanding principal amount of our 8.375% Senior Notes due 2028, $350.0 million outstanding principal amount of our 5.00% Senior Notes due 2029 and $550.0 million outstanding principal amount of our 8.875% Senior Notes due 2030.

… 50 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

16 edited+2 added−2 removed1 unchanged
Biggest changeTo protect against the risk of cybersecurity threats associated with the use of third-party providers in support of our operations, we take reasonable steps to select and retain service providers that are capable of maintaining appropriate safeguards for the information at use, requiring our service providers by contract to implement and maintain such safeguards, and periodically assessing our service providers based on the risk they present and the continued adequacy of their safeguards.
Biggest changeWhere applicable, we require our third-party service providers, by contract, to implement and maintain such safeguards and periodically evaluate these providers and the continued adequacy of their safeguards based on the risk they present. In addition, we may engage third-party service providers to perform functions associated with our information security program and the assessment of security threats.
Management is primarily responsible and accountable for the awareness, oversight and control of enterprise information security and the implementation of cybersecurity policies, procedures, and strategies. Our information security and risk assessment teams regularly communicate to management the effectiveness and efficiency of our information security program’s risk management processes.
The information security management team is primarily responsible and accountable for the awareness, oversight and control of enterprise information security and the implementation of cybersecurity policies, procedures and strategies. Our information security management and risk assessment teams regularly communicate to senior management about the effectiveness and efficiency of our information security program’s risk management processes.
Management reviews such assessments, reports any potential threats and vulnerabilities and responds accordingly, including by providing regularly scheduled reports and escalating items, as necessary, to the Disclosure Committee and the Board's Risk Committee. Our information security management team is led by a global CIO, to whom the CISO and Chief Technology Officer report.
Senior management reviews such assessments, reports any potential threats and vulnerabilities and responds accordingly, including by providing regularly scheduled reports and escalating items, as necessary, to our Disclosure Committee and Risk Committee. 17 Our information security management team is led by a global CIO to whom the CISO reports.
The experience of our information security management spans various job practice analysis areas and is underpinned by relevant education and certifications as well as decades of in-field experience in areas such as information security program development, information security governance, risk management and information security incident management. As discussed above, management reports regularly to the Board on our information security program.
The experience of our information security management spans various job practice analysis areas and is underpinned by relevant education and certifications as well as decades of in-field experience in areas such as information security program development, information security governance, risk management and information security incident management.
Governance Role of the Board Our Board oversees the Company’s enterprise risk management framework, including information security. The Board has delegated responsibility for overseeing enterprise risk to its Risk Committee, which is governed by a formal charter. Consistent with the Risk Committee Charter, management reports regularly to the Risk Committee on key risks to the Company, including cybersecurity risks.
The Board has delegated responsibility for overseeing enterprise risk to its Risk Committee, which is governed by a formal charter. Consistent with the Risk Committee Charter, management reports regularly to the Risk Committee on key risks to the Company, including cybersecurity risks.
Our program also includes a comprehensive incident management process intended to promptly identify, evaluate, respond, remediate, and recover from cybersecurity incidents including the preparation, detection, analysis, communication, eradication, and containment of such incidents including those associated with third-party service providers.
To strengthen our cybersecurity readiness, we have developed a cybersecurity incident management process that incorporates the use of third-party IT resources. Our cybersecurity incident response plan is intended to promptly identify, evaluate, respond, remediate and recover from cybersecurity incidents through the preparation, detection, analysis, communication, eradication and containment of such incidents, including those associated with third-party service providers.
Additionally, as part of our risk assessment system, we regularly measure, analyze, and report security and risk metrics. We have invested and continue to invest in risk management measures in order to protect our information systems and information.
As part of our risk assessment process, we regularly measure, analyze and report security and risk metrics and share those findings with the Board and senior management. We have invested and continue to invest in risk management measures in order to protect our IT systems, operations and sensitive business information.
The CIO, who reports directly to the CEO, has more than 30 years of experience in information technology and is responsible for information technology, information security, and business applications at a strategic level across the Company’s global platform.
The CIO, who reports directly to the Chief Executive Officer ("CEO"), has more than 30 years of related experience and is responsible for IT, information security and business applications at a strategic level across our global platforms. Moreover, the CIO is also responsible for reporting any information security matters to our Disclosure Committee to support compliance with applicable disclosure obligations.
The Chief Information Officer (“CIO”) and/or Chief Information Security Officer (“CISO”) reports regularly to the Risk Committee on the overall status of and any recommended changes to the information security program, compliance with applicable regulations and material matters related to the program, including the annual risk assessment, risk management and control decisions, service provider arrangements, results of testing and information security-related events, if any, and management’s responses to the same.
Our Chief Information Officer (“CIO”) and Chief Information Security Officer (“CISO”) report regularly to the Risk Committee on the overall status of, and any recommended changes to, the information security program, compliance with applicable regulations and material matters related to the program. The Risk Committee Chair reports to the Board of Directors on matters discussed during Risk Committee meetings.
The identification, 17 assessment and response functions related to information security are managed by an incident response team, which is responsible for maintaining and operationalizing our incident response plan.
The identification, assessment and response functions related to information security are managed by an internal incident response team, which is responsible for maintaining and operationalizing our incident response plan. Key components of our cybersecurity incident management process and response plan include root cause analysis when incidents occur, tabletop exercises and implementation of business continuity and disaster recovery plans.
After each Risk Committee meeting, the Risk Committee Chair reports to the Board of Directors on the matters reported on during the committee meeting. Role of Management Our information security management team oversees the design, implementation, and maturation of security practices to protect critical business processes, information systems and information technology assets across our enterprise.
Role of management Led by our CIO and CISO, our information security management team oversees the design, implementation and evolution of our security practices to protect critical business processes, information systems and IT assets across our business.
In addition, we may engage third-party service providers to perform functions associated with our information security program and the assessment of security threats. We regularly evaluate and adjust our information security procedures by integrating emerging technologies, revised frameworks and industry best practices.
The third-party risk assessments and reports are shared with internal teams and IT leadership to assist with ongoing risk mitigation actions. We regularly evaluate and adjust our information security procedures by integrating emerging technologies, revised frameworks and industry best practices.
Item 1C. Risk Management and Strategy We have developed and implemented a comprehensive, written information security program predicated on industry best practices and applicable regulations that is comprised of administrative, physical, and technical safeguards.
Item 1C. 16 Risk Management and Strategy We have developed and implemented an information security program predicated on industry practices, frameworks and applicable regulations that are reinforced by policies, processes, procedures, standards, technologies and training designed to protect our IT systems, operations and sensitive business information with administrative, physical and technical safeguards.
Our risk assessments are developed from industry best practices and include criteria for evaluating and categorizing identified security risks or threats based on the likelihood and potential impact of the threat. Our information security program continuously assesses the sufficiency of our safeguards to control potential risks.
Our risk assessments are developed from industry best practices and frameworks, including external third-party maturity assessments. As part of our information security program, we regularly assess the sufficiency of our safeguards to control potential risks.
Our information security program is based on written risk assessments that identify reasonably foreseeable internal and external risks to the security, confidentiality, and integrity of our information systems and information that could result in the unauthorized disclosure, misuse, alteration, destruction, or other compromise of these systems.
Our information security program is integrated as part of our enterprise risk management framework. We regularly conduct internal risk assessments to identify reasonably foreseeable security risks or threats and to evaluate and categorize those risks or threats based on the likelihood and potential impact to the security, confidentiality and integrity of our IT systems and sensitive business information.
In addition, we require all employees to undertake mandatory annual training covering information security, social engineering, remote working, phishing and email security and digital threats, among others. Additionally, we maintain internal informational content consisting of educational material on cyber awareness on our Company portals and conduct ongoing simulated phishing exercises.
We require employees to participate in periodic training covering information security-related topics, maintain informational content on our internal portals and conduct ongoing simulated phishing exercises. Governance Role of our Board of Directors Our Board of Directors oversees the Company’s enterprise risk management framework, which includes information security.
Removed
Through our information security program, we seek to assess, identify, monitor, mitigate, and manage cybersecurity threats and prevent the recurrence of said threats through preventative and remedial measures. Our information security program is integrated as part of our overall risk management system.
Added
Through our information security program, we seek to assess, identify, monitor, mitigate and manage cybersecurity incidents and threats, and to prevent the occurrence of a cybersecurity incident through protective and detective technologies that measure and monitor our critical IT systems, which include among others, intrusion detection and protection, email security, endpoint security, third-party security monitoring and proactive security testing.
Removed
Moreover, the CIO is also responsible for reporting any information security matters to the Disclosure Committee to support the Company’s compliance with applicable disclosure obligations.
Added
To protect against the risk of cybersecurity threats, we evaluate new and existing third-party service providers through a risk assessment process designed to assess their capabilities for maintaining appropriate safeguards over the information provided to them.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 2. Properties. Our corporate headquarters are located in Norfolk, Virginia. In addition, as of December 31, 2023 , we h a d 10 operational centers in the Americas (eight leased and two owned), eight in Europe (all leased) and two in Australia (all leased).
Biggest changeItem 2. Properties. Our corporate headquarters are located in Norfolk, Virginia. In addition, as of December 31, 2024 , we h a d 10 operational sites in the Americas (eight leased and two owned), eight in Europe (all leased) and one in Australia (leased).

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed1 unchanged
Biggest changeAlso, customers, either individually, as members of a class action, or through 18 a governmental entity on behalf of customers, may initiate litigation against us in which they allege that we have violated a state or federal law in the process of collecting on an account. From time to time, other types of lawsuits are brought against us.
Biggest changeAlso, customers, either individually, as members of a class action, or through a governmental entity on behalf of customers, may initiate litigation against us in which they allege that we have violated a state or federal law in the process of collecting on an account. From time-to-time, other types of lawsuits are brought against us.
