Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | May 05, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 000-50058 | |
Entity Registrant Name | PRA Group, Inc | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 75-3078675 | |
Entity Address, Address Line One | 120 Corporate Boulevard | |
Entity Address, City or Town | Norfolk | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 23502 | |
City Area Code | 888 | |
Local Phone Number | 772-7326 | |
Title of 12(b) Security | Common Stock, $0.01 par value per share | |
Trading Symbol | PRAA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 45,541,199 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Central Index Key | 0001185348 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Cash and cash equivalents | $ 179,995 | $ 119,774 |
Investments | 52,711 | 56,176 |
Finance receivables, net | 3,408,074 | 3,514,165 |
Other receivables, net | 11,383 | 10,606 |
Income taxes receivable | 29,372 | 17,918 |
Deferred tax asset, net | 63,911 | 63,225 |
Property and equipment, net | 59,882 | 56,501 |
Right-of-use assets | 66,655 | 68,972 |
Goodwill | 418,565 | 480,794 |
Intangible assets, net | 4,003 | 4,497 |
Other assets | 55,548 | 31,263 |
Total assets | 4,350,099 | 4,423,891 |
Liabilities: | ||
Accounts payable | 4,328 | 4,258 |
Accrued expenses | 76,583 | 88,925 |
Income taxes payable | 18,596 | 4,046 |
Deferred tax liability, net | 69,845 | 85,390 |
Interest-bearing deposits | 97,465 | 106,246 |
Borrowings | 2,828,002 | 2,808,425 |
Lease liabilities | 71,102 | 73,377 |
Other liabilities | 63,502 | 26,211 |
Total liabilities | 3,229,423 | 3,196,878 |
Equity: | ||
Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $0.01 par value, 100,000 shares authorized, 45,540 shares issued and outstanding at March 31, 2020; 100,000 shares authorized, 45,416 shares issued and outstanding at December 31, 2019 | 455 | 454 |
Additional paid-in capital | 67,021 | 67,321 |
Retained earnings | 1,381,766 | 1,362,631 |
Accumulated other comprehensive loss | (375,617) | (261,018) |
Total stockholders' equity - PRA Group, Inc. | 1,073,625 | 1,169,388 |
Noncontrolling interest | 47,051 | 57,625 |
Total equity | 1,120,676 | 1,227,013 |
Total liabilities and equity | $ 4,350,099 | $ 4,423,891 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 45,540,000 | 45,416,000 |
Common stock, shares outstanding | 45,540,000 | 45,416,000 |
Consolidated Income Statements
Consolidated Income Statements - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues: | ||
Portfolio income | $ 262,022 | $ 0 |
Changes in expected recoveries | (12,816) | 0 |
Income recognized on finance receivables | 0 | 238,836 |
Fee income | 2,209 | 6,374 |
Other revenue | 369 | 667 |
Total revenues | 251,784 | 245,877 |
Net allowance charges | 0 | (6,095) |
Operating expenses: | ||
Compensation and employee services | 75,171 | 79,645 |
Legal collection fees | 14,572 | 13,059 |
Legal collection costs | 34,447 | 35,229 |
Agency fees | 13,376 | 14,032 |
Outside fees and services | 19,394 | 15,248 |
Communication | 13,511 | 13,201 |
Rent and occupancy | 4,484 | 4,363 |
Depreciation and amortization | 4,084 | 4,572 |
Other operating expenses | 12,205 | 11,585 |
Total operating expenses | 191,244 | 190,934 |
Income from operations | 60,540 | 48,848 |
Other income and (expense): | ||
Interest expense, net | (37,211) | (33,981) |
Foreign exchange gain | 2,283 | 6,264 |
Other | (76) | (352) |
Income before income taxes | 25,536 | 20,779 |
Income tax expense | 3,100 | 3,867 |
Net income | 22,436 | 16,912 |
Adjustment for net income attributable to noncontrolling interests | 3,301 | 1,685 |
Net income attributable to PRA Group, Inc. | $ 19,135 | $ 15,227 |
Net income per common share attributable to PRA Group, Inc.: | ||
Basic (in dollars per share) | $ 0.42 | $ 0.34 |
Diluted (in dollars per share) | $ 0.42 | $ 0.34 |
Weighted average number of shares outstanding: | ||
Basic (shares) | 45,452 | 45,338 |
Diluted (shares) | 45,784 | 45,419 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 22,436 | $ 16,912 |
Currency translation adjustments | (108,076) | (1,173) |
Cash flow hedges | (20,568) | (5,715) |
Debt securities available-for-sale | 170 | 45 |
Other comprehensive loss | (128,474) | (6,843) |
Total comprehensive (loss)/income | (106,038) | 10,069 |
Less comprehensive (loss)/ income attributable to noncontrolling interests | (10,574) | 1,254 |
Comprehensive (loss)/income attributable to PRA Group, Inc. | $ (95,464) | $ 8,815 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) | Noncontrolling Interest |
Beginning balance (in shares) at Dec. 31, 2018 | 45,304 | |||||
Beginning balance at Dec. 31, 2018 | $ 1,123,969 | $ 453 | $ 60,303 | $ 1,276,473 | $ (242,109) | $ 28,849 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 16,912 | 15,227 | 1,685 | |||
Currency translation adjustments | (1,173) | (742) | (431) | |||
Cash flow hedges | (5,715) | (5,715) | ||||
Debt securities available-for-sale | 45 | 45 | ||||
Distributions to noncontrolling interest | (6,877) | (6,877) | ||||
Contributions from noncontrolling interest | 89 | 89 | ||||
Vesting of restricted stock (in shares) | 80 | |||||
Vesting of restricted stock | 0 | $ 1 | (1) | |||
Share-based compensation expense | 2,314 | 2,314 | ||||
Employee stock relinquished for payment of taxes | (1,437) | (1,437) | ||||
Other | (2,088) | (2,088) | ||||
Ending balance (in shares) at Mar. 31, 2019 | 45,384 | |||||
Ending balance at Mar. 31, 2019 | $ 1,126,039 | $ 454 | 59,091 | 1,291,700 | (248,521) | 23,315 |
Beginning balance (in shares) at Dec. 31, 2019 | 45,416 | 45,416 | ||||
Beginning balance at Dec. 31, 2019 | $ 1,227,013 | $ 454 | 67,321 | 1,362,631 | (261,018) | 57,625 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 22,436 | 19,135 | 3,301 | |||
Currency translation adjustments | (108,076) | (94,201) | (13,875) | |||
Cash flow hedges | (20,568) | (20,568) | ||||
Debt securities available-for-sale | 170 | 170 | ||||
Vesting of restricted stock (in shares) | 124 | |||||
Vesting of restricted stock | 1 | $ 1 | ||||
Share-based compensation expense | 2,857 | 2,857 | ||||
Employee stock relinquished for payment of taxes | $ (3,157) | (3,157) | ||||
Ending balance (in shares) at Mar. 31, 2020 | 45,540 | 45,540 | ||||
Ending balance at Mar. 31, 2020 | $ 1,120,676 | $ 455 | $ 67,021 | $ 1,381,766 | $ (375,617) | $ 47,051 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 22,436 | $ 16,912 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Share-based compensation expense | 2,857 | 2,314 |
Depreciation and amortization | 4,084 | 4,572 |
Amortization of debt discount and issuance costs | 5,857 | 5,678 |
Changes in expected recoveries | 12,816 | 0 |
Deferred income taxes | (12,755) | (9,994) |
Net unrealized foreign currency transactions | 24,873 | (6,632) |
Fair value in earnings for equity securities | (7,566) | (2,139) |
Net allowance charges | 0 | 6,095 |
Other | (135) | 0 |
Changes in operating assets and liabilities: | ||
Other assets | (1,242) | 550 |
Other receivables, net | (545) | (1,289) |
Accounts payable | 221 | (548) |
Income taxes payable, net | 3,835 | (13,040) |
Accrued expenses | (8,990) | 1,553 |
Other liabilities | 994 | 10,888 |
Right of use asset/lease liability | 66 | 0 |
Other, net | 0 | 37 |
Net cash provided by operating activities | 46,806 | 14,957 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (7,639) | (4,493) |
Acquisition of finance receivables | (271,845) | (264,632) |
Recoveries applied to negative allowance | 236,656 | 0 |
Collections applied to principal on finance receivables | 0 | 222,335 |
Proceeds from/(purchase of) investments | 36 | (82,616) |
Proceeds from sales and maturities of investments | 612 | 42,940 |
Business acquisition, net of cash acquired | 0 | (57,610) |
Proceeds from sale of subsidiaries, net | 0 | 31,177 |
Net cash used in investing activities | (42,180) | (112,899) |
Cash flows from financing activities: | ||
Proceeds from lines of credit | 315,118 | 537,891 |
Principal payments on lines of credit | (227,459) | (132,486) |
Principal payments on notes payable and long-term debt | (2,500) | (305,665) |
Payments of origination cost and fees | (8,203) | 0 |
Tax withholdings related to share-based payments | (3,156) | (1,437) |
