PRA Group, Inc.

digital, and offshoring to transform the business. We are focused on building on this momentum by continuing to execute against our PRA 3.0 strategy. In addition to net income, we also focus on adjusted EBITDA, which we believe provides a more cash-driven perspective on our operating success. Adjusted EBITDA for the last 12 months was $1.3 billion. up 14% year over year, exceeding cash collections growth of 11%. Our net leverage, defined as net debt to adjusted EBITDA, continued to tick down, ending the quarter at 2.71 times compared to 2.73 times as of December 31, and compared to 2.82 times in the prior year period. This is due to the strong adjusted EBITDA growth coupled with disciplined purchasing, In line with our 3.0 strategy, our goal is to have our net leverage continue to decline over the next few years as we aim to land in the mid two times area. In terms of our funding, we have ample liquidity and a strong capital structure that is well diversified between bank and bond debt. As of March 31, we had $3.1 billion in total committed capital under our credit facilities with total availability of approximately $1 billion, comprised of $714 million available based on current ERC, and $282 million of additional availability that we can draw from, subject to borrowing-based and debt covenants, including advance rates. We continue to proactively strengthen our capital structure. Last month, we refinanced our 730 million European revolving credit facility. We are pleased that we completed the transaction well in advance of its maturity in November 2027. The new facility has a five-year term, further staggering our debt maturity profile with no change to the commitment level and pricing. Our funding profile remains strong with ample liquidity and no maturities until 2028. We want to thank our lending partners for their continued support as we deliver on our strategy. Lastly, we saw an opportunity to undertake another share buyback during the quarter and repurchase $10 million of our shares. This is in addition to the $20 million we repurchased in 2025. We will continue to evaluate share repurchases as part of our overall capital allocation strategy and consistent with covenant restrictions. Overall, Q1 was another solid quarter as we continue to execute our operational initiatives, improve our financial profile, and deliver higher returns while reducing leverage. I'll now turn it back to Martin.

Thanks, Rakesh. So to summarize, we've started the year on the front foot, executing with rigor, discipline, and speed across many parts of the business. We continue to gain momentum in the US, especially in legal and digital channels. Europe continues to deliver strong results and innovation, helping us diversify across many markets. And lastly, we believe that we're in a good position to execute on our new 3.0 strategy, deliver against our financial targets, and generate value for our shareholders over the next few years. Thank you, everyone, for tuning in and for your time, support, and continued confidence in our future. And with that, we'll open it up for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press a star followed by the number one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press a star followed by the number two.

One moment, please, for your first question. And your first question comes from the line of Mark Hughes with Truist. Please go ahead.

Yeah, thank you. Good afternoon.

Martin, you talked about buying paper in kind of an adjacent or new area in keeping with your strategy of doing test buys and starting small. Is that an area that could potentially expand into something more meaningful?

Yeah, so what I talked about there was really part of our strategy, which is that overall we're focused on discipline purchasing in the core business, but that we will test our way into adjacent product segments. So we're looking for areas where we can leverage our operating capability, our underwriting capability, and so on, also our great seller relationships that we have. So we did this quarter get into some areas that are adjacent. They're not hugely different, but they have a slightly different – cost to collect structure. And that's what we called out in terms of the impact on the multiple mix there. And we are investing in areas where we think there could be future opportunity. But as I've been saying, we like to test into it to get data, learn the products, and before we go large. But we do see bigger opportunities in the future in some of these areas.

And talking about your outlook for the balance sheet, you look for the debt leverage to decline over time. As you execute more on the 3.0 strategy, is it possible that you could be in a position where you'd accelerate, again, the purchasing activity if you're generating better returns based on your internal initiatives? Could, in fact, you go in a different direction, keep your leverage as is, and pick up the pace of portfolio buys?

Yeah, I mean, as we laid out, you know, our focus is really on being disciplined allocators of capital. So we have, you know, in the first quarter, we ended up with a volume that met our plan and also our return thresholds. So, you know, we are focused on that. If something were to really change in the market, we have, you know, a very strong funding profile and an ability to adjust that. And The targets we've laid out for our buying really are based on the market conditions that we see right now. So that is our plan, and that's what we've laid out in 3.0. But with things happening in the macro environment, if they were to continue to accelerate and there was a big change in the volume available, we would be in a position to consider that. But our basic plan based on our current outlook is the one that we've outlined in the 3.0 strategy. Yeah.

And Mark, if I could add to that, we have ample liquidity, right? We've got a billion dollars of liquidity, but we've also set a target out there that we want to get to the mid twos leverage over the next few years. But it's, as Martin said, should the opportunity arise where we are seeing portfolios that meet our thresholds, we would invest more. We put a target out there that we would be investing between 1 to 1.3 over the next few years as part of our 3.0 plan.

Then one more question. How would you characterize your progress on the 3.0 strategy, just thinking about the technology and the systems? I think, Martin, your goal was to somewhat replicate the success you had in the international realm and Europe. and bring that same sort of approach to the broader platform. How far along are you? How much time before you get to the place where you want to be?