Refe r to the " Litigation and Regulatory Matters " section of Note 14 to our Consolidated Financial Statements included in Item 8 of this Form 10-K for information regarding legal proceedings in which we are involved. Item 4. Mine Safety Disclosures. Not applicable. 19 PART II
Refe r to the " Litigation and Regulatory Matters " section of Note 14 to our Consolidated Financial Statements included in Item 8 of this Form 10-K for information regarding legal proceedings in which we are involved. Item 4. Mine Safety Disclosures. Not applicable. 18 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed2 unchanged
Biggest changePRAA $ 100.0 $ 149.0 $ 162.7 $ 206.0 $ 138.6 $ 107.5 Nasdaq Financial 100 IXF $ 100.0 $ 129.5 $ 134.3 $ 170.9 $ 129.7 $ 146.7 Nasdaq Global Market Composite Index NQGM $ 100.0 $ 137.9 $ 227.3 $ 192.9 $ 106.7 $ 113.6 The comparisons of stock performance shown above are not intended to forecast or be indicative of possible future performance of our common stock.
Biggest changePRAA $ 100.0 $ 109.3 $ 138.3 $ 93.1 $ 72.2 $ 57.5 Nasdaq Financial 100 IXF $ 100.0 $ 103.7 $ 132.0 $ 100.1 $ 113.3 $ 142.2 Nasdaq Global Market Composite Index NQGM $ 100.0 $ 164.9 $ 139.9 $ 77.4 $ 82.4 $ 88.2 The comparisons of stock performance shown above are not intended to forecast or be indicative of possible future performance of our common stock.
Share Repurchase Programs On February 25, 2022, our Board of Directors approved a share repurchase program under which we are authorized to repurchase up to $150.0 million of our outstanding common stock. For more information, see Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" of this Form 10-K.
Share Repurchase Programs On February 25, 2022, our Board of Directors approved a share repurchase program under which we are authorized to repurchase up to $150.0 million of our outstanding common stock. For more information, refer to Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" of this Form 10-K.
Any future determination as to the declaration and payment of dividends will be at the discretion of our Board of Directors and will depend on conditions then existing, including our results of operations, financial condition, contractual restrictions, capital requirements, business prospects and other factors that our Board of Directors may consider relevant. 20 Recent Sales of Unregistered Securities None.
Any future determination as to the declaration and payment of dividends will be at the discretion of our Board of Directors and will depend on conditions then existing, including our results of operations, financial condition, contractual restrictions, capital requirements, business prospects and other factors that our Board of Directors may consider relevant. 19 Recent Sales of Unregistered Securities None.
We do not currently pay regular dividends on our common stock and did not pay dividends during the three years ended December 31, 2023; however, our Board of Directors may determine in the future to declare or pay dividends on our common stock.
We do not currently pay regular dividends on our common stock and did not pay dividends during the three years ended December 31, 2024; however, our Board of Directors may determine in the future to declare or pay dividends on our common stock.
Any dividends paid during the five-year period are assumed to be reinvested. Ticker 2018 2019 2020 2021 2022 2023 PRA Group, Inc.
Any dividends paid during the five-year period are assumed to be reinvested. Ticker 2019 2020 2021 2022 2023 2024 PRA Group, Inc.
Stock Performance The following gra ph and subsequent table compare, from December 31, 2018 to December 31, 2023, cumulative stockholder returns assuming an initial investment of $100 in our common stock (PRAA), the stocks comprising the Nasdaq Financial 100 (IXF) and the stocks comprising the Nasdaq Global Market Composite Index (NQGM) at the beginning of the period.
Stock Performance The following gra ph and subsequent table compare, from December 31, 2019 to December 31, 2024, cumulative stockholder returns assuming an initial investment of $100 in our common stock (PRAA), the stocks comprising the Nasdaq Financial 100 (IXF) and the stocks comprising the Nasdaq Global Market Composite Index (NQGM) at the beginning of the period.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Common Stock Our common stock is traded on the Nasdaq Global Select Market under the symbol "PRAA". Based on information provided by our transfer agent and registrar, as of February 20, 2024 , there were 45 holders of record.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Common Stock Our common stock is traded on the Nasdaq Global Select Market under the symbol "PRAA". Based on information provided by our transfer agent and registrar, as of February 19, 2025 , there were 44 holders of record.
We did not repurchase any common stock during the fourth quarter of the year ended December 31, 2023. Item 6. [Reserved] 21
We did not repurchase any common stock during the fourth quarter of the year ended December 31, 2024. Item 6. [Reserved] 20

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

73 edited+54 added−48 removed17 unchanged
Biggest change(3) Non-U.S. amounts are presented at the December 31, 2023 exchange rate. 30 Cash Collections by Year, By Year of Purchase (1) as of December 31, 2023 Amounts in millions Cash Collections Purchase Period Purchase Price (3)(4) 1996-2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total Americas and Australia Core 1996-2013 $ 1,932.7 $ 3,618.9 $ 660.3 $ 474.4 $ 299.7 $ 197.0 $ 140.3 $ 99.7 $ 64.7 $ 46.5 $ 36.0 $ 28.4 $ 5,665.9 2014 404.1 — 92.7 253.4 170.3 114.2 82.2 55.3 31.9 22.3 15.0 11.8 849.1 2015 443.1 — — 117.0 228.4 185.9 126.6 83.6 57.2 34.9 19.5 14.1 867.2 2016 455.8 — — — 138.7 256.5 194.6 140.6 105.9 74.2 38.4 24.9 973.8 2017 532.9 — — — — 107.3 278.7 256.5 192.5 130.0 76.3 43.8 1,085.1 2018 654.0 — — — — — 122.7 361.9 337.7 239.9 146.1 92.9 1,301.2 2019 581.5 — — — — — — 143.8 349.0 289.8 177.7 110.3 1,070.6 2020 435.7 — — — — — — — 132.9 284.3 192.0 125.8 735.0 2021 435.8 — — — — — — — — 85.0 177.3 136.8 399.1 2022 406.1 — — — — — — — — — 67.7 195.4 263.1 2023 622.6 — — — — — — — — — — 108.5 108.5 Subtotal 6,904.3 3,618.9 753.0 844.8 837.1 860.9 945.1 1,141.4 1,271.8 1,206.9 946.0 892.7 13,318.6 Americas Insolvency 1996-2013 1,266.1 1,491.4 421.4 289.9 168.7 85.5 30.3 6.8 3.6 2.2 1.6 1.1 2,502.5 2014 148.4 — 37.0 50.9 44.3 37.4 28.8 15.8 2.2 1.1 0.7 0.4 218.6 2015 63.2 — — 3.4 17.9 20.1 19.8 16.7 7.9 1.3 0.6 0.3 88.0 2016 91.4 — — — 18.9 30.4 25.0 19.9 14.4 7.4 1.8 0.9 118.7 2017 275.3 — — — — 49.1 97.3 80.9 58.8 44.0 20.8 4.9 355.8 2018 97.9 — — — — — 6.7 27.4 30.5 31.6 24.6 12.7 133.5 2019 123.1 — — — — — — 13.4 31.4 39.1 37.8 28.7 150.4 2020 62.1 — — — — — — — 6.5 16.1 20.4 19.5 62.5 2021 55.2 — — — — — — — — 4.6 17.9 17.5 40.0 2022 33.4 — — — — — — — — — 3.2 9.2 12.4 2023 91.3 — — — — — — — — — — 9.0 9.0 Subtotal 2,307.4 1,491.4 458.4 344.2 249.8 222.5 207.9 180.9 155.3 147.4 129.4 104.2 3,691.4 Total Americas and Australia 9,211.7 5,110.3 1,211.4 1,189.0 1,086.9 1,083.4 1,153.0 1,322.3 1,427.1 1,354.3 1,075.4 996.9 17,010.0 Europe Core 2012-2013 40.7 27.7 14.2 5.5 3.5 3.3 3.3 2.4 1.9 1.8 1.4 1.0 66.0 2014 (2) 773.8 — 153.2 292.0 246.4 220.8 206.3 172.9 149.8 149.2 122.2 107.6 1,820.4 2015 411.3 — — 45.8 100.3 86.2 80.9 66.1 54.3 51.4 40.7 33.8 559.5 2016 333.1 — — — 40.4 78.9 72.6 58.0 48.3 46.7 36.9 29.7 411.5 2017 252.2 — — — — 17.9 56.0 44.1 36.1 34.8 25.2 20.2 234.3 2018 341.8 — — — — — 24.3 88.7 71.3 69.1 50.7 41.6 345.7 2019 518.6 — — — — — — 48.0 125.7 121.4 89.8 75.1 460.0 2020 324.1 — — — — — — — 32.3 91.7 69.0 56.1 249.1 2021 412.4 — — — — — — — — 48.5 89.9 73.0 211.4 2022 359.4 — — — — — — — — — 33.9 83.8 117.7 2023 410.6 — — — — — — — — — — 50.2 50.2 Subtotal 4,178.0 27.7 167.4 343.3 390.6 407.1 443.4 480.2 519.7 614.6 559.7 572.1 4,525.8 Europe Insolvency 2014 (2) 10.9 — — 4.3 3.9 3.2 2.6 1.5 0.8 0.3 0.2 0.2 17.0 2015 19.0 — — 3.0 4.4 5.0 4.8 3.9 2.9 1.6 0.6 0.4 26.6 2016 39.3 — — — 6.2 12.7 12.9 10.7 7.9 6.0 2.7 1.3 60.4 2017 39.2 — — — — 1.2 7.9 9.2 9.8 9.4 6.5 3.8 47.8 2018 44.9 — — — — — 0.6 8.4 10.3 11.7 9.8 7.2 48.0 2019 77.2 — — — — — — 5.0 21.1 23.9 21.0 17.5 88.5 2020 105.4 — — — — — — — 6.0 34.6 34.1 29.7 104.4 2021 53.2 — — — — — — — — 5.5 14.4 14.7 34.6 2022 44.6 — — — — — — — — — 4.5 12.4 16.9 2023 46.6 — — — — — — — — — — 4.2 4.2 Subtotal 480.3 — — 7.3 14.5 22.1 28.8 38.7 58.8 93.0 93.8 91.4 448.4 Total Europe 4,658.3 27.7 167.4 350.6 405.1 429.2 472.2 518.9 578.5 707.6 653.5 663.5 4,974.2 Total PRA Group $ 13,870.0 $ 5,138.0 $ 1,378.8 $ 1,539.6 $ 1,492.0 $ 1,512.6 $ 1,625.2 $ 1,841.2 $ 2,005.6 $ 2,061.9 $ 1,728.9 $ 1,660.4 $ 21,984.2 (1) Non-U.S. amounts are presented using the average exchange rates during the cash collection period.