Distributions paid to noncontrolling interest | 0 | (6,877) |
Net (decrease)/increase in interest-bearing deposits | (1,658) | 16,126 |
Other financing activities | 0 | (2,088) |
Net cash provided by financing activities | 72,142 | 105,464 |
Effect of exchange rate on cash | (16,575) | (4,115) |
Net increase in cash and cash equivalents | 60,193 | 3,407 |
Cash and cash equivalents, beginning of period | 123,807 | 98,695 |
Cash and cash equivalents, end of period | 184,000 | 102,102 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 30,502 | 25,479 |
Cash paid for income taxes | 12,100 | 27,293 |
Cash, cash equivalents and restricted cash reconciliation: | ||
Total cash, cash equivalents and restricted cash | $ 184,000 | $ 102,102 |
Organization and Business
Organization and Business | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Organization and Business: As used herein, the terms "PRA Group," the "Company," or similar terms refer to PRA Group, Inc. and its subsidiaries. PRA Group, Inc., a Delaware corporation, is a global financial and business services company with operations in the Americas, Europe, and Australia. The Company's primary business is the purchase, collection, and management of portfolios of nonperforming loans. The Company also provides fee-based services on class action claims recoveries and by servicing consumer bankruptcy accounts in the United States ("U.S."). On March 11, 2020, due to the global outbreak of the novel coronavirus ("COVID-19"), the World Health Organization declared a global pandemic. Since the initial outbreak was reported, all U.S. states have declared states of emergency and COVID-19 has spread to all countries in which the Company operates. As a result, the Company implemented business continuity plans including remote work practices where possible and have leveraged existing space to follow social distancing recommendations. To date, the pandemic has not prevented the Company's ability to operate the business and the Company has continued to take steps necessary to minimize impact or disruption to the Company's global operations. The consolidated financial statements of the Company are prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and include the accounts of all of its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Under the guidance of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") ASC Topic 280 "Segment Reporting" ("ASC 280"), the Company has determined that it has several operating segments that meet the aggregation criteria of ASC 280, and, therefore, it has one reportable segment, accounts receivable management. This conclusion is based on similarities among the operating units, including economic characteristics, the nature of the products and services, the nature of the production processes, the types or class of customer for their products and services, the methods used to distribute their products and services and the nature of the regulatory environment. The following table shows the amount of revenue generated for the three months ended March 31, 2020 and 2019 , and long-lived assets held at March 31, 2020 and 2019 , both for the U.S., the Company's country of domicile, and outside of the U.S. (amounts in thousands): As of and for the As of and for the Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 Revenues Long-Lived Assets Revenues Long-Lived Assets United States $ 153,335 $ 115,053 $ 167,576 $ 110,643 United Kingdom 36,340 3,076 29,756 3,993 Other (1) 62,109 8,408 48,545 10,377 Total $ 251,784 $ 126,537 $ 245,877 $ 125,013 (1) None of the countries included in "Other" comprise greater than 10% of the Company's consolidated revenues or long-lived assets. Revenues are attributed to countries based on the location of the related operations. Long-lived assets consist of net property and equipment and right-of-use assets. The Company reports revenues earned from nonperforming loan acquisitions and collection activities, fee-based services and investments. For additional information on the Company's investments, see Note 4. It is impracticable for the Company to report further breakdowns of revenues from external customers by product or service. Beginning January 1, 2020, the Company implemented Accounting Standards Update ("ASU") ASU 2016-13, "Financial Instruments - Credit Losses" ("Topic 326") ("ASU 2016-13") and ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2019-11”), collectively referred to as "ASC Topic 326", on a prospective basis. Prior to January 1, 2020, the vast majority of the Company's investment in finance receivables were accounted for under ASC 310-30 "Loans and Debt Securities Acquired with Deteriorated Credit Quality" ("ASC 310-30"). Refer to Note 2. Finance receivables and income recognition: The Company accounts for its investment in finance receivables at amortized cost under the guidance of ASC Topic 310 “Receivables” (“ASC Topic 310”) and ASC Topic 326-20 “Financial Instruments - Credit Losses - Measured at Amortized Cost” (“ASC Topic 326-20”). ASC Topic 326-20 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. Credit quality information : The Company acquires portfolios of accounts that have experienced deterioration of credit quality between origination and the Company's acquisition of the accounts. The amount paid for a portfolio reflects the Company's determination that it is probable the Company will be unable to collect all amounts due according to an account's contractual terms. The Company accounts for the portfolios in accordance with the guidance for purchased credit deteriorated ("PCD") assets. The initial allowance for credit losses is added to the purchase price rather than recorded as a credit loss expense. The Company has established a policy to writeoff the amortized cost of individual assets when it deems probable that it will not collect on an individual asset. Due to the deteriorated credit quality of the individual accounts, the Company may writeoff the unpaid principal balance of all accounts in a portfolio at the time of acquisition. However, when the Company has an expectation of collecting cash flows at the portfolio level, a negative allowance is established for expected recoveries at an amount not to exceed the amount paid for the financial portfolios. Portfolio segments : The Company develops systematic methodologies to determine its allowance for credit losses at the portfolio segment level. The Company’s nonperforming loan portfolio segments consist of two broad categories: Core and Insolvency. The Company’s Core portfolios contain loan accounts that are in default, which were purchased at a substantial discount to face value because either the credit grantor and/or other third-party collection agencies have been unsuccessful in collecting the full balance owed. The Company’s Insolvency portfolios contain loan accounts that are in default where the customer is involved in a bankruptcy or insolvency proceeding and were purchased at a substantial discount to face value. Each of the two broad portfolio segments of purchased nonperforming loan portfolios consist of large numbers of homogeneous receivables with similar risk characteristics. Effective Interest Rate and Accounting Pools : Within each portfolio segment, the Company pools accounts with similar risk characteristics that are acquired in the same year. Similar risk characteristics generally include portfolio segment and geographic region. The initial effective interest rate of the pool is established based on the purchase price and expected recoveries of each individual purchase at the purchase date. During the year of acquisition, the annual pool is aggregated, and the blended effective interest rate will change to reflect new acquisitions and new cash flow estimates until the end of the year. The effective interest rate for a pool is fixed for the remaining life of the pool once the year has ended. Methodology : The Company develops its estimates of expected recoveries in the Consolidated Balance Sheets by applying discounted cash flow methodologies to its estimated remaining collections (“ERC”) and recognizes income over the estimated life of the pool at the constant effective interest rate of the pool. Subsequent changes (favorable and unfavorable) in