PRA Group, Inc.

Good evening, and welcome to PRA Group's first quarter 2023 conference call. All participants will be in a listen-only mode for the duration of the call, and should you need any assistance during that time, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please also note that this event is being recorded today. I would now like to turn the call over to Mr. Najeeb Mostamand, Vice President, Investor Relations for PRA Group. Please go ahead, sir.

Thank you. Good evening, everyone, and thank you for joining us. With me today are Vik Atal, President and Chief Executive Officer, and Pete Graham, Executive Vice President and Chief Financial Officer. We will make forward-looking statements during the call which are based on management's current beliefs, projections, assumptions, and expectations. We assume no obligation to revise or update these statements. We caution listeners that these forward-looking statements are subject to risks, uncertainties, assumptions, and other factors that could cause our actual results to differ materially from our expectations. Please refer to the earnings press release and our SEC filings for a detailed discussion of these factors. The earnings release, the slide presentation that we will use during today's call, and our SEC filings can all be found in the investor relations section of our website at www.pragroup.com. Additionally, a replay of this call will be available shortly after its conclusion. and the replay dial-in information is included in the earnings press release. All comparisons mentioned today will be between Q1 2023 and Q1 2022, unless otherwise noted, and our America's results include Australia. During our call, we will discuss adjusted EBITDA and debt to adjusted EBITDA for the 12 months ended March 31st, 2023 and December 31st, 2022. Please refer to today's earnings release and the appendix of the slide presentation used during this call for a reconciliation of the most directly comparable U.S. GAAP financial measures to these non-GAAP financial measures. And with that, I'd now like to turn the call over to Vik Atal, our President and Chief Executive Officer.

Thank you, Najeeb, and thank you, everyone, for joining us this evening. It's a pleasure to be hosting my first earnings conference call as PRA's new president and chief executive officer. Over the past 27 years, Steve Fredrickson and Kevin Stevenson led PRA from its inception to becoming one of the leaders in our industry. I step into their shoes with humility and deep respect for all that they have accomplished, and I extend my deepest gratitude for the wisdom and insights they have shared to prepare me for this journey. I also want to thank everyone at the company for welcoming and supporting me as I get settled into this new role on the other side of the boardroom table. It has been fantastic to engage with so many of our leaders and employees across the globe over the past few weeks. While these are still early days, I am developing a deeper understanding of the business as it stands today, and crucially, I am gathering more insights into areas of opportunity and growth. My reviews and assessments continue to support the perspectives I had as a board member that PRA's business is on a solid foundation. We enjoy an outstanding credibility and reputation among our customers, investors, legislators, and other key stakeholders. We possess one of the industry's strongest balance sheets, which gives us significant flexibility to capitalize on our global presence and invest in geographies where we already have significant market share as well as in newer markets. We have an integrated global business with relationships with key sellers around the world and operating expertise in all the markets we operate in. We operate with a disciplined, customer-centric focus that is supported by a strong compliance environment. And we have a strong base of deeply experienced employees, including our leaders, who excel in their respective roles across every function and geography. I have already had the opportunity to collaborate with team members throughout the entire organization, and I can state with confidence that our talent positions us well for future success. This is a great position for me to be in as an incoming CEO, and particularly important as we position ourselves for the anticipated increase in the supply of non-performing loan portfolios. While I believe that our strategy is on target and our future is bright, we do face near-term challenges in our US business due to a combination of the weaker economic environment reduce consumer liquidity, and the resulting impact on cash performance and margin. These realities are reflected in our quarter one financial results. Looking ahead, I am committed to driving performance and results across economic cycles, and we are working to address the aforementioned challenges with urgency and intensity. Already, we have implemented several initiatives such as a reduction in force mainly in our U.S. operations to right-size the organization. I have identified several near-term initiatives to drive additional efficiencies, including continuing to optimize our collection strategy mix with an expansion of our legal channel for accounts that score highly and are not responding in the call center. And we are also evaluating the possibility of outsourcing and leveraging third parties for certain activities we are now doing internally. As we continue to assess these and other opportunities, I want to reiterate that our overall strategy remains intact. This includes building and deepening our seller relationships to boost our purchasing opportunities and drive market share growth, managing day-to-day performance as efficiently as possible, which is especially important in this challenging market environment, fostering a high-performing workforce, strengthening our position as a recognized and trusted brand, and maintaining our capital allocation priorities, leading with our core focus of purchasing non-performing loans while seeking opportunities to expand our addressable market. I am encouraged by the work we are doing to further refine our strategic focus crystallize our business imperatives, and identify and address barriers to future success. And I look forward to PRA's next exciting chapter and to doing everything I can to help us create long-term value for our shareholders. With that, let's turn to some highlights for quarter one. I am not satisfied with the results we announced today, as quarter one presented several challenges particularly in our US business. As we look ahead, we are examining our end-to-end processes to ensure we optimize cash generation and drive efficiencies. Looking at our results for the quarter, we delivered total cash collections of $411 million globally. The 14% year-over-year decrease or 12% decrease on a constant currency adjusted basis was primarily driven by lower portfolio purchases in 2021 and 2022 due to the overall lower volumes of portfolios offered for sale. We also experienced a softer than expected tax season in the US this year, which impacted US collections. Pete will go over this and the rest of our financials in more detail, but I wanted to quickly highlight one of the positives this quarter, which was our strong purchasing. Quarterly portfolio purchases were $230 million, up 56% year over year. This increase in purchasing reinforces our expectations for a gradually improving supply environment, and we continue to see leading indicators foreshadowing additional volumes entering the market in 2023 and beyond, especially here in the U.S. Industry data shows active U.S. credit card balances continue to climb, setting new records since hitting a trough in early 2021. Balances in Q1 2023 exceeded their pre-pandemic levels by 14%. Credit card delinquency and charge-off rates have also risen from their troughs in 2021 to 2.3% and 2.6% respectively, exiting 2022. And we believe these metrics will continue to trend higher, especially in non-prime accounts. As supply builds, we will continue to practice prudent capital deployment. And with that, I'd now like to turn things over to Pete to go through the financial results in more detail.