Biggest change(3) Non-U.S. amounts are presented at the December 31, 2024 exchange rate. 32 Cash Collections by Year, By Year of Purchase (1) as of December 31, 2024 Amounts in millions Cash Collections Purchase Period Purchase Price (2)(3) 1996-2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total Americas and Australia Core 1996-2014 $ 2,336.8 $ 4,371.9 $ 727.8 $ 470.0 $ 311.2 $ 222.5 $ 155.0 $ 96.6 $ 68.8 $ 51.0 $ 40.2 $ 49.4 $ 6,564.4 2015 443.1 — 117.0 228.4 185.9 126.6 83.6 57.2 34.9 19.5 14.1 17.3 884.5 2016 455.8 — — 138.7 256.5 194.6 140.6 105.9 74.2 38.4 24.9 24.0 997.8 2017 532.9 — — — 107.3 278.7 256.5 192.5 130.0 76.3 43.8 39.2 1,124.3 2018 654.0 — — — — 122.7 361.9 337.7 239.9 146.1 92.9 75.9 1,377.1 2019 581.5 — — — — — 143.8 349.0 289.8 177.7 110.3 77.7 1,148.3 2020 435.7 — — — — — — 132.9 284.3 192.0 125.8 87.0 822.0 2021 435.8 — — — — — — — 85.0 177.3 136.8 98.4 497.5 2022 406.1 — — — — — — — — 67.7 195.4 144.7 407.8 2023 622.5 — — — — — — — — — 108.5 285.9 394.4 2024 823.7 — — — — — — — — — — 145.9 145.9 Subtotal 7,727.9 4,371.9 844.8 837.1 860.9 945.1 1,141.4 1,271.8 1,206.9 946.0 892.7 1,045.4 14,364.0 Americas Insolvency 1996-2014 1,414.5 1,949.8 340.8 213.0 122.9 59.1 22.6 5.8 3.3 2.3 1.5 1.3 2,722.4 2015 63.2 — 3.4 17.9 20.1 19.8 16.7 7.9 1.3 0.6 0.3 0.2 88.2 2016 91.4 — — 18.9 30.4 25.0 19.9 14.4 7.4 1.8 0.9 0.6 119.3 2017 275.3 — — — 49.1 97.3 80.9 58.8 44.0 20.8 4.9 2.5 358.3 2018 97.9 — — — — 6.7 27.4 30.5 31.6 24.6 12.7 2.5 136.0 2019 123.1 — — — — — 13.4 31.4 39.1 37.8 28.7 14.6 165.0 2020 62.1 — — — — — — 6.5 16.1 20.4 19.5 17.0 79.5 2021 55.2 — — — — — — — 4.6 17.9 17.5 15.3 55.3 2022 33.4 — — — — — — — — 3.2 9.2 11.1 23.5 2023 91.2 — — — — — — — — — 9.0 25.1 34.1 2024 68.4 — — — — — — — — — — 12.1 12.1 Subtotal 2,375.7 1,949.8 344.2 249.8 222.5 207.9 180.9 155.3 147.4 129.4 104.2 102.3 3,793.7 Total Americas and Australia 10,103.6 6,321.7 1,189.0 1,086.9 1,083.4 1,153.0 1,322.3 1,427.1 1,354.3 1,075.4 996.9 1,147.7 18,157.7 Europe Core 2012-2014 814.5 195.1 297.5 249.9 224.1 209.6 175.3 151.7 151.0 123.6 108.6 101.7 1,988.1 2015 411.3 — 45.8 100.3 86.2 80.9 66.1 54.3 51.4 40.7 33.8 30.4 589.9 2016 333.1 — — 40.4 78.9 72.6 58.0 48.3 46.7 36.9 29.7 27.4 438.9 2017 252.2 — — — 17.9 56.0 44.1 36.1 34.8 25.2 20.2 17.9 252.2 2018 341.8 — — — — 24.3 88.7 71.3 69.1 50.7 41.6 37.1 382.8 2019 518.6 — — — — — 48.0 125.7 121.4 89.8 75.1 68.2 528.2 2020 324.1 — — — — — — 32.3 91.7 69.0 56.1 50.1 299.2 2021 412.4 — — — — — — — 48.5 89.9 73.0 66.6 278.0 2022 359.4 — — — — — — — — 33.9 83.8 74.7 192.4 2023 410.6 — — — — — — — — — 50.2 103.1 153.3 2024 451.9 — — — — — — — — — — 46.3 46.3 Subtotal 4,629.9 195.1 343.3 390.6 407.1 443.4 480.2 519.7 614.6 559.7 572.1 623.5 5,149.3 Europe Insolvency 2014 10.9 — 4.3 3.9 3.2 2.6 1.5 0.8 0.3 0.2 0.2 0.2 17.2 2015 19.0 — 3.0 4.4 5.0 4.8 3.9 2.9 1.6 0.6 0.4 0.2 26.8 2016 39.3 — — 6.2 12.7 12.9 10.7 7.9 6.0 2.7 1.3 0.8 61.2 2017 39.2 — — — 1.2 7.9 9.2 9.8 9.4 6.5 3.8 1.5 49.3 2018 44.9 — — — — 0.6 8.4 10.3 11.7 9.8 7.2 3.5 51.5 2019 77.2 — — — — — 5.0 21.1 23.9 21.0 17.5 12.9 101.4 2020 105.4 — — — — — — 6.0 34.6 34.1 29.7 25.5 129.9 2021 53.2 — — — — — — — 5.5 14.4 14.7 15.4 50.0 2022 44.6 — — — — — — — — 4.5 12.4 15.2 32.1 2023 46.7 — — — — — — — — — 4.2 12.7 16.9 2024 43.4 — — — — — — — — — — 9.5 9.5 Subtotal 523.8 — 7.3 14.5 22.1 28.8 38.7 58.8 93.0 93.8 91.4 97.4 545.8 Total Europe 5,153.7 195.1 350.6 405.1 429.2 472.2 518.9 578.5 707.6 653.5 663.5 720.9 5,695.1 Total PRA Group $ 15,257.3 $ 6,516.8 $ 1,539.6 $ 1,492.0 $ 1,512.6 $ 1,625.2 $ 1,841.2 $ 2,005.6 $ 2,061.9 $ 1,728.9 $ 1,660.4 $ 1,868.6 $ 23,852.8 (1) Non-U.S. amounts are presented using the average exchange rates during the respective year.
Depending on the level of performance and expected future impacts from our operations, we may update ERC and TEC levels based on the results of our cash forecasting with a correlating adjustment to the purchase price multiple.
ERC and TEC Depending on the level of performance and expected future impacts from our operations, we may update ERC and TEC levels based on the results of our cash forecasting with a correlating adjustment to the purchase price multiple.
These tax laws are complex and are subject to different interpretations by the taxpayer and the relevant government taxing authorities. When determining our domestic and non-U.S. income tax expense, we make judgments about the application of these inherently complex laws. We record a tax provision for the anticipated tax consequences of the reported results of operations.
These tax laws are complex and subject to different interpretations by the taxpayer and the relevant government taxing authorities. When determining our domestic and non-U.S. income tax expense, we make judgments about the application of these inherently complex laws. We record a tax provision for the anticipated tax consequences of the reported results of operations.
These accounts include IVAs, Trust Deeds in the UK, Consumer Proposals in Canada and bankruptcy accounts in the U.S., Canada, Germany and the UK. • "Negative Allowance" refers to the present value of cash flows expected to be collected on our finance receivables. • "Portfolio acquisitions" refers to all nonperforming loan portfolios acquired as a result of a purchase or added as a result of a business acquisition. • "Portfolio purchases" refers to all nonperforming loan portfolios purchased in the normal course of business and excludes those added as a result of business acquisitions. • "Portfolio income" reflects revenue recorded due to the passage of time using the effective interest rate calculated based on the purchase price of nonperforming loan portfolios and estimated remaining collections. • "Purchase price" refers to the cash paid to a seller to acquire nonperforming loans. • "Purchase price multiple" refers to the total estimated collections on our nonperforming loan portfolios divided by purchase price. • "Recoveries" refers to cash collections plus buybacks and other adjustments. • "Total estimated collections" or "TEC" refers to actual cash collections plus estimated remaining collections on our nonperforming loan portfolios.
These accounts include IVAs, Trust Deeds in the UK, Consumer Proposals in Canada and bankruptcy accounts in the U.S., Canada, Germany and the UK. • "Negative allowance" refers to the present value of cash flows expected to be collected on our finance receivables. • "Portfolio acquisitions" refers to all nonperforming loan portfolios acquired as a result of a purchase or added as a result of a business acquisition. • "Portfolio purchases" refers to all nonperforming loan portfolios purchased in the normal course of business and excludes those added as a result of business acquisitions. • "Portfolio income" reflects revenue recorded due to the passage of time using the effective interest rate calculated based on the purchase price of nonperforming loan portfolios and estimated remaining collections. • "Purchase price" refers to the cash paid to a seller to acquire nonperforming loans. • "Purchase price multiple" refers to the total estimated collections on our nonperforming loan portfolios divided by purchase price. • "Recoveries collected" refers to cash collections plus buybacks and other adjustments. • "Total estimated collections" or "TEC" refers to actual cash collections plus estimated remaining collections on our nonperforming loan portfolios. 39
These accounts are aggregated separately from insolvency accounts. • "Estimated remaining collections" or "ERC" refers to the sum of all future projected cash collections on our nonperforming loan portfolios. • "Finance receivables" or "receivables" refers to the negative allowance for expected recoveries recorded on our balance sheet as an asset. 22 • "Insolvency" accounts or portfolios refer to accounts or portfolios of nonperforming loans that are in an insolvent status when we purchase them and as such are purchased as a pool of insolvent accounts.