expected cash flows are recognized within changes in expected recoveries in the Consolidated Income Statements by adjusting the present value of increases or decreases in ERC at a constant effective interest rate. Amounts included in the estimate of recoveries do not exceed the aggregate amount of the amortized cost basis previously written off or expected to be written off. The measurement of expected recoveries is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Factors that may contribute to the changes in estimated cash flows include both external and internal factors. External factors that may have an impact on the collectability, and subsequently on the overall profitability of acquired pools of nonperforming loans, would include new laws or regulations relating to collections, new interpretations of existing laws or regulations, and the overall condition of the economy. Internal factors that may have an impact on the collectability, and subsequently the overall profitability of acquired pools of nonperforming loans, would include necessary revisions to initial and post-acquisition scoring and modeling estimates, operational activities, and changes in productivity related to turnover and tenure of the Company's collection staff. Portfolio income : The recognition of income on expected recoveries is based on the constant effective interest rate established for a pool. Changes in expected recoveries : The activity consists of differences between actual recoveries compared to expected recoveries for the reporting period, as well as the net present value of increases or decreases in ERC at the constant effective interest rate. Agreements to acquire the aforementioned receivables include general representations and warranties from the sellers covering matters such as account holder death or insolvency and accounts settled or disputed prior to sale. The representation and warranty period permitting the return of these accounts from the Company to the seller is typically 90 to 180 days, with certain international agreements extending as long as 24 months . Any funds received from the seller as a return of purchase price are referred to as buybacks. Buyback funds are included in changes in expected recoveries when received. In some cases, the seller will replace the returned accounts with new accounts in lieu of returning the purchase price. In that case, the old account is removed from the pool and the new account is added. Fees paid to third parties other than the seller related to the direct acquisition of a portfolio of accounts are expensed when incurred. Goodwill and intangible assets : Goodwill, in accordance with ASC Topic 350, "Intangibles-Goodwill and Other" ("ASC 350"), is not amortized but rather is reviewed for impairment annually or more frequently if indicators of potential impairment exist. On January 1, 2020, the Company adopted ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"). The Company performs its annual assessment of goodwill as of October 1. The Company may first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If management concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, an impairment loss is recognized. The loss will be recorded at the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to the respective reporting unit. Basis of presentation : The accompanying interim financial statements have been prepared in accordance with the instructions for Quarterly Reports on Form 10-Q and, therefore, do not include all information and Notes to the Consolidated Financial Statements necessary for a complete presentation of financial position, results of operations, comprehensive income/(loss) and cash flows in conformity with GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the Company's Consolidated Balance Sheets as of March 31, 2020 , its Consolidated Income Statements, and Statements of Comprehensive Income/(Loss) for the three months ended March 31, 2020 and 2019 , and its Statements of Changes in Equity and Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019, have been included. The Consolidated Income Statements of the Company for the three months ended March 31, 2020 may not be indicative of future results. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 (the "2019 Form 10-K"). |
Change in Accounting Principle
Change in Accounting Principle | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Change in Accounting Principle | Change in Accounting Principle: Financial Instruments - Credit Losses In June 2016, FASB issued ASU 2016-13, which introduced a new methodology requiring the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. ASU 2016-13 utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to-maturity debt securities and other receivables measured at amortized cost. The new methodology requires an entity to present on the balance sheet the net amount expected to be collected. This methodology replaces the multiple impairment methods under prior GAAP, including for purchased credit impaired ("PCI") assets, and introduces the concept of PCD assets. The Company's PCI assets previously accounted for under ASC 310-30 are now accounted for as PCD assets upon adoption of ASU 2016-13. ASU 2016-13 requires PCD assets to be recognized at their purchase price plus the allowance for credit losses expected at the time of acquisition. ASU 2016-13 also requires that financial assets should be written off when they are deemed uncollectible. In November 2019, FASB issued ASU 2019-11, which amended the PCD asset guidance in ASU 2016-13 to clarify that expected recoveries of amounts previously written off and expected to be written off should be included in the valuation account. Additionally, they should not exceed the aggregate of amounts previously written off and expected to be written off by an entity. Further, ASU 2019-11 clarifies that a negative allowance is recognized when an entity determines, after a full or partial writeoff of the amortized cost basis, that it will recover all or a portion of the basis. The Company adopted ASC Topic 326 on January 1, 2020 on a prospective basis. In accordance with the guidance, substantially all the Company’s PCI assets were transitioned using the PCD guidance, with immediate writeoff of the amortized cost basis of individual accounts and establishment of a negative allowance for expected recoveries equal to the amortized cost basis written off. Accounts previously accounted for under ASC Topic 310-30, were aggregated into annual pools based on similar risk characteristics and an effective interest rate was established based on the estimated remaining cash flows of the annual pool. The immediate writeoff and subsequent recognition of expected recoveries had no impact on the Company’s Consolidated Income Statements or the Consolidated Balance Sheets at the date of adoption. The Company develops its estimate of expected recoveries by applying discounted cash flow methodologies to its ERC and recognizes income over the estimated life of the pool at the constant effective interest rate of the pool. Changes (favorable and unfavorable) in expected cash flows are recognized in current period earnings by adjusting the present value of the expected recoveries. Following the transition guidance for PCD assets, the Company grossed up the amortized cost of its net finance receivables at January 1, 2020 as shown below (amounts in thousands): Amortized cost $ 3,514,165 Allowance for credit losses 125,757,689 Noncredit discount 3,240,131 Face value $ 132,511,985 Allowance for credit losses $ 125,757,689 Writeoffs, net (125,757,689 ) Expected recoveries 3,514,165 Initial negative allowance for expected recoveries $ 3,514,165 Recently issued accounting standards adopted: Financial Instruments - Credit Losses Effective January 1, 2020, the Company adopted ASC 326 on a prospective basis. Prior to January 1, 2020, substantially all of the Company's investment in finance receivables were accounted for under ASC 310-30. Refer to Note 2 for comprehensive details. Intangibles - Goodwill and Other In January 2017, FASB issued ASU 2017-04 which eliminates Step 2 of the goodwill impairment test. Instead, an entity performs its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company adopted ASU 2017-04 on January 1, 2020 which had no impact on its consolidated financial statements. Fair Value Measurement In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” ("ASU 2018-13"). ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. The Company adopted ASU 2018-13 on January 1, 2020 which had no impact to the Company's Notes to Consolidated Financial Statements. Recently issued accounting standards not yet adopted: Income Taxes I n December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes. This standard is effective for annual and interim periods beginning af ter December 15, 2020 on a prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2019-12 on its c onsolidated financial statements and expects that the adoption of the standard will result in additional and modified disclosures. Investments-Equity Securities I n January 2020, the FASB issued ASU 2020-01 “Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815” (“ASU 2020-01”). ASU 2020-01 clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments-Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. Additionally, it clarifies that, when determining the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. This standard is effective for public entities for financial statements issued for fiscal years and interim periods beginning after December 15, 2020. The Company is evaluating the impact of ASU 2020-01 but does not expect adoption to have a material effect on its consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference London Inter-bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued. ASU 2020-04 is effective immediately for a limited time through December 31, 2022. The Company is currently evaluating the impact of ASU 2020-04. The Company does not expect that any other recently issued accounting pronouncements will have a material effect on its consolidated financial statements. |
Finance Receivables, net
Finance Receivables, net | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Finance Receivables, net | Finance Receivables, net: Finance Receivables, net after the adoption of ASC Topic 326 (refer to Note 2) Finance receivables, net consists of the following at March 31, 2020 (amounts in thousands): Amortized cost $ — Negative allowance for expected recoveries (1) 3,408,074 Balance at end of period $ 3,408,074 (1) The negative allowance balance includes certain portfolios of nonperforming loans for which the Company holds a beneficial interest representing approximately 1% of the balance. Changes in the negative allowance for expected recoveries by portfolio segment for the three months ended March 31, 2020 were as follows (amounts in thousands): Core Insolvency Total Balance at beginning of period $ 3,051,426 $ 462,739 $ 3,514,165 Initial negative allowance for expected recoveries - portfolio acquisitions (1) 233,687 39,550 273,237 Foreign currency translation adjustment (120,214 ) (9,642 ) (129,856 ) Recoveries applied to negative allowance (2) (199,038 ) (37,618 ) (236,656 ) Changes in expected recoveries (3) (16,477 ) 3,661 (12,816 ) Balance at end of period $ 2,949,384 $ 458,690 $ 3,408,074 (1) Initial negative allowance for expected recoveries - portfolio acquisitions Portfolio acquisitions for the three months ended March 31, 2020 were as follows (amounts in thousands): Core Insolvency Total Face value $ 1,891,142 $ 177,454 $ 2,068,596 Noncredit discount (213,289 ) (13,032 ) (226,321 ) Allowance for credit losses at acquisition (1,444,166 ) (124,872 ) (1,569,038 ) Purchase price $ 233,687 $ 39,550 $ 273,237 The initial negative allowance recorded on portfolio acquisitions for the three months ended March 31, 2020 was as follows (amounts in thousands): Core Insolvency Total Allowance for credit losses at acquisition $ (1,444,166 ) $ (124,872 ) $ (1,569,038 ) Writeoffs, net 1,444,166 124,872 1,569,038 Expected recoveries 233,687 39,550 273,237 Initial negative allowance for expected recoveries $ 233,687 $ 39,550 $ 273,237 (2) Recoveries applied to negative allowance Recoveries applied to the negative allowance were computed as follows for the three months ended March 31, 2020 (amounts in thousands): Core Insolvency Total Recoveries (a) $ 440,694 $ 57,984 $ 498,678 Less - amounts reclassified to portfolio income (b) 241,656 20,366 262,022 Recoveries applied to negative allowance $ 199,038 $ 37,618 $ 236,656 (a) Recoveries includes cash collections, buybacks and other adjustments. (b) The Company reported income on expected recoveries based on the constant effective interest rate in portfolio income on the Company's Consolidated Income Statements. (3) Changes in expected recoveries Changes in expected recoveries consists of the following for the three months ended March 31, 2020 (amounts in thousands): Core Insolvency Total Changes in expected future recoveries $ (20,524 ) $ (102 ) $ (20,626 ) Recoveries received in excess/(shortfall) of forecast 4,047 3,763 7,810 Changes in expected recoveries $ (16,477 ) $ 3,661 $ (12,816 ) In order to evaluate the impact of the COVID-19 pandemic on expectations of future cash collections, the Company considered historical performance, current economic forecasts regarding the duration of the impact to short-term and long-term growth in the various geographies in which the Company operates, and evolving information regarding government stimulus packages and the reduced economic activity required by stay at home orders. The Company also considered current collection activity in its determination to adjust the timing of near term ERC for certain pools. Based on these considerations, the Company’s estimates incorporate changes in the timing of expected cash collections over the next 6 to 12 months . Changes in expected recoveries were a net write down of $12.8 million . This reflects a $20.6 million net, negative adjustment to the expected future recoveries primarily related to an expected delay in cash collections from the impact of COVID-19, partially offset by $7.8 million in recoveries in excess of expectations in the current quarter. Changes in the Company’s assumptions regarding the duration and impact of COVID-19 to cash collections could change significantly as conditions evolve. Finance Receivables, net prior to adoption of ASC Topic 326 The following information reflect finance receivables, net as previously disclosed in the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 2019 which was under previous revenue recognition accounting standard ASC Topic 310-30. Changes in finance receivables, net for the three months ended March 31, 2019 were as follows (amounts in thousands): Three Months Ended March 31, 2019 Balance at beginning of period $ 3,084,777 Acquisitions of finance receivables (1) 313,446 Foreign currency translation adjustment 7,436 Cash collections (461,171 ) Income recognized on finance receivables 238,836 Net allowance charges (6,095 ) Balance at end of period $ 3,177,229 (1) Includes portfolio purchases adjusted for buybacks and acquisition related costs, and portfolios from the acquisition of a business in Canada made during the first quarter of 2019. During the three months ended March 31, 2019 , the Company acquired finance receivable portfolios with a face value of $4.7 billion for $318.8 million . At March 31, 2019 , the ERC on the receivables acquired during the three months ended March 31, 2019 were $541.1 million . At the time of acquisition and each quarter thereafter, the life of each quarterly accounting pool is estimated based on projected amounts and timing of future cash collections using the proprietary models of the Company. Based upon current projections, cash collections expected to be applied to principal are estimated to be as follows for the twelve-month periods ending March 31, (amounts in thousands): 2020 $ 850,955 2021 718,010 2023 562,256 2024 426,004 2025 258,793 2026 137,843 2027 77,642 2028 47,138 2029 38,084 2030 28,474 Thereafter 32,030 Total ERC expected to be applied to principal $ 3,177,229 At March 31, 2019 , the Company had aggregate net finance receivables balances in pools accounted for under the cost recovery method of $43.5 million . Accretable yield represented the amount of income on finance receivables the Company expected to recognize over the