=PRA Group (PRAA) reported earnings on Mon 7 Nov 2016 (a/h)

PRA Group Inc.’s third-quarter 2016 earnings per share of 68 cents missed the Zacks Consensus Estimate by 11.7%. The bottom line also declined 20% from the year-ago quarter due to lower revenues. Adjusted net income was $31.7 million, down 23.4% year over year.


Operational Update

PRA Group’s total revenue was $222 million, down 3% year over year. Revenues also missed the Zacks Consensus Estimate by 3.5%. The downside may be attributed to the weakness in two non-accrual portfolios in Italy. These portfolios affected cash collections of $6.1 million to principal amortization during this seasonally weak period.

Additionally, PRA Group’s revenues from finance receivables income fell 3% to $202 million. Fee income of $17.6 million was down 1.1%, while other revenues plunged roughly 50% to $1.7 million. Cash collections in the third quarter were $371.7 million, down 2.4% year over year.

Total operating expenses decreased 12% year over year to $154.4 million. This was mainly due to lower legal collection fees, communication costs and other operating expenses. Other operating expenses declined 75% year over year, thereby lowering overall expenses. However, adjusted operating expenses increased 7% year over year.

Financial Update

As of Sep 30, 2016, PRA Group had total assets worth $3.3 billion, up 9% from year-end 2015. The company exited the quarter with total equity of $988 million, up 17.6% from Dec 31, 2015.

As of Sep 30, 2016, cash and cash equivalents were $91.8 million, up 29.6% from year-end 2015. In the reported quarter, borrowings increased 5.8% to $1.8 billion.

Annualized return on average equity was 14.0% in the quarter under review.