These accounts are aggregated separately from insolvency accounts. • "Estimated remaining collections" or "ERC" refers to the sum of all future projected cash collections on our nonperforming loan portfolios. • "Finance receivables" or "receivables" refers to the negative allowance for expected recoveries recorded on our balance sheet as an asset. • "Insolvency" accounts or portfolios refer to accounts or portfolios of nonperforming loans that are in an insolvent status when we purchase them and, as such, are purchased as a pool of insolvent accounts.
We follow an established process to evaluate ERC, and we typically do not adjust our ERC and TEC until we gain sufficient collection experience and confidence with a pool of accounts. Over time, our TEC has often increased as pools have aged resulting in the ratio of TEC to purchase price for any given year of buying to gradually increase.
We follow an established process to evaluate ERC, and we typically do not adjust our ERC and TEC until we gain sufficient collection experience with a pool of accounts. Over time, our TEC has often increased as pools have aged resulting in the ratio of TEC to purchase price for any given year of buying to gradually increase.
Our management believes Adjusted EBITDA helps provide enhanced period to period comparability of operations and financial performance, as it excludes certain items whose fluctuations from period to period do not necessarily correspond to changes in the operations of our business, and is useful to investors as other companies in the industry report similar financial measures.
Our management believes Adjusted EBITDA helps provide enhanced period-to-period comparability of our operational and financial performance, as it excludes certain items whose fluctuations from period-to-period do not necessarily correspond to changes in the operations of our business, and is useful to investors as other companies in the industry report similar financial measures.
Some of the agreements establish a volume reference for the contract term in the form of a target or maximum, however, very few agreements establish a minimum contractual obligation, and many of the contracts contain early termination provisions allowing either party to cancel the agreements in accordance with a specified notice period.
Some of the agreements establish a volume reference for the contract term in the form of a target or maximum, 34 however, very few agreements establish a minimum contractual obligation, and many of the contracts contain early termination provisions allowing either party to cancel the agreements in accordance with a specified notice period.
Generally, adjustments to cash forecasts result in an adjustment to revenue at an amount less than the impact of the performance in the period due to the effects of discounting. Additionally, cash collection forecast increases will result in more revenue being recognized and cash collection forecast decreases in less revenue being recognized over the life of the pool.
Generally, adjustments to cash forecasts result in an adjustment to revenue at an amount less than the impact of the performance in the period due to the effects of discounting. Additionally, cash collection forecast increases result in more revenue being recognized, and cash collection forecast decreases in less revenue being recognized, over the life of the pool.
If we subsequently realize deferred tax assets that were previously determined to be unrealizable, the respective valuation allowance would be reversed, resulting in a 40 positive adjustment to earnings.
If we subsequently realize deferred tax assets that were previously determined to be unrealizable, the respective valuation allowance would be reversed, resulting in a positive adjustment to earnings.
(2) Includes the acquisition date finance receivables 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.
(2) Includes the acquisition date finance receivables portfolios 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.
To calculate net cash provided by/(used in) operating activities, net income/(loss) was adjusted for (i) non-cash items included in net income such as unrealized foreign currency transaction (gains)/losses, changes in expected recoveries, depreciation and amortization, deferred taxes, fair value changes in equity securities, and stock-based compensation, as well as (ii) changes in the balances of operating assets and liabilities, which can vary significantly in the normal course of business due to the amount and timing of payments.
To calculate net cash used in operating activities, net income/(loss) was adjusted for (i) non-cash items included in net income/(loss), such as unrealized foreign currency transaction gains/(losses), changes in expected recoveries, depreciation, amortization and impairment, deferred income taxes, fair value changes in equity securities, and share-based compensation, as well as (ii) changes in the balances of operating assets and liabilities, which can vary significantly in the normal course of business due to the amount and timing of payments.
Key inputs to the DBC reporting unit’s fair value under the income approach included our forecasted financial results and the discount rate. Forecasted financial results were developed considering several inputs and assumptions, including portfolio purchasing volume, purchase price multiples, operating expenses and the projected impact of certain strategic and operational initiatives.
Key inputs to the DBC reporting unit’s fair value under the income approach included our forecasted financial results and the discount rate. Forecasted financial results were developed considering several inputs and assumptions, including portfolio purchasing volume, purchase price multiples, ERC growth rate, terminal value multiple, operating expenses and the projected impact of certain strategic and operational initiatives.
We determine the fair value of a reporting unit by applying certain approaches prescribed under ASC Topic 820 "Fair Value Measurements and Disclosures": the income approach and the market approach. Under the income approach, we estimate 39 the fair value of a reporting unit based on the present value of estimated future cash flows and a residual terminal value.
We determine the fair value of a reporting unit by applying the income approach and market approach, which are prescribed under ASC Topic 820 "Fair Value Measurements and Disclosures". Under the income approach, we estimate the fair value of a reporting unit based on the present value of estimated future cash flows and a residual terminal value.
Refer to Note 13 to our Consolidated Financial Statements included in Item 8 of this Form 10-K for additional information regarding the unremitted earnings of our international subsidiaries. 36 Borrowings .
For additional information about the unremitted earnings of our international subsidiaries, refer to Note 13 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.
We are implementing a number of strategic and operational initiatives in our U.S. business designed to increase cash collections while reducing our marginal costs. The estimated net cash flows from certain of these initiatives were incorporated in our goodwill evaluation, reflecting an assessment of our ability to execute such initiatives.
We have implemented a number of strategic and operational initiatives in our U.S. business designed to increase cash collections while reducing our marginal costs and continue to implement additional initiatives. The estimated net cash flows from certain of these initiatives were incorporated in our goodwill evaluation, reflecting an assessment of our ability to execute such initiatives.
The discount rate used was based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics, including assumptions related to the reporting unit's ability to execute on the projected cash flows. The discount rate utilized for the DBC reporting unit was 10.0% as of October 1, 2023.
The discount rate of 8.3% utilized for the DBC reporting unit as of October 1, 2024 was based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics, including assumptions related to the reporting unit's ability to execute on the projected cash flows.
(2) Non-U.S. amounts are presented using the average exchange rates during the current reporting period.
(2) Non-U.S. amounts are presented using the average exchange rates during the current year.
Frequently Used Terms We may use the following terminology throughout this Form 10-K: • "Buybacks" refers to purchase price refunded by the seller due to the return of ineligible nonperforming loan accounts. • "Cash collections" refers to collections on our nonperforming loan portfolios. • "Cash receipts" refers to cash collections on our nonperforming loan portfolios, fees and revenue recognized from our class action claims recovery services. • "Change in expected recoveries" refers to the differences of actual recoveries received when compared to expected recoveries and the net present value of changes in estimated remaining collections. • "Core" accounts or portfolios refer to accounts or portfolios that are nonperforming loans and are not in an insolvent status upon acquisition.
For further information regarding our uncertain tax positions, refer to Note 13 to our Consolidated Financial Statements included in Item 8 of this Form 10-K. 38 Frequently Used Terms We may use the following terminology throughout this Form 10-K: • "Buybacks" refers to purchase price refunded by the seller due to the return of ineligible nonperforming loan accounts. • "Cash collections" refers to collections on our nonperforming loan portfolios. • "Cash receipts" refers to cash collections on our nonperforming loan portfolios, fees and revenue recognized from our class action claims recovery services. • "Changes in expected recoveries" refers to the differences of actual recoveries received when compared to expected recoveries and the net present value of changes in estimated remaining collections. • "Core" accounts or portfolios refer to accounts or portfolios that are nonperforming loans and are not in an insolvent status upon acquisition.
The assumptions used in estimating the DBC reporting unit’s fair value were based on currently available data and involved the exercise of judgment. There are inherent uncertainties related to the assumptions used in our evaluation and to our application of those assumptions.
Our goodwill evaluation is dependent on a number of factors, both internal and external. The assumptions used in estimating the DBC reporting unit’s fair value were based on currently available data and involved the exercise of judgment. There are inherent uncertainties related to the assumptions used in our evaluation and to our application of those assumptions.
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. (4) Non-U.S. amounts are presented at the year-end exchange rate for the respective year of purchase. (5) Non-U.S. amounts are presented at the December 31, 2023 exchange rate.
(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.
We also assess the reasonableness of the aggregate estimated fair value of our reporting units by comparison to our market capitalization over a reasonable period, considering historic control premiums in the financial services industry and the current market environment. Based on the annual October 1 impairment test, we concluded that the goodwill of our reporting units was not impaired.
We also assess the reasonableness of the aggregate estimated fair value of our reporting units by comparison to our market capitalization over a reasonable period, considering historic control premiums in the financial services industry and the current market environment.
We believe that funds generated from operations and cash collections on nonperforming loan portfolios, together with existing cash, available borrowings under our revolving credit facilities and access to the capital markets, will be sufficient to finance our operations, planned capital expenditures, forward flow purchase commitments, debt maturities and additional portfolio purchases during the next 12 months and beyond.
Uses of liquidity and material cash requirements We believe that funds generated from our business activities, together with existing cash, available borrowings under our revolving credit facilities and access to the capital markets, will be sufficient to finance our operations, planned capital expenditures, forward flow purchase commitments, debt maturities and additional portfolio purchases for at least the next 12 months.
Purchase price multiples can vary over time due to a variety of factors, including pricing competition, supply levels, paper type, age of the accounts acquired, mix of portfolios purchased, costs to collect, expected returns and changes in operational efficiency.
Purchase price multiples can vary over time due to a variety of factors, including pricing competition, supply levels, age of the accounts acquired, type and mix of portfolios purchased, expected costs to collect and returns, and changes in operational efficiency and effectiveness. When we pay more for a portfolio, the purchase price multiple and effective interest rate are generally lower.