remaining life of its existing portfolios based on estimated future cash flows as of the balance sheet date. Additions represented the original expected accretable yield on portfolios acquired during the period. Net reclassifications from nonaccretable difference to accretable yield primarily resulted from the increase in the Company's estimate of future cash flows. When applicable, net reclassifications to nonaccretable difference from accretable yield resulted from the decrease in the Company's estimates of future cash flows and allowance charges that together exceeded the increase in the Company's estimate of future cash flows. Changes in accretable yield for the three months ended March 31, 2019 were as follows (amounts in thousands): Three Months Ended March 31, 2019 Balance at beginning of period $ 3,058,445 Income recognized on finance receivables (238,836 ) Net allowance charges 6,095 Additions from portfolio acquisitions 235,814 Reclassifications from nonaccretable difference 19,161 Foreign currency translation adjustment (511 ) Balance at end of period $ 3,080,168 The following is a summary of activity within the Company's valuation allowance account, all of which relates to acquired finance receivables, for the three months ended March 31, 2019 (amounts in thousands): Three Months Ended March 31, 2019 Beginning balance $ 257,148 Allowance charges 7,977 Reversal of previously recorded allowance charges (1,882 ) Net allowance charges 6,095 Foreign currency translation adjustment 81 Ending balance $ 263,324 |
Investments
Investments | 3 Months Ended |
Mar. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments: Investments consisted of the following at March 31, 2020 and December 31, 2019 (amounts in thousands): March 31, 2020 December 31, 2019 Debt securities Available-for-sale $ 4,347 $ 5,052 Equity securities Private equity funds 7,141 7,218 Mutual funds 33,353 33,677 Equity method investments 7,870 10,229 Total investments $ 52,711 $ 56,176 Debt Securities Available-for-sale Government bonds: The Company's investments in government bonds are classified as available-for-sale and are stated at fair value. The amortized cost and estimated fair value of investments in debt securities at March 31, 2020 and December 31, 2019 were as follows (amounts in thousands): March 31, 2020 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Aggregate Fair Value Available-for-sale Government bonds $ 4,219 $ 128 $ — $ 4,347 December 31, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Aggregate Fair Value Available-for-sale Government bonds $ 5,095 $ — $ 43 $ 5,052 Equity Securities Investments in private equity funds: Investments in private equity funds represent limited partnerships in which the Company has less than a 1% interest. Mutual funds: The Company invests certain excess funds held in Brazil in a Brazilian real denominated mutual fund benchmarked to the U.S. dollar that invests principally in Brazilian fixed income securities. The investments are carried at fair value based on quoted market prices. Gains and losses from this investment are included as a foreign exchange component of other income and (expense) in the Company's Consolidated Income Statements. Unrealized gains and losses: Net unrealized gains on the Company's equity securities were $7.6 million and $2.1 million for the three months ended March 31, 2020 and 2019, respectively. Equity Method Investments The Company has an 11.7% interest in RCB Investimentos S.A. ("RCB"), a servicing platform for nonperforming loans in Brazil. This investment is accounted for on the equity method because the Company exercises significant influence over RCB’s operating and financial activities. Accordingly, the Company’s investment in RCB is adjusted for the Company’s proportionate share of RCB’s earnings or losses. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, net | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill And Intangible Assets, Net | Goodwill and Intangible Assets, net: In connection with the Company's business acquisitions, the Company acquired certain tangible and intangible assets. Intangible assets resulting from these acquisitions include client and customer relationships, non-compete agreements, trademarks and technology. The Company performs an annual review of goodwill as of October 1 of each year or more frequently if indicators of impairment exist. The Company performed its most recent annual review as of October 1, 2019 and concluded that no goodwill impairment was necessary. The Company performed its quarterly assessment by evaluating whether a triggering event had occurred as of March 31, 2020 considering current market conditions resulting from the global COVID-19 pandemic. The Company concluded that no triggering event had occurred at March 31, 2020 and will continue to monitor the market for any adverse conditions resulting from the COVID-19 pandemic. The following table represents the changes in goodwill for the three months ended March 31, 2020 and 2019 (amounts in thousands): Three Months Ended March 31, 2020 2019 Goodwill: Balance at beginning of period $ 480,794 $ 464,116 Changes: Acquisition (1) — 13,653 Foreign currency translation adjustment (62,229 ) 2,749 Net change in goodwill (62,229 ) 16,402 Balance at end of period $ 418,565 $ 480,518 (1) The $13.7 million addition to goodwill during the three months ended March 31, 2019, is related to the acquisition of a business in Canada. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | Leases: The Company's operating lease portfolio primarily includes corporate offices and call centers. The majority of its leases have remaining lease terms of 1 year to 20 years, some of which include options to extend the leases for 5 years, and others include options to terminate the leases within 1 year. Exercises of lease renewal options are typically at the Company's sole discretion and are included in its right-of-use ("ROU") assets and lease liabilities based upon whether the Company is reasonably certain of exercising the renewal options. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. The components of lease expense for the three months ended March 31, 2020 and 2019, were as follows (amounts in thousands): Three months ended March 31, 2020 2019 Operating lease expense $ 3,063 $ 2,863 Short-term lease expense 693 842 Total lease expense $ 3,756 $ 3,705 Supplemental cash flow information and non-cash activity related to leases for the three months ended March 31, 2020 and 2019 were as follows (amounts in thousands): Three months ended March 31, 2020 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 2,991 $ 2,780 ROU assets obtained in exchange for operating lease obligations 531 76,175 Lease term and discount rate information related to operating leases were as follows as of the dates indicated: Three months ended March 31, 2020 2019 Weighted-average remaining lease term (years) 10.6 11.0 Weighted-average discount rate 4.89 % 4.95 % Maturities of lease liabilities at March 31, 2020 are as follows for the following periods (amounts in thousands): Operating Leases For the nine months ending December 31, 2020 $ 8,747 For the year ending December 31, 2021 11,250 For the year ending December 31, 2022 9,281 For the year ending December 31, 2023 7,148 For the year ending December 31, 2024 6,387 Thereafter 49,434 Total lease payments $ 92,247 Less imputed interest 21,145 Total $ 71,102 |
Borrowings
