PRA Group, Inc.

Good afternoon and welcome to the PRA Group's third quarter of 2023 conference call. All participants will be in 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 your 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 Musseman, Vice President of Investor Relations for PRA Group. Please go ahead.

All right. Thank you. Good evening, everyone, and thank you for joining us. With me today are Vic Atal, President and Chief Executive Officer and Rakesh Sehgal, 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 Q3 2023 and Q3 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 September 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 US GAAP financial measures to these non-GAAP financial measures. And with that, I'd now like to turn the call over to Vivek Atal, our President and Chief Executive Officer.

Thank you, Najeeb, and thank you for everyone for joining us this evening. In a few minutes, I will pass the baton to Rakesh to cover the financial section of our third quarter results. Prior to doing so, however, I feel that it is important for me to provide a link between the results we are reporting today which closely parallel our prior expectations and the confidence I have in the results we expect to realize over the next 12 to 18 months. We believe these future results will be driven by a combination of portfolio supply, pricing, operational effectiveness, and efficiency. First, portfolio supply and pricing. The chart on the upper left profiles our quarterly investments in Europe stretching back three years. As you can see, purchasing levels vary throughout the year. This is due to the mix of spot transactions versus forward flows in the region, but the overall picture indicates relatively stable averages continuing into this year. Despite the competition in Europe, we continue to benefit from our deep relationships with sellers to maintain investment levels and renew important forward flow agreements. Moving across to the chart on the right, the US picture shows the correlation between the overall industry credit card charge-off rates and our portfolio purchases. We believe these recent trends will continue into 2024, providing clear opportunities for us to benefit from this important tailwind. It is worth pointing out that along with the growth in volumes, the returns on our new purchases have improved over recent quarters, and a substantial majority of our forward flows are now priced to reflect the current macroeconomic conditions and funding environment. Because these increased volumes and return profiles are fairly recent developments, they have not yet flowed through our current results to any meaningful extent. However, we expect for this dynamic to positively influence cash collections and revenues through 2024 and beyond. Next, operational effectiveness. As I have referenced on previous calls, it is essential for us to not only focus on the front end of our business, purchasing portfolios at attractive returns, but also to optimize the value from our back book. Therefore, From my very first week as CEO, I have encouraged and challenged our team to reevaluate and enhance our operational effectiveness. They have responded superbly. Over the past six months, we have identified, tested, and begun rolling out a wide range of cash generating initiatives, both large and small, to address our performance in the U.S. Some of these initiatives include enhancements to our legal collection activities, where we are identifying new information sources to optimize the value and decision-making processes across this important channel. We are also leveraging additional third-party resources to bolster and accelerate our post-judgment customer interactions. Both sets of initiatives have identified significant opportunities that are now migrating into execution mode. Similar efforts have been made within our U.S. call center operations with correspondingly encouraging opportunities. We implemented a wide range of operational strategy enhancements starting in the second quarter, expanded these in the third quarter, and are rolling out further initiatives this quarter. These changes are driving increased customer contact rates and more effective customer interactions, leading to a growth in payment plans and U.S. cash collections performance that has modestly outperformed our internal expectations over the past six months. Due to the timeline between the actions being taken and the impact on cash generation, particularly within the legal channel, but also extending into the call center, the effect of these initiatives and enhancements are only minimally reflected in our year-to-date results. Finally, efficiency. Our relative underinvestment in platform and system upgrades will be a focus of ours in the time to come. Meanwhile, in the near term, there are tangible opportunities for us to improve our efficiency that don't require complex changes to our core architecture. Over the past six months, we have instituted initiatives that are improving core center productivity and optimizing our site footprint in the U.S. We have also piloted multiple programs with third parties to leverage lower cost locations to support both voice and data processes. The rollout of these programs has commenced in the current quarter with an expectation that we will expand these over the next 12 to 18 months. While growth in account volumes and expanded legal processes suggest a corresponding increase in expenses, we believe these anticipated higher expenses will be largely offset by the efficiency initiatives underway. In other words, growth in cash collections is expected to outpace our growth in operating expenses over the near term. This should position us to march towards an improved cash efficiency ratio into the low 60s level. With growing portfolio supply, improved pricing, increased operational effectiveness in the U.S., and robust efficiency measures, we believe we have clear line of sight to deliver significantly improved financial performance in 2024 and beyond. The speed, scope, and impact of the effort underway have far exceeded my initial expectations. We recognize the need to deliver results for our shareholders, and we will not let up the pace at which we are working to achieve this. With that, it's over to Rakesh for a review of our quarterly results.