Portfolio Acquisitions by Delinquency Category 2023 2022 2021 Fresh (1) $ 340,479 67.3 % $ 142,939 51.9 % $ 89,140 26.2 % Primary (2) 15,485 3.1 12,912 4.7 2,908 0.9 Secondary (3) 124,758 24.5 96,402 35.0 226,302 66.6 Other (4) 25,597 5.1 23,180 8.4 21,537 6.3 Total Core 506,319 100.0 % 275,433 100.0 % 339,887 100.0 % Insolvency 61,242 33,442 54,897 Total $ 567,561 $ 308,875 $ 394,784 (1) Fresh accounts are typically past due 120 to 270 days, charged-off by the credit originator and sold prior to any post-charge-off collection activity.
Portfolio Purchases by Delinquency Category 2024 2023 2022 Fresh (1) $ 442,432 60.8 % $ 340,479 67.3 % $ 142,939 51.9 % Primary (2) 47,783 6.6 15,485 3.1 12,912 4.7 Secondary (3) 218,400 30.0 124,758 24.5 96,402 35.0 Other (4) 19,057 2.6 25,597 5.1 23,180 8.4 Total Core 727,672 100.0 % 506,319 100.0 % 275,433 100.0 % Insolvency 68,168 61,242 33,442 Total $ 795,840 $ 567,561 $ 308,875 (1) Fresh accounts are typically past due 120 to 270 days, charged-off by the credit originator and sold prior to any post-charge-off collection activity.
These amounts represent our estimated forward flow purchases over the next 12 months based on projections and other factors, including sellers' estimates of future flows sales, and are dependent on actual delivery by the sellers. Accordingly, amounts purchased under these agreements may vary significantly.
These amounts represent our estimated forward flow purchases over the next 12 months under the agreements in place based on projections and other factors, including sellers' estimates of future forward flow sales, and are dependent on actual delivery by the sellers and, in some cases, the impact of foreign exchange rate fluctuations.
Sources of Liquidity Cash and cash equivalents . As of December 31, 2023, cash and cash equivalents totaled $112.5 million, of which $76.5 million related to our international operations with indefinitely reinvested earnings.
Sources of liquidity Cash and cash equivalents As of December 31, 2024, cash and cash equivalents totaled $105.9 million, of which $91.1 million consisted of cash related to international operations with indefinitely reinvested earnings.
Portfolio Acquisitions by Major Asset Type 2023 2022 2021 Major Credit Cards $ 167,824 29.6 % $ 59,311 19.2 % $ 168,364 42.7 % Private Label Credit Cards 306,758 54.0 203,670 66.0 173,197 43.8 Consumer Finance 77,393 13.6 41,792 13.5 35,114 8.9 Auto Related 15,586 2.8 4,102 1.3 18,109 4.6 Total $ 567,561 100.0 % $ 308,875 100.0 % $ 394,784 100.0 % 34 U.S.
Portfolio Purchases by Major Asset Type 2024 2023 2022 Major credit cards $ 342,460 43.0 % $ 167,824 29.6 % $ 59,311 19.2 % Private label credit cards 401,487 50.4 306,758 54.0 203,670 66.0 Consumer finance 20,130 2.5 77,393 13.6 41,792 13.5 Auto related 31,763 4.1 15,586 2.8 4,102 1.3 Total $ 795,840 100.0 % $ 567,561 100.0 % $ 308,875 100.0 % U.S.
While actual results could vary, we believe we have adequate tax accruals with respect to the ultimate outcome of such unresolved tax matters. We record interest and penalties related to unresolved tax matters as a component of income tax expense when the more likely than not standards are not met.
We record interest and penalties related to unresolved tax matters as a component of income tax expense when the more likely than not standards are not met.
Based on purchasing volume estimates, the forecasted financial results reflect an expected long-term growth rate of 3.3%. Purchase price multiples related to our existing portfolios were based on historical growth rates, while purchase price multiples on future portfolio purchases were based on recent and expected future purchasing metrics.
Purchase price multiples related to our existing portfolios were based on historical growth rates, while purchase price multiples on future portfolio purchases were based on recent and expected future purchasing metrics.
We exercise significant judgment in estimating the potential exposure to unresolved tax matters and apply a more likely than not criteria approach for recording tax benefits related to uncertain tax positions in the application of the complex tax laws.
We exercise significant judgment in estimating the potential exposure to unresolved tax matters and apply a more likely than not standard for recording tax benefits related to uncertain tax positions in the application of complex tax laws. While actual results could vary, we believe we have adequate tax accruals with respect to the ultimate outcome of such unresolved tax matters.
Market conditions permitting, we may seek to access the debt or equity capital markets as we deem appropriate. Business acquisitions or higher than expected levels of portfolio purchasing could require additional financing from other sources. We may also, from time to time, repurchase Senior Notes in the open market or otherwise.
Market conditions permitting, as we deem appropriate, we may seek to access the debt or equity capital markets or other sources of funding, and it may be necessary to raise additional funds to achieve our business objectives. Business acquisitions or higher than expected levels of portfolio purchasing could require additional financing.
Adjusted EBITDA is calculated starting with our GAAP financial measure, Net income/(loss) attributable to PRA Group, Inc. and is adjusted for: • income tax expense (or less income tax benefit); • foreign exchange loss (or less foreign exchange gain); • interest expense, net (or less interest income, net); • other expense (or less other income); • depreciation and amortization; • impairment of real estate; • net income attributable to noncontrolling interests; and • recoveries applied to negative allowance less changes in expected recoveries. 35 The following table provides a reconciliation of Net income/(loss) attributable to PRA Group, Inc., as reported in accordance with GAAP, to Adjusted EBITDA for the years indicated (a mounts in thousands): Reconciliation of Non-GAAP Financial Measures 2023 2022 2021 Net income/(loss) attributable to PRA Group, Inc. $ (83,477) $ 117,147 $ 183,158 Adjustments: Income tax expense/(benefit) (16,133) 36,787 54,817 Foreign exchange (gains)/losses (289) (985) 809 Interest expense, net 181,724 130,677 124,143 Other expense/(income) (1) 1,944 1,325 (282) Depreciation and amortization 13,376 15,243 15,256 Impairment of real estate 5,239 — — Adjustment for net income attributable to noncontrolling interests 16,723 851 12,351 Recoveries applied to negative allowance less Changes in expected recoveries 887,891 805,942 988,050 Adjusted EBITDA $ 1,006,998 $ 1,106,987 $ 1,378,302 (1) Other expense/(income) reflects non-operating related activity.
The following table provides a reconciliation of Net income/(loss) attributable to PRA Group, Inc. as reported in accordance with GAAP to Adjusted EBITDA for the years indicated (amounts in thousands): Adjusted EBITDA 2024 2023 2022 Net income/(loss) attributable to PRA Group, Inc. $ 70,601 $ (83,477) $ 117,147 Adjustments: Income tax expense/(benefit) 21,032 (16,133) 36,787 Foreign exchange (gain)/loss 9 (289) (985) Interest expense, net 229,267 181,724 130,677 Other expense (1) 851 1,944 1,325 Depreciation and amortization 10,792 13,376 15,243 Impairment of real estate — 5,239 — Net income attributable to noncontrolling interests 17,972 16,723 851 Recoveries collected and applied to Finance receivables, net less Changes in expected recoveries 787,028 887,891 805,942 Adjusted EBITDA $ 1,137,552 $ 1,006,998 $ 1,106,987 (1) Other expense reflects non-operating activities.
All other acquisitions of portfolios of accounts are included in our Core portfolio tables as represented below. Once an account is initially segregated, it is not later transferred from an Insolvency pool to a Core pool or vice versa and the account continues to be accounted for as originally segregated regardless of any future changes in operational status.
Portfolios of accounts that were in an insolvency status at the time of acquisition are represented under Insolvency headings in the tables below. All other acquisitions of portfolios of accounts are included under Core headings. Once an account is initially segregated, it is not later transferred from an Insolvency pool to a Core pool, or vice versa.
As of December 31, 2023, we had $20.4 million of derivative liabilities, $8.8 million of which mature within the next 12 months. The remaining $11.6 million matures in 2028. For more information, see Note 8 to our Consolidated Financial Statements included in Item 8 of this Form 10-K. Investments.
As of December 31, 2024, we had $36.4 million in lease liabilities, of which $9.2 million is due within the next 12 months. For additional information, refer to Note 5 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.
This was mainly due to changes in the mix of income from different taxing jurisdictions. 26 Noncontrolling interests In Brazil, we purchase nonperforming loan portfolios through investment funds in which we hold a majority interest.
The increase was primarily due to higher income before taxes in 2024. The effective tax rate decreased marginally and was impacted by changes in the mix of income from different taxing jurisdictions and the timing and amount of discrete items. Noncontrolling interests In Brazil, we purchase nonperforming loan portfolios through investment funds in which we hold a majority interest.
However, we estimated that our Debt Buying and Collection ("DBC") reporting unit’s fair value exceeded its carrying value by 6%, and therefore, the reporting unit may be at-risk for future impairment if our cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including adverse changes in the debt sales market that impact our estimated purchasing volumes and purchase price multiples, and/or an increase in the discount rate.
Under the prior year impairment test, the excess of our DBC reporting unit’s fair value over its carrying value was approximately 6.0%, and although the excess increased to approximately 11.0% under our most recent test, if our cash flow projections are not met or if market factors utilized in the impairment test were to deteriorate, including adverse changes in the debt sales market that impact our estimated purchasing volumes and purchase price multiples, an increase in the discount rate, or a sustained decline in our stock price, the reporting unit may be at-risk for future impairment. 37 We estimate the fair value of the DBC reporting unit based on the income approach, and as an assessment for reasonableness, also apply the market approach.
As of December 31, 2023, we have forward flow agreements in place with an estimated purchase price of approximately $550.0 million over the next 12 months. This total is comprised of $400.0 million for the Americas and Australia and $150.0 million for Europe.
As of December 31, 2024, we had forward flow agreements in place with an estimated purchase price of approximately $498.9 million over the next 12 months. This total can vary significantly based on the remaining terms and renewal dates of the agreements and is comprised of $403.1 million for the Americas and Australia and $95.8 million for Europe.
