PRA Group, Inc.

Good afternoon and welcome to the PRA Group's second quarter 2023 conference call. All participants will be in a listen-only mode. Should you need assistance, 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 a touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Najim Mossaman, Vice President of Investor Relations for PRA Group. Please go ahead.

Najim Mossaman Thank you, operator. 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 Q2 2023 and Q2 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 June 30th, 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 Vic Atal, our President and Chief Executive Officer.

Thank you, Najeeb, and thank you, everyone, for joining us this evening. It has been a pleasure these past few months connecting with many of you at the various conferences and meetings we attended, and I have been looking forward to sharing an update on our recent performance and business outlook. Having completed the first 100 days of my tenure, it is appropriate that I spend a few minutes reflecting on the perspective I have gathered during this period prior to discussing our financial results for the quarter. My remarks are grouped into five broad themes. First, our people. It may be viewed as a cliche to have an incoming CEO extol the virtues of his team, but I do so nonetheless and in full sincerity based on my assessment of their capabilities and strengths. Most of you are familiar with our longstanding CFO, Pete Graham, and the team that he leads. However, our talent extends beyond PEAT to encompass individuals in every function and geography and across all levels of the organization. I believe that their intellect, domain knowledge, and pride in their work are second to none, and I have full confidence in their ability to drive PRA's success. Next, our European business. This past month, I visited our European operations and not only had the opportunity to connect with our team, but also engage with banks and top sellers in meaningful conversations about our business. Europe now represents over 50% of our ERC. And while the UK remains our largest market presence in the region, we have established broad diversification across the continent. Over the years, we have invested considerable effort to build relationships with sellers and other stakeholders, along with a focus on enhancing core capabilities such as digital. These efforts have paid off with broad investment opportunity across the region and a compelling track record on revenue growth and expense efficiency. Furthermore, we exercised significant restraint in recent years as pricing became irrational in certain markets. We believe the diversification provided through our European business is a key differentiator for us versus most industry peers, and we will be looking to build on the success while maintaining operational and pricing discipline. Third, the growing portfolio supply. Consistent with the messaging from consumer lenders and credit card industry statistics, we are seeing increased inventory being made available for sale in the U.S. Global portfolio purchases are up 47% for the first six months of 2023 versus the year-ago period. While we continue to anticipate seeing increased supply, we don't expect this level of year-over-year growth to sustain. Of note, within the U.S., we are not only benefiting from the increases in market supply, but are also anticipating opportunities to extend the set of seller relationships to supplement baseline trends. In contrast to recent trends, pricing is also improving across all of our markets as we renew forward flows and enter into spot transactions. We believe we have now entered an inflection point in the cycle that is translating to portfolios being purchased at higher returns. Fourth, our US business. It is undeniable that it is not performing to our expectations. Notwithstanding the references we made in previous quarters of our collection shortfalls on recent vintages, our track record on underwriting purchases extends back over two decades and is excellent. We have, however, underinvested in the processes and capabilities required to optimize cash generation from the portfolios we own. Over time, this gap has expanded, and coupled with the lower volume of available supply in recent years, contributed to the reduced levels of profitability in this portion of our overall business. Optimizing our U.S. business is therefore key to our success, both in the long and the short term. I shared a slide similar to this at the William Blair Conference earlier this summer, and I now wanted to briefly provide an update on this important initiative. It is essential that we generate more cash from our existing portfolio. To accomplish this, we are examining our end-to-end core processes with the goal of enhancing efficiencies, driving revenues, and optimizing results. This work is already underway, and as examples, we are in advanced discussions with select third parties to expand our outsourcing and offshoring capabilities. We are also beginning to rationalize the capacity of our U.S. collection sites with the announced closure of one of our sites last month. These developments in and of themselves are not yet at a scale to impact the business results, but I mention them here as an indication of the speed, decisiveness, and open-ended approach we are taking to address the underlying issues. In parallel, we are optimizing a range of customer interactions and revenue-generating activities including legal processes. This brings me to the fifth and final theme of my opening remarks, which is creating shareholder value. It is important to note that while the changes and initiatives referred to above are being implemented with urgency, we anticipate that it will take at least several quarters for their effect to flow through and influence our results. Ultimately, we believe the steps we are taking today are laying the foundation for a stronger, profitable, and higher performing PRA. And with that, I'd now like to turn things over to Pete to go through investments and the financial results in more detail.