Borrowings | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings: The Company's borrowings consisted of the following as of the dates indicated (amounts in thousands): March 31, 2020 December 31, 2019 Americas revolving credit $ 749,211 $ 772,037 Europe revolving credit 1,058,348 1,017,465 Term loans 422,500 425,000 Convertible senior notes 632,500 632,500 2,862,559 2,847,002 Less: Debt discount and issuance costs (34,557 ) (38,577 ) Total $ 2,828,002 $ 2,808,425 The following principal payments are due on the Company's borrowings as of March 31, 2020 for the 12-month periods ending March 31, (amounts in thousands): 2021 $ 298,395 2022 10,895 2023 2,208,269 2024 345,000 Total $ 2,862,559 The Company determined that it was in compliance with the covenants of its financing arrangements as of March 31, 2020 . North American Revolving Credit and Term Loan On May 5, 2017, the Company amended and restated its existing credit agreement (as amended, and modified from time to time, the “North American Credit Agreement”) with Bank of America, N.A., as administrative agent, Bank of America, National Association, acting through its Canada branch, as the Canadian administrative agent, and a syndicate of lenders named therein. The total credit facility under the North American Credit Agreement includes an aggregate principal amount of $1,540.5 million (subject to compliance with a borrowing base and applicable debt covenants), which consists of (i) a fully-funded $422.5 million term loan, (ii) a $1,068.0 million domestic revolving credit facility, and (iii) a $50.0 million Canadian revolving credit facility. The facility includes an accordion feature for up to $500.0 million in additional commitments (at the option of the lender) and also provides for up to $25.0 million of letters of credit and a $25.0 million swingline loan sublimit that would reduce amounts available for borrowing. The term and revolving loans accrue interest, at the option of the Company, at either the base rate or the Eurodollar rate (as defined in the North American Credit Agreement) for the applicable term plus 2.50% per annum in the case of the Eurodollar rate loans and 1.50% in the case of the base rate loans. The base rate is the highest of (a) the Federal Funds Rate (as defined in the North American Credit Agreement) plus 0.50% , (b) Bank of America's prime rate, or (c) the one-month Eurodollar rate plus 1.00% . Canadian Prime Rate Loans bear interest at a rate per annum equal to the Canadian Prime Rate plus 1.50% . The revolving credit facilities also bear an unused line fee of 0.375% per annum, payable quarterly in arrears. The loans under the North American Credit Agreement mature May 5, 2022. As of March 31, 2020 , the unused portion of the North American Credit Agreement was $371.2 million . Considering borrowing base restrictions, as of March 31, 2020 , the amount available to be drawn was $175.7 million . The North American Credit Agreement is secured by a first priority lien on substantially all of the Company's North American assets. The North American Credit Agreement contains restrictive covenants and events of default including the following: • borrowings under each of the domestic revolving loan facility and the Canadian revolving loan facility are subject to separate borrowing base calculations and may not exceed 35% of the ERC of all domestic or Canadian, as applicable, core eligible asset pools, plus 55% of ERC of domestic or Canadian, as applicable, insolvency eligible asset pools, plus 75% of domestic or Canadian, as applicable, eligible accounts receivable; • the consolidated total leverage ratio cannot exceed 2.75 to 1.0 as of the end of any fiscal quarter; • the consolidated senior secured leverage ratio cannot exceed 2.25 to 1.0 as of the end of any fiscal quarter; • subject to no default or event of default, cash dividends and distributions during any fiscal year cannot exceed $20.0 million ; • subject to no default or event of default, stock repurchases during any fiscal year cannot exceed $100.0 million plus 50% of the prior year's consolidated net income; • permitted acquisitions during any fiscal year cannot exceed $250.0 million (with a $50.0 million per year sublimit for permitted acquisitions by non-loan parties); • indebtedness in the form of senior, unsecured convertible notes or other unsecured financings cannot exceed $750.0 million in the aggregate (without respect to the 2020 Notes); • the Company must maintain positive consolidated income from operations during any fiscal quarter; and • restrictions on changes in control. European Revolving Credit Facility and Term Loan On October 23, 2014, European subsidiaries of the Company ("PRA Europe") entered into a credit agreement with DNB Bank ASA for a Multicurrency Revolving Credit Facility (such agreement as later amended or modified, the "European Credit Agreement"). In the first quarter of 2020, the Company entered into the Sixth Amendment and Restatement Agreement to its European Credit Agreement which, among other things, increased the total commitments by $200 million , extended the majority of the facility by 2 years and includes an accordion feature of no less than $50.0 million not to exceed $500.0 million , to allow for future increases. Under the terms of the European Credit Agreement, the credit facility includes an aggregate amount of $1,300.0 million (subject to the borrowing base), accrues interest at the Interbank Offered Rate ("IBOR") plus 2.70% - 3.80% (as determined by the estimated remaining collections ratio ("ERC Ratio") as defined in the European Credit Agreement), bears an unused line fee, currently 1.23% per annum, of 35% of the margin, is payable monthly in arrears, and matures February 19, 2023. The European Credit Agreement also includes an overdraft facility in the aggregate amount of $40.0 million (subject to the borrowing base), which accrues interest (per currency) at the daily rates as published by the facility agent, bears a facility line fee of 0.125% per quarter, payable quarterly in arrears, and matures February 19, 2023. As of March 31, 2020 , the outstanding balance under the European Credit Agreement was $1,058.3 million and the unused portion of the European Credit Agreement (including the overdraft facility) was $281.7 million . Considering borrowing base restrictions and other covenants, as of March 31, 2020 , the amount available to be drawn under the European Credit Agreement (including the overdraft facility) was $56.4 million . The European Credit Agreement is secured by the shares of most of the Company's European subsidiaries and all intercompany loans receivable in Europe. The European Credit Agreement contains restrictive covenants and events of default including the following: • the ERC Ratio cannot exceed 45% ; • the gross interest-bearing debt ratio in Europe cannot exceed 3.25 to 1.0 as of the end of any fiscal quarter; • interest bearing deposits in AK Nordic AB cannot exceed SEK 1.2 billion ; and • PRA Europe's cash collections must meet certain thresholds, measured on a quarterly basis. Colombian Revolving Credit Facility PRA Group Colombia Holding SAS, a subsidiary of the Company in Colombia, has a credit agreement that provides for borrowings in an aggregate amount of approximately $4.9 million . As of March 31, 2020 , the outstanding balance under the credit agreement was $2.4 million , with a weighted average interest rate of 7.13% . The outstanding balance accrues interest at the Indicador Bancario de Referencia rate ("IBR") plus a weighted average spread of 2.74% , is payable quarterly in arrears, amortizes quarterly, and matures on October 17, 2022 (per the credit agreement, maturity represents three years from the last draw). This credit facility is fully collateralized using time deposits with the lender that are subject to certain limitations regarding withdrawal and usage and are included within other assets on the Company's Consolidated Balance Sheets. As of March 31, 2020 , the unused portion of the Colombia Credit Agreement was $2.5 million . Convertible Senior Notes due 2020 On August 13, 2013, the Company completed the private offering of $287.5 million in aggregate principal amount of its 3.00% Convertible Senior Notes due August 1, 2020 (the "2020 Notes"). The 2020 Notes were issued pursuant to an Indenture, dated August 13, 2013 (the "2013 Indenture"), between the Company and Regions Bank, as successor trustee. The 2013 Indenture contains customary terms and covenants, including certain events of default after which the 2020 Notes may be due and payable immediately. The 2020 Notes are senior unsecured obligations of the Company. Interest on the 2020 Notes is payable semi-annually, in arrears, on February 1 and August 1 of each year. Prior to February 1, 2020, the 2020 Notes were convertible only upon the occurrence of specified events. As of March 31, 2020 the 2020 Notes are convertible at any time. The conversion rate for the 2020 Notes is initially 15.2172 shares per $1,000 principal amount of 2020 Notes, which is equivalent to an initial