Some of our significant accounting policies require that we use estimates, assumptions and judgments that affect the reported amounts of revenues, expenses, assets and liabilities. For a discussion of our significant accounting policies, refer to Note 1 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.
Critical Accounting Estimates Our Consolidated Financial Statements have been prepared in accordance with GAAP. Some of our significant accounting policies require that we use estimates, assumptions and judgments that affect the reported amounts of revenues, expenses, assets and liabilities.
Certain types of accounts have lower collection costs, and we generally pay more for these types of accounts, resulting in a lower purchase price multiple but similar net income margins when compared with other portfolio purchases. Within a given portfolio type, when lower purchase price multiples are the result of more competitive pricing, this generally leads to lower profitability.
Certain types of accounts, such as Insolvency accounts, have lower collection costs, and we generally pay more for those types of accounts, which results in lower purchase price multiples but similar net income margins compared to other portfolio purchases.
Also on February 25, 2022, our Board of Directors approved a new share repurchase program under which we are authorized to repurchase up to $150.0 million of our outstanding common stock. Repurchases are subject to restrictive covenants contained in 37 our credit facilities and indentures that govern our Senior Notes.
For additional information about our credit facilities, term loan and senior notes, refer to Note 7 to our Consolidated Financial Statements included in Item 8 of this Form 10-K. Share repurchases On February 25, 2022, our Board of Directors approved a share repurchase program under which we are authorized to repurchase up to $150.0 million of our outstanding common stock.
We may also enter into new or renewed forward flow commitments and/or close on spot purchase transactions in addition to the current forward flow agreements. Borrowings.
Accordingly, amounts purchased under these agreements may vary significantly. In addition to these agreements, we may also enter into new or renewed forward flow commitments and/or close on spot purchase transactions. Borrowings As of December 31, 2024, we had $3.3 billion in outstanding borr owings.
Impairment of Real Estate Impairment of real estate was $5.2 million in 2023 due to an impairment charge associated with our decision to cease call center operations at one of our owned regional offices in the U.S., which is being marketed for sale or lease. No impairment was recorded in 2022.
Depreciation, amortization and impairment Depreciation, amortization and impairment decreased $7.8 million, or 42.0%, due mainly to a $5.2 million impairment charge taken in 2023 associated with our decision to cease call center operations at one of our owned regional offices in the U.S.
Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our results of operations and financial position. For further information regarding our uncertain tax positions, refer to Note 13 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.
Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our results of operations and financial position.
In addition, the accounts are segregated into geographical regions based upon where the account was acquired. Ultimately, accounts are aggregated into annual pools based on portfolio segment, geography and year of acquisition. Portfolios of accounts that were in an insolvency status at the time of acquisition are represented in the Insolvency tables below.
In addition, the accounts are segregated into geographical regions based upon where the account was acquired and, as applicable, foreign currency exchange rates are fixed for purposes of comparability in future periods. Ultimately, accounts are aggregated into annual pools based on portfolio type, geography and year of acquisition.
Legal collection costs primarily consist of costs paid to courts where a lawsuit is filed for the purpose of attempting to collect on an account. The increase primarily reflects higher volumes of lawsuits filed in the U.S. during 2023.
The costs associated with an increase in headcount to service our recent purchasing volumes were partially offset by leveraging third parties and offshore call centers to reduce collection costs. Legal collection costs Legal collection costs consist primarily of costs paid to courts where a lawsuit is filed for the purpose of attempting to collect on an account.
For more information, see Note 7 to our Consolidated Financial Statements included in Item 8 of this Form 10-K. Share Repurchases. On February 25, 2022, we completed our $230.0 million share repurchase program.
For additional information, refer to Note 8 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.
Cash Flow Analysis The following table summarizes our cash flow activity for the years ended December 31, 2023 and 2022 (amounts in thousands): 2023 2022 Change Net cash provided by/(used in): Operating activities $ (97,535) $ 21,592 $ (119,127) Investing activities (234,860) 120,453 (355,313) Financing activities 355,300 (121,342) 476,642 Effect of exchange rates on cash 6,029 (25,017) 31,046 Net decrease in cash and cash equivalents $ 28,934 $ (4,314) $ 33,248 Operating Activities Net cash provided by/(used in) operating activities mainly reflects cash collections recognized as revenue and cash paid for operating expenses, interest and income taxes.
Investments As of December 31, 2024, we held $55.8 million in Swedish treasury securities to meet the liquidity requirements of the Swedish Financial Services Authority for our banking subsidiary, AK Nordic AB. 35 Cash flow analysis The following table summarizes our cash flow activity for the years ended December 31, 2024 and 2023 (amounts in thousands): 2024 2023 Change Net cash provided by/(used in): Operating activities $ (94,594) $ (97,535) $ 2,941 Investing activities (382,470) (234,860) (147,610) Financing activities 490,837 355,300 135,537 Effect of exchange rates on cash (20,034) 6,029 (26,063) Net increase/(decrease) in cash and cash equivalents $ (6,261) $ 28,934 $ (35,195) Operating activities Net cash used in operating activities mainly reflects the portion of our cash collections recognized as revenue and cash paid for operating expenses, interest and income taxes.
Interest expense, net f or the years indicated was as follows (amounts in thousands): 2023 2022 $ Change % Change Interest on revolving credit facilities and term loan, and unused line fees $ 110,684 $ 71,108 $ 39,576 55.7 % Interest on senior notes 69,728 39,625 30,103 76.0 Interest on convertible notes 5,032 12,075 (7,043) (58.3) Amortization of loan fees and other loan costs 9,223 10,097 (874) (8.7) Interest income (12,943) (2,228) (10,715) 480.9 Interest expense, net $ 181,724 $ 130,677 $ 51,047 39.1 % Income Tax Expense/(Benefit) Income tax benefit was $16.1 million in 2023 compared to income tax expense of $36.8 million in 2022.
Interest expense, net Interest expense, net f or 2024 and 2023 was as follows (amounts in thousands): 2024 2023 $ Change % Change Interest on revolving credit facilities and term loan, and unused line fees $ 139,270 $ 110,684 $ 28,586 25.8 % Interest on senior notes 88,731 69,728 19,003 27.3 Interest on convertible notes — 5,032 (5,032) (100.0) Amortization of debt premium and issuance costs, net 10,567 9,223 1,344 14.6 Interest income (9,301) (12,943) 3,642 (28.1) Interest expense, net $ 229,267 $ 181,724 $ 47,543 26.2 % Interest expense, net was $229.3 million in 2024, an increase of $47.6 million, or 26.2%, compared to $181.7 million in 2023.
Beyond 12 months, as of December 31, 2023, principal payments on our debt are due from between one and six years. Many of our financing arrangements include covenants with which we must comply, and as of December 31, 2023, we determined that we were in compliance with these covenants.
Many of our financing arrangements include covenants with which we must comply, and as of December 31, 2024, we were in compliance with these covenants. On May 20, 2024, we issued $400.0 million in aggregate principal amount of our 2030 Notes.
These agreements typically have terms ranging from three to 12 months and establish purchase prices and specific criteria for the accounts to be purchased.
We may also from time-to-time repurchase senior notes in the open market or otherwise. Forward flows We enter into forward flow agreements for the purchase of nonperforming loans. These agreements typically have terms ranging from six to 12 months, or they can be open-ended, and establish purchase prices and specific criteria for the accounts to be purchased.
For more information, see Note 5 to our Consolidated Financial Statements included in Item 8 of this Form 10-K. Derivatives . We enter into d erivative financial instruments to reduce our exposure to fluctuations in interest rates on variable rate debt and foreign currency exchange rates.
Derivatives We enter into d erivative financial instruments to reduce our exposure to fluctuations in interest rates on variable rate debt and foreign currency exchange rates. As of December 31, 2024, we had $5.0 million of derivative liabilities, of which $0.2 million matures within the next 12 months. The remaining $4.8 million matures in 2028.
Recent Accounting Pronouncements For a summary of recent accounting pronouncements and the anticipated effects on our Consolidated Financial Statements, see Note 1 to our Consolidated Financial Statements included in Item 8 of this Form 10-K. Critical Accounting Estimates Our Consolidated Financial Statements have been prepared in accordance with GAAP.
For discussion of our significant accounting policies, refer to Note 1 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.
Additionally, and primarily impacting the first quarter of 2023, the tax refund season was softer than we had anticipated, with U.S. collections lower than our expectations, which then prompted a reduction in ERC. This resulted in a negative $30.7 million net present value adjustment to our U.S. Core portfolio, with nearly half of this adjustment related to the 2021 U.S.
Core pools and certain pools in Europe. In 2023, the net negative adjustment was largely due to the impact of a softer than expected tax refund season in the U.S., with nearly half of the negative adjustment related to our 2021 U.S. Core pool.
Year Ended December 31, 2022 Compared To Year Ended December 31, 2021 Refer to Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our 2022 Form 10-K for a discussion of our 2022 results compared to our 2021 results. 27 Supplemental Performance Data Finance Receivables Portfolio Performance We purchase portfolios of nonperforming loans from a variety of credit originators or acquire portfolios through strategic acquisitions and segregate them into two main portfolio segments: Core or Insolvency, based on the status of the account upon acquisition.
Purchasing We purchase portfolios of nonperforming loans from a variety of creditors, or acquire portfolios through strategic acquisitions, and segregate them into our Core or Insolvency portfolios, based on the status of the account upon acquisition.
Under our European credit facility, our interest-bearing deposit funding is limited to SEK 1.2 billion (the equivalent of approximately $118.9 million as of December 31, 2023), and as of December 31, 2023, our interest-bearing deposits were $115.6 million.
(2) Subject to borrowing base and debt covenants, including advance rates ranging from 35-55% of applicable ERC. Interest-bearing deposits As of December 31, 2024, interest-bearing deposits totaled $163.4 million. Under our European revolving credit facility, our interest-bearing deposit funding is limited to SEK 2.2 billion (the equivalent of $199.0 million U.S. dollars as of December 31, 2024).
Net cash used in operating activities was $97.5 million in 2023 compared to net cash provided by operating activities of $21.6 million in 2022.