Yeah, that's a good question. As we've talked about, we've been investing in the technology platform in Europe for some time. So we're on one common cloud. We have one common contact platform. We've streamlined our collection systems and so on. There's still more work to do there. And I mentioned earlier, we just launched a mobile app in the UK as an example of how we're trying to innovate. So that's in good place. On the US side, this transformation has been going on for some time. So it didn't just start last quarter when I laid out the strategy. But it has brought, I think, heightened focus on the strategy. So we expect to... Some elements of this will fall into place even later this year. So we have, you know, for example, we expect to be in one cloud instance, one global cloud instance by the end of the year. We'll also have one common cloud-based contact platform, so that will also be in place in the U.S. market later this year. So on those fronts, we're making really good progress. And then there's a lot of longer-term opportunities that we're also investing in, ranging from AI to ways of improving our core platform. So I think we're going to start to see some of the benefits even this year, but then there are other projects that will take a longer time before we're fully in place. And that's kind of why we laid this out as a multi-year journey.

Thank you very much.

Thanks, Mark. The next question comes from the line of Robert Dodd with Raymond James.

Please go ahead.

Hi, guys. On the topic of unifying that global platform and the other IT investments you're making, et cetera, is that what kind of is allowing expanding into the other agencies. Is a more uniform platform and a more uniform kind of use of data, perhaps, encouraging you to look at those adjacent markets because you've got the same tools, but the more the data is analyzed globally and uniformly, the more you can learn about additional agencies, and would you expand further into those other markets once all these IT investments are made? Or is it just coincidental that it's occurring at the same time?

Yeah, no, I mean, in the European markets, we are already in, I would say, a broader set of segments than we are in the US. So we've been doing it for some time there. And that's just been something that's developed over time is, you know, getting data, tuning our underwriting, building our operational confidence in a particular area, and then scaling up if we see the opportunities. On the US side, I do think that these investments that we're making will give us a more lean operating platform. We'll be able to provide better service to customers. We'll have more automation. We'll have better ways of leveraging the data and so on. So it will be bringing improvements And I do think over time, it'll make us more flexible in terms of handling other segments. But it's not just the technology platform. There's other capabilities that we've put in place. For example, building up a network of external debt collection agencies. Two years ago, that wasn't something we really did in the US. It's something over on the European side we've been doing for a while. And that's just another way of creating capabilities. They don't all have to be in-house, but they would enable us to go after segments that we may not be focused on currently.

Got it. Got it. And one more. On the legal now in the U.S., I think it was 53% of collections, if I heard that right. It was 46 a year ago. I mean, there's been a number of steps on utilization of the legal channel. You've taken over several years, you know, optimizing the actual collections when there's a lien, things like that. I mean, how much of the growth is just you've spent more on that channel versus it's a consequence of the optimization steps themselves rather than just And I don't mean that in the wrong way, but putting more pure financial resources in terms of spending behind it.

Yeah, I would say it's a combination there. I mean, the first thing that we always point out is that we don't lead with legal. We do first work very hard to engage with customers through digital and through call centers and so on. But if people won't engage and if we conclude that they should be able to make repayments, we will pursue the legal channel. And over the past couple of years, we have made significant improvements in our capabilities all across the kind of legal collections chain. So on one hand, we've been doing that. That makes it more efficient for us to use that channel, and it just makes the returns better if we do it. But on the other hand, we've also been investing significantly in it, as you pointed out. And that kind of creates, I would say, a virtuous cycle where we have more data, we're investing more, we're seeing better results as we build these capabilities. So really both sides come together. It's both a matter of investing, it's a matter of better scoring to understand the economics on an individual account basis, but also those capabilities which are rooted in technology and other capabilities that help make us more efficient on legal.

Yeah, Robert, thank you for that. Thank you. Yeah, Robert, it obviously starts with us improving our processes, the life cycle, and that's what's given us confidence to continue to invest. So the growth in legal was 40% going into 25%, and then last year it grew another 30%. And the important thing is that before we put that account into the legal channel, we obviously will score those accounts. They have to meet certain return thresholds And that's when we decide if it's meeting those return thresholds, the account will go into the legal channel. And keep in mind, there's greater certainty on the cash that we collect as well as the cash that we will collect. The amount is higher versus some of the other channels.

Understood. Thank you.

And once again, if you would like to ask a question, you can press star 1 on your telephone keypad. And I'm showing no further questions at this time.

I would like to turn it back to Mark and Sholan for closing remarks.

Okay, thank you. Well, as you can see, we're off to a good start in 2026. We've got good momentum on our 3.0 strategy. And we're going to be attending a few investor conferences over the next couple of weeks, including Barclays and Truist conferences. So I hope to see some of you there. So thank you very much.

Thank you, presenters. And ladies and gentlemen, this now concludes today's conference call. Thank you all for joining. You may now disconnect.