conversion price of approximately $65.72 per share of the Company's common stock, and is subject to adjustment in certain circumstances pursuant to the 2013 Indenture. Upon conversion, holders of the 2020 Notes will receive cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election. The Company's intent is to settle conversions through combination settlement (i.e ., the 2020 Notes would be converted into cash up to the aggregate principal amount, and shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election, for the remainder). As a result and in accordance with authoritative guidance related to derivatives and hedging and earnings per share, only the conversion spread is included in the diluted earnings per share calculation, if dilutive. Under such method, the settlement of the conversion spread has a dilutive effect when the average share price of the Company's common stock during any quarter exceeds $65.72 . The Company determined that the fair value of the 2020 Notes at the date of issuance was approximately $255.3 million , and designated the residual value of approximately $32.2 million as the equity component. Additionally, the Company allocated approximately $7.3 million of the $8.2 million 2020 Notes issuance cost as debt issuance cost and the remaining $0.9 million as equity issuance cost. Convertible Senior Notes due 2023 On May 26, 2017, the Company completed the private offering of $345.0 million in aggregate principal amount of its 3.50% Convertible Senior Notes due June 1, 2023 (the "2023 Notes" and, together with the 2020 Notes, the "Notes"). The 2023 Notes were issued pursuant to an Indenture, dated May 26, 2017 (the "2017 Indenture"), between the Company and Regions Bank, as trustee. The 2017 Indenture contains customary terms and covenants, including certain events of default after which the 2023 Notes may be due and payable immediately. The 2023 Notes are senior unsecured obligations of the Company. Interest on the 2023 Notes is payable semi-annually, in arrears, on June 1 and December 1 of each year. Prior to March 1, 2023, the 2023 Notes will be convertible only upon the occurrence of specified events. On or after March 1, 2023, the 2023 Notes will be convertible at any time. The Company has the right, at its election, to redeem all or any part of the outstanding 2023 Notes at any time on or after June 1, 2021 for cash, but only if the last reported sale price (as defined in the 2017 Indenture) exceeds 130% of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on and including the trading day immediately before the date the Company sends the related redemption notice. As of March 31, 2020 , the Company does not believe that any of the conditions allowing holders of the 2023 Notes to convert their notes have occurred. The conversion rate for the 2023 Notes is initially 21.6275 shares per $1,000 principal amount of 2023 Notes, which is equivalent to an initial conversion price of approximately $46.24 per share of the Company's common stock, and is subject to adjustment in certain circumstances pursuant to the 2017 Indenture. Upon conversion, holders of the 2023 Notes will receive cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election. The Company's intent is to settle conversions through combination settlement (i.e ., the 2023 Notes would be converted into cash up to the aggregate principal amount, and shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election, for the remainder). As a result and in accordance with authoritative guidance related to derivatives and hedging and earnings per share, only the conversion spread is included in the diluted earnings per share calculation, if dilutive. Under such method, the settlement of the conversion spread has a dilutive effect when the average share price of the Company's common stock during any quarter exceeds $46.24 . The Company determined that the fair value of the 2023 Notes at the date of issuance was approximately $298.8 million , and designated the residual value of approximately $46.2 million as the equity component. Additionally, the Company allocated approximately $8.3 million of the $9.6 million 2023 Notes issuance cost as debt issuance cost and the remaining $1.3 million as equity issuance cost. The balances of the liability and equity components of the Notes outstanding were as follows as of the dates indicated (amounts in thousands): March 31, 2020 December 31, 2019 Liability component - principal amount $ 632,500 $ 632,500 Unamortized debt discount (28,197 ) (31,414 ) Liability component - net carrying amount $ 604,303 $ 601,086 Equity component $ 76,216 $ 76,216 The debt discount is being amortized into interest expense over the remaining life of the 2020 Notes and the 2023 Notes using the effective interest rate, which is 4.92% and 6.20% , respectively. Interest expense related to the Notes was as follows for the periods indicated (amounts in thousands): Three Months Ended March 31, 2020 2019 Interest expense - stated coupon rate $ 5,175 $ 5,175 Interest expense - amortization of debt discount 3,217 3,042 Total interest expense - convertible senior notes $ 8,392 $ 8,217 |
Derivatives
Derivatives | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives: The Company periodically enters into derivative financial instruments, typically interest rate swap agreements, interest rate caps, and foreign currency contracts to reduce its exposure to fluctuations in interest rates on variable-rate debt and foreign currency exchange rates. The Company does not utilize derivative financial instruments with a level of complexity or with a risk greater than the exposure to be managed nor does it enter into or hold derivatives for trading or speculative purposes. The Company periodically reviews the creditworthiness of the counterparty to assess the counterparty’s ability to honor its obligation. Counterparty default would expose the Company to fluctuations in interest and currency rates. Derivative financial instruments are recognized at fair value in the Consolidated Balance Sheets, in accordance with the guidance of ASC Topic 815 “Derivatives and Hedging” (“ASC 815”). The following table summarizes the fair value of derivative instruments in the Company's Consolidated Balance Sheets (amounts in thousands): March 31, 2020 December 31, 2019 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate contracts Other assets $ — Other assets $ 323 Interest rate contracts Other liabilities 43,674 Other liabilities 17,807 Derivatives not designated as hedging instruments: Foreign currency contracts Other assets 18,126 Other assets 552 Foreign currency contracts Other liabilities 15,614 Other liabilities 5,856 Derivatives Designated as Hedging Instruments: Changes in fair value of derivative contracts designated as cash flow hedging instruments are recognized in other comprehensive income ("OCI"). As of March 31, 2020 and December 31, 2019 , the notional amount of interest rate contracts designated as cash flow hedging instruments was $922.2 million and $959.0 million , respectively. Derivatives designated as cash flow hedging instruments were evaluated and remain highly effective at March 31, 2020 and have initial terms of two to seven years . The Company estimates that approximately $8.4 million of net derivative loss included in OCI will be reclassified into earnings within the next 12 months. The following table summarizes the effects of derivatives designated as cash flow hedging instruments on the consolidated financial statements for the three months ended March 31, 2020 and 2019 (amounts in thousands): Gain or (loss) recognized in OCI, net of tax Gain or (loss) reclassified from OCI into income Three Months Ended March 31, Three Months Ended March 31, Derivatives designated as cash flow hedging instruments 2020 2019 Location of gain or (loss) reclassified from OCI into income 2020 2019 Interest rate contracts $ (21,350 ) $ (5,795 ) Interest expense, net $ (1,012 ) $ (80 ) Derivatives Not Designated as Hedging Instruments: Changes in fair value of derivative contracts not designated as hedging instruments are recognized in earnings. The Company also enters into foreign currency contracts to economically hedge the foreign currency re-measurement exposure related to certain balances that are denominated in currencies other than the functional currency of the entity. As of March 31, 2020 and December 31, 2019 , the notional amount of foreign currency contracts that are not designated as hedging instruments was $747.8 million and $469.9 million , respectively. The following table summarizes the effects of derivatives not designated as hedging instruments on the Company’s Consolidated Income Statements for the three months ended March 31, 2020 and 2019 (amounts in thousands): Amount of gain or (loss) recognized in income Three Months Ended March 31, Derivatives not designated as hedging instruments Location of gain or (loss) recognized in income 2020 2019 Foreign currency contracts Foreign exchange gain $ 26,786 $ (5,256 ) Foreign currency contracts Interest expense, net (1,001 ) — Interest rate contracts Interest expense, net 1,038 (349 ) |