Net cash used in operating activities was $94.6 million in 2024 compared to $97.5 million in 2023. The change was primarily due to higher cash collections recognized as income, which was offset by higher cash paid for interest.
As of December 31, 2023, we had $67.7 million remaining for share repurchases under the program. Leases. Our leases have remaining lease terms from one to 12 years. As of December 31, 2023, we had $50.3 million in lease liabilities, of which $10.0 million is due within the next 12 months.
Repurchases are also subject to restrictive covenants contained in our credit facilities and the indentures that govern our senior notes. There were no repurchases during 2024, and as of December 31, 2024, we had $67.7 million remaining for share repurchases under the program. Leases Our leases have remaining terms from one to 11 years.
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. 31 Estimated Remaining Collections The following chart shows our ERC of $6.4 billion as of December 31, 2023 by geographical region (amounts in millions): The following chart shows our ERC by year and geography as of December 31, 2023 .
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. 33 Liquidity and Capital Resources We actively manage our liquidity to meet our business needs and financial obligations.
Our primary business is the purchase, collection and management of portfolios of nonperforming loans. For the year ended December 31, 2023 we had: • Total portfolio purchases of $1.2 billion. • Total cash collections of $1.7 billion. • Cash efficiency ratio of 58.0%. • Diluted earnings per share of $(2.13).
Our primary business is the purchase, collection and management of portfolios of nonperforming loans. 2024 highlights • Portfolio purchases of $1.4 billion, an increase of 22.0%. • ERC of $7.5 billion at year-end, an increase of 16.6%. • Cash collections of $1.9 billion, an increase of 12.5%. • Net income attributable to PRA Group, Inc. of $70.6 million. • Diluted earnings per share of $1.79.
However, our management uses certain non-GAAP financial measures, including adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), to evaluate our operating and financial performance as well as to set performance goals. We present Adjusted EBITDA because we consider it an important supplemental measure of operations and financial performance.
Adjusted EBITDA We present Adjusted EBITDA because we consider it an important supplemental measure of our operational and financial performance.
Legal collection fees represent contingent fees incurred for the cash collections generated by our third-party attorney network. Legal Collection Costs Legal collection costs were $89.1 million in 2023, an increase of $12.3 million, or 16.0%, compared to $76.8 million in 2022.
The increase of $35.7 million, or 40.0%, was primarily due to higher account volumes in both our U.S. and Europe legal collections channels. Legal collection fees Legal collection fees represent contingent fees incurred for cash collections generated by our third-party attorney network. The increase of $18.6 million, or 48.7%, mainly reflected higher external legal collections within our U.S.
Financing Activities Net cash provided by financing activities increased by $476.6 million in 2023, primarily driven by proceeds from the issuance of our 2028 Notes in aggregate principal amount of $400.0 million, a $326.0 million increase from net payments on our lines of credit in 2022 to net draws on our lines of credit in 2023 and a decrease in repurchases of our common stock of $111.4 million.
Financing activities Net cash provided by financing activities increased $135.5 million in 2024, primarily driven by $202.4 million in net proceeds from issuances and repayments of senior notes, and in 2023, the retirement of our convertible senior notes, a $61.3 million increase in interest-bearing deposits and a $35.1 million increase in net proceeds obtained under our term loan, offset by a decrease of $153.7 million in net proceeds from our lines of credit.
Unless otherwise specified, references to 2023, 2022 and 2021 are for the years ended December 31, 2023, December 31, 2022 and December 31, 2021, respectively. 23 Results of Operations The following table sets forth Consolidated Income Statement amounts as a percentage of total revenues for the periods indicated (dollars in thousands).
Unless otherwise specified, references to 2024, 2023 and 2022 are for the years ended December 31, 2024, December 31, 2023 and December 31, 2022, respectively. Executive Summary We are a global financial services company with operations in the Americas, Europe and Australia.
Agency Fees Agency fees were $74.7 million in 2023, an increase of $10.9 million, or 17.1%, compared to $63.8 million in 2022. Agency fees primarily represent third-party collection fees. The increase was mainly due to the increase in cash collections in Brazil.
Core portfolio. 24 Agency fees Agency fees primarily represent third-party collection fees. The increase of $8.6 million, or 11.6%, was primarily due to higher collection fees in Brazil. Communication Communication expense relates mainly to correspondence, network and calling costs associated with our collection efforts.
The change was primarily driven by lower cash collections recognized as income, higher cash paid for interest and the impact of unrealized foreign currency transaction (gains)/losses. 38 Investing Activities Net cash used in investing activities increased by $355.3 million in 2023, primarily driven by an increase of $316.0 million in purchases of nonperforming loan portfolios and a decrease of $57.8 million in recoveries applied to the negative allowance.
Investing activities Net cash used in investing activities increased $147.6 million in 2024, primarily driven by an increase of $246.8 million in purchases of nonperforming loan portfolios, offset by an increase of $110.9 million in recoveries collected and applied to Finance receivables, net.
The portion of our Net income/(loss) attributable to noncontrolling interests is reflected in Adjustment of net income attributable to noncontrolling interests, which was $16.7 million in 2023 compared to $0.9 million in 2022.
The portion of our Net income/(loss) attributable to noncontrolling interests is reflected in Adjustment for net income attributable to noncontrolling interests in our Consolidated Income Statements, which totaled $18.0 million in 2024 compared to $16.7 million in 2023. 25 Balance sheet Finance receivables, net Finance receivables, net were $4.1 billion as of December 31, 2024, an increase of $484.1 million, or 13.2%, compared to $3.7 billion as of December 31, 2023, driven largely by portfolio purchases of $1.4 billion and changes in expected recoveries of $240.9 million, partially offset by recoveries collected and applied to Finance receivables, net of $1.0 billion.
The decrease was primarily due to the timing of settlements in CCB. Operating Expenses Total operating expenses were $702.1 million in 2023, an increase of $21.4 million, or 3.1%, compared to $680.7 million in 2022.
The increase of $3.0 million, or 7.4%, was primarily due to an expansion in account volumes associated with higher levels of portfolio purchases.
Interest income increased $10.7 million primarily due to the cash we received and invested from the issuance of our 2028 Notes in the first quarter of 2023, substantially all of the net proceeds of which we used to retire our Convertible Senior Notes due 2023 ("2023 Notes") in the second quarter of 2023, in addition to higher interest rates earned on our investments and bank account balances.
On June 1, 2023, we used s ubstantially all of the net proceeds from the issuance of our Senior Notes due 2028 to retire our 3.50% Convertible Senior Notes due 2023 at their maturity.
Due to all of the factors described above, readers should be cautious when making comparisons of purchase price multiples among periods and between types of categories of portfolio segments and related geographies. 28 Purchase Price Multiples as of December 31, 2023 Amounts in thousands Purchase Period Purchase Price (2)(3) Total Estimated Collections (4) Estimated Remaining Collections (5) Current Purchase Price Multiple Original Purchase Price Multiple (6) Americas and Australia Core 1996-2013 $ 1,932,722 $ 5,725,248 $ 52,146 296% 233% 2014 404,117 884,911 27,461 219% 204% 2015 443,114 899,839 35,758 203% 205% 2016 455,767 1,078,122 65,679 237% 201% 2017 532,851 1,200,599 105,245 225% 193% 2018 653,975 1,482,269 152,931 227% 202% 2019 581,476 1,294,462 182,487 223% 206% 2020 435,668 951,929 216,016 218% 213% 2021 435,846 749,966 362,191 172% 191% 2022 406,082 708,070 460,475 174% 179% 2023 622,583 1,227,985 1,118,683 197% 197% Subtotal 6,904,201 16,203,400 2,779,072 Americas Insolvency 1996-2013 1,266,056 2,502,614 91 198% 159% 2014 148,420 218,811 98 147% 124% 2015 63,170 88,009 73 139% 125% 2016 91,442 117,987 256 129% 123% 2017 275,257 356,839 1,121 130% 125% 2018 97,879 135,530 1,939 138% 127% 2019 123,077 168,658 18,261 137% 128% 2020 62,130 90,690 28,225 146% 136% 2021 55,187 73,803 33,804 134% 136% 2022 33,442 46,811 34,461 140% 139% 2023 91,282 122,780 113,508 135% 135% Subtotal 2,307,342 3,922,532 231,837 Total Americas and Australia 9,211,543 20,125,932 3,010,909 Europe Core 2012-2013 40,742 71,982 1 177% 153% 2014 (1) 773,811 2,465,052 394,133 319% 208% 2015 411,340 743,591 141,158 181% 160% 2016 333,090 567,702 162,940 170% 167% 2017 252,174 363,813 107,971 144% 144% 2018 341,775 544,970 194,808 159% 148% 2019 518,610 838,326 353,219 162% 152% 2020 324,119 561,192 262,884 173% 172% 2021 412,411 695,544 428,779 169% 170% 2022 359,447 582,380 489,333 162% 162% 2023 410,593 692,580 640,924 169% 169% Subtotal 4,178,112 8,127,132 3,176,150 Europe Insolvency 2014 (1) 10,876 18,882 — 174% 129% 2015 18,973 29,301 29 154% 139% 2016 39,338 57,673 932 147% 130% 2017 39,235 51,995 2,020 133% 128% 2018 44,908 52,658 4,862 117% 123% 2019 77,218 112,260 20,970 145% 130% 2020 105,440 156,670 42,614 149% 129% 2021 53,230 72,736 33,441 137% 134% 2022 44,604 60,935 46,620 137% 137% 2023 46,558 64,411 60,029 138% 138% Subtotal 480,380 677,521 211,517 Total Europe 4,658,492 8,804,653 3,387,667 Total PRA Group $ 13,870,035 $ 28,930,585 $ 6,398,576 (1) Includes finance receivables portfolios that were acquired through the acquisition of Aktiv Kapital AS in 2014.
(4) Other accounts are 480 days or more past due, charged-off and have previously been worked by three or more contingent fee servicers. 30 Purchase Price Multiples as of December 31, 2024 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 1996-2014 $ 2,336,839 $ 6,666,570 $ 86,032 285% 228% 2015 443,114 927,658 46,128 209% 205% 2016 455,767 1,098,337 57,944 241% 201% 2017 532,851 1,224,240 88,789 230% 193% 2018 653,975 1,541,030 132,482 236% 202% 2019 581,476 1,318,780 123,568 227% 206% 2020 435,668 961,295 137,424 221% 213% 2021 435,846 736,453 237,332 169% 191% 2022 406,082 711,153 299,192 175% 179% 2023 622,583 1,222,214 800,016 196% 197% 2024 823,662 1,738,041 1,593,881 211% 211% Subtotal 7,727,863 18,145,771 3,602,788 Americas Insolvency 1996-2014 1,414,476 2,722,528 18 192% 155% 2015 63,170 88,142 14 140% 125% 2016 91,442 118,446 152 130% 123% 2017 275,257 359,007 773 130% 125% 2018 97,879 136,633 539 140% 127% 2019 123,077 167,054 1,987 136% 128% 2020 62,130 91,244 11,795 147% 136% 2021 55,187 74,384 19,064 135% 136% 2022 33,442 47,469 23,982 142% 139% 2023 91,282 119,560 83,007 131% 135% 2024 68,391 101,716 89,633 149% 149% Subtotal 2,375,733 4,026,183 230,964 Total Americas and Australia 10,103,596 22,171,954 3,833,752 Europe Core 2012-2014 814,553 2,669,874 379,300 328% 205% 2015 411,340 758,443 120,732 184% 160% 2016 333,090 583,379 140,510 175% 167% 2017 252,174 366,781 89,512 145% 144% 2018 341,775 561,190 168,307 164% 148% 2019 518,610 856,928 290,123 165% 152% 2020 324,119 581,309 219,274 179% 172% 2021 412,411 713,243 352,787 173% 170% 2022 359,447 587,410 398,171 163% 162% 2023 410,593 693,410 510,556 169% 169% 2024 451,786 815,403 770,745 180% 180% Subtotal 4,629,898 9,187,370 3,440,017 Europe Insolvency 2014 10,876 19,087 — 175% 129% 2015 18,973 29,488 — 155% 139% 2016 39,338 58,074 517 148% 130% 2017 39,235 52,129 571 133% 128% 2018 44,908 52,994 1,685 118% 123% 2019 77,218 114,028 9,631 148% 130% 2020 105,440 159,773 19,710 152% 129% 2021 53,230 75,089 19,991 141% 134% 2022 44,604 63,240 33,069 142% 137% 2023 46,558 65,196 47,203 140% 138% 2024 43,459 63,717 54,480 147% 147% Subtotal 523,839 752,815 186,857 Total Europe 5,153,737 9,940,185 3,626,874 Total PRA Group $ 15,257,333 $ 32,112,139 $ 7,460,626 (1) Includes the acquisition date finance receivables portfolios that were acquired through our business acquisitions.
The change in income tax expense/(benefit) was primarily due to the loss before income taxes in 2023 compared to income before income taxes in 2022. In 2023, our effective tax benefit rate was 19.5%, compared to an effective tax rate of 23.8% in 2022.
Income tax expense/(benefit) Income tax expense/(benefit) and our effective tax rate for 2024 and 2023 were as follows (amounts in thousands): 2024 2023 $ Change % Change Income tax expense/(benefit) $ 21,032 $ (16,133) $ 37,165 230.4 % Effective tax rate 19.2 % 19.5 % Income tax expense was $21.0 million in 2024, an increase of $37.1 million, or 230.4%, compared to an income tax benefit of $16.1 million in 2023.
Compensation and Employee Services Compensation and employee service expenses were $288.8 million in 2023, an increase of $3.3 million, or 1.2%, compared to $285.5 million in 2022.
Borrowings Borrowings were $3.3 billion as of December 31, 2024, an increase of $412.4 million, or 14.1%, compared to $2.9 billion as of December 31, 2023.
Of our $2.9 billion in borrowings as of December 31, 2023, estimated interest, unused fees and principal payments for the next 12 months ar e $202.4 million, of which $12.5 million r elates to principal on the term loan under our North American Credit Agreement.
The estimated interest, unused fees and principal payments for the next 12 months are $236.0 million, of which $10.0 million rel ates to principal on our term loan. After 12 months, principal payments on our debt are due from betwee n one and five year s.
Removed
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Objective This discussion is from the perspective of management and is intended to help the reader understand our financial condition, cash flows and other changes in financial condition and results of operations.
Added
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with our audited financial statements and accompanying notes thereto included in Item 8 of this Form 10-K (see Frequently Used Terms at the end of this Item 7 for certain definitions that may be used throughout this Form 10-K).
Removed
It should be read in conjunction with the financial statements and notes thereto included in Item 8 of this Form 10-K. Executive Overview We are a global financial and business services company with operations based primarily in the Americas and Europe, and to a lesser extent, Australia.
Added
The past year was one of the most transformational years in our nearly three-decade long history.
Removed
As of December 31, 2023, we had estimated remaining collections ("ERC") of $6.4 billion. In the U.S., in 2023, portfolio supply and pricing dynamics improved, and we expect them to remain healthy in 2024.
Added
In 2024, we expanded our senior leadership team, further differentiated our European business, strengthened our capital structure and delivered on our cash-generating and operational initiatives in the U.S, where improvements in our legal collections process helped drive 2024 U.S. legal collections of $376.0 million, an increase of 42.4% compared to the prior year.
Removed
There is a positive correlation between industry credit card charge-off rates and our U.S. portfolio purchases, and in 2023, we benefited from significant growth in portfolio supply within the U.S. Additionally, we are evaluating and implementing a number of strategic and operational initiatives in our U.S. business designed to improve profitability by increasing cash collections while reducing our marginal costs.

… 95 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+0 added−0 removed6 unchanged
Biggest changeTo reduce the exposure to changes in the market rate of interest, we have entered into interest rate derivative contracts for a portion of our borrowings under our floating rate financing arrangements. The terms of the interest rate derivative contracts require us to receive a variable interest rate and pay a fixed interest rate.
Biggest changeAs such, our consolidated financial results are subject to fluctuations due to changes in market interest rates. To reduce our exposure to changes in the market rate of interest, we have entered into interest rate derivative contracts to hedge a portion of our borrowings under floating rate financing arrangements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Our business is subject to various financial risks, including market, currency, interest rate, credit, liquidity and cash flow risk. We use various strategies, including derivative financial instruments, to manage these risks; however, they may still impact our Consolidated Financial Statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Our business is subject to various financial risks, including market, currency, interest rate, credit, liquidity and cash flow risk. We use various strategies, including derivative financial instruments, to manage these risks; however, they can still impact our Consolidated Financial Statements.
In the event adjustments are required to our liability composition by currency we may, from time to time, execute re-balancing foreign exchange contracts to more closely align funding and portfolio acquisitions by currency. 41
In the event adjustments are required to our liability composition by currency, we may, from time-to-time, execute re-balancing foreign exchange contracts to more closely align funding and portfolio acquisitions by currency. 40
Additionally, our reported financial results could change from period to period due solely to fluctuations between currencies. Foreign currency gains and losses are primarily the result of the re-measurement of transactions in other currencies into an entity's functional currency. Foreign currency gains and losses are included as a component of Other income and (expense) in our Consolidated Income Statements.
Additionally, our reported financial results could change from period-to-period due solely to fluctuations between currencies. Foreign currency gains and losses are primarily the result of the remeasurement of transactions in other currencies into an entity's functional currency. Foreign currency gains and losses are included as a component of Other income and (expense) in our Consolidated Income Statements.
In 2023, we generated $444.3 million of revenues from operations outside the U.S. and used multiple functional currencies. Weakness in one particular currency might be offset by strength in other currencies over time. Fluctuations in foreign currencies could cause us to incur foreign currency exchange gains and losses, and could adversely affect our comprehensive income and stockholders' equity.
Our subsidiaries use multiple functional currencies, and weakness in one particular currency might be offset by strength in other currencies over time. In 2024, our revenues from operations outside the U.S. were $520.6 million. Fluctuations in foreign currencies could cause us to incur foreign currency gains and losses, and could affect our comprehensive income and stockholders' equity.
Based on our debt structure as of December 31, 2023, assuming a 50 basis point decrease in interest rates, interest expense over the following 12 months would decrease by an estimated $5.7 million. Assuming a 50 basis point increase in interest rates, interest expense over the following 12 months would increase by an estimated $5.7 million.
Borrowings on our variable rate credit facilities were $2.0 billion as of December 31, 2024, and based on our debt structure, assuming a 50 basis point decrease/increase in interest rates, interest expense over the following 12 months would decrease/increase by an estimated $7.0 million. Currency Exchange Risk We operate internationally and enter into transactions denominated in various foreign currencies.
Considering these fixed rate borrowings and interest rate hedges on our variable rate debt, with maturities that range from one month to five years, as of December 31, 2023, 63% of our total debt was either fixed rate or converted to a fixed rate. Currency Exchange Risk We operate internationally and enter into transactions denominated in various foreign currencies.
Considering these fixed rate borrowings and the interest rate hedges on our variable rate debt, with maturities ranging from five months to five years, as of December 31, 2024, 60% of our total debt was either fixed rate or converted to a fixed rate.
As such, our consolidated financial results are subject to fluctuations due to changes in market interest rates. We assess this interest rate risk by estimating the increase or decrease in interest expense that would occur due to a change in short-term interest rates. The borrowings on our variable rate credit facilities were $1.9 billion as of December 31, 2023.
We assess interest rate risk by estimating the increase or decrease in interest expense that would occur due to a change in short-term interest rates.
Of our $2.9 billion in total borrowings as of December 31, 2023, $1.0 billion was fixed rate debt.
Under the terms of the interest rate derivatives, we receive a variable interest rate and pay a fixed interest rate. Of our $3.3 billion in total borrowings as of December 31, 2024, $1.3 billion was fixed rate debt.

Other PRAA 10-K year-over-year comparisons