Fair Value Measurements and Dis
Fair Value Measurements and Disclosures | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value: As defined by ASC Topic 820, "Fair Value Measurements and Disclosures" ("ASC 820"), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires the consideration of differing levels of inputs in the determination of fair values. Those levels of input are summarized as follows: • Level 1: Quoted prices in active markets for identical assets and liabilities. • Level 2: Observable inputs other than Level 1 quoted prices, such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. • Level 3: Unobservable inputs that are supported by little or no market activity. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques as well as instruments for which the determination of fair value requires significant management judgment or estimation. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Financial Instruments Not Required To Be Carried at Fair Value In accordance with the disclosure requirements of ASC Topic 825, "Financial Instruments" ("ASC 825"), the table below summarizes fair value estimates for the Company's financial instruments that are not required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company. The carrying amounts in the table are recorded in the Consolidated Balance Sheets at March 31, 2020 and December 31, 2019 (amounts in thousands): March 31, 2020 December 31, 2019 Carrying Estimated Carrying Estimated Financial assets: Cash and cash equivalents $ 179,995 $ 179,995 $ 119,774 $ 119,774 Finance receivables, net 3,408,074 3,503,737 3,514,165 3,645,610 Financial liabilities: Interest-bearing deposits 97,465 97,465 106,246 106,246 Revolving lines of credit 1,807,559 1,807,559 1,789,502 1,789,502 Term loans 422,500 422,500 425,000 425,000 Convertible senior notes 604,303 589,742 601,086 648,968 Disclosure of the estimated fair values of financial instruments often requires the use of estimates. The carrying amount and estimates of the fair value of the Company's debt obligations outlined above do not include any related debt issuance costs associated with the debt obligations. The Company uses the following methods and assumptions to estimate the fair value of financial instruments: Cash and cash equivalents: The carrying amount approximates fair value and quoted prices for identical assets can be found in active markets. Accordingly, the Company estimates the fair value of cash and cash equivalents using Level 1 inputs. Finance receivables, net: The Company estimates the fair value of these receivables using proprietary pricing models that the Company utilizes to make portfolio acquisition decisions. Accordingly, the Company's fair value estimates use Level 3 inputs as there is little observable market data available and management is required to use significant judgment in its estimates. Interest-bearing deposits: The carrying amount approximates fair value due to the short-term nature of the deposits and the observable quoted prices for similar instruments in active markets. Accordingly, the Company uses Level 2 inputs for its fair value estimates. Revolving lines of credit: The carrying amount approximates fair value due to the short-term nature of the interest rate periods and the observable quoted prices for similar instruments in active markets. Accordingly, the Company uses Level 2 inputs for its fair value estimates. Term loans: The carrying amount approximates fair value due to the short-term nature of the interest rate periods and the observable quoted prices for similar instruments in active markets. Accordingly, the Company uses Level 2 inputs for its fair value estimates. Convertible senior notes: The fair value estimates for the Notes incorporate quoted market prices which were obtained from secondary market broker quotes which were derived from a variety of inputs including client orders, information from their pricing vendors, modeling software, and actual trading prices when they occur. Accordingly, the Company uses Level 2 inputs for its fair value estimates. Furthermore, in the table above, carrying amount represents the portion of the Notes classified as debt, while estimated fair value pertains to the face amount of the Notes. Financial Instruments Required To Be Carried At Fair Value The carrying amounts in the following table are measured at fair value on a recurring basis in the accompanying Consolidated Balance Sheets at March 31, 2020 and December 31, 2019 (amounts in thousands): Fair Value Measurements as of March 31, 2020 Level 1 Level 2 Level 3 Total Assets: Available-for-sale investments Government bonds $ 4,347 $ — $ — $ 4,347 Fair value through net income Mutual funds 33,353 — — 33,353 Derivative contracts (recorded in other assets) — 18,126 — 18,126 Liabilities: Derivative contracts (recorded in other liabilities) — 59,288 — 59,288 Fair Value Measurements as of December 31, 2019 Level 1 Level 2 Level 3 Total Assets: Available-for-sale investments Government bonds $ 5,052 $ — $ — $ 5,052 Fair value through net income Mutual funds 33,677 — — 33,677 Derivative contracts (recorded in other assets) — 875 — 875 Liabilities: Derivative contracts (recorded in other liabilities) — 23,663 — 23,663 Available-for-sale investments Government bonds: Fair value of the Company's investment in government bonds is estimated using quoted market prices. Accordingly, the Company uses Level 1 inputs. Fair value through net income investments Mutual funds: Fair value of the Company's investment in mutual funds is estimated using quoted market prices. Accordingly, the Company uses Level 1 inputs. Derivative contracts: The estimated fair value of the derivative contracts is determined using industry standard valuation models. These models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves and other factors. Accordingly, the Company uses Level 2 inputs for its fair value estimates. Investments measured using net asset value Private equity funds: This class of investments consists of private equity funds that invest primarily in loans and securities including single-family residential debt; corporate debt products; and financially-oriented, real-estate-rich and other operating companies in the Americas, Western Europe, and Japan. These investments are subject to certain restrictions regarding transfers and withdrawals. The investments cannot be redeemed with the funds. Instead, the nature of the investments in this class is that distributions are received through the liquidation of the underlying assets of the fund. The investments are expected to be returned through distributions as a result of liquidations of the funds' underlying assets over one to five years . The fair value of these private equity funds following the application of the Net Asset Value ("NAV") practical expedient was $7.1 million and $7.2 million as of March 31, 2020 and December 31, 2019 , respectively. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss: The following table provides details about the reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2020 and 2019 (amounts in thousands): Three Months Ended March 31, Gains and losses on cash flow hedges 2020 2019 Affected line in the consolidated income statement Interest rate swaps $ (1,012 ) $ (80 ) Interest expense, net Income tax effect of item above 230 — Income tax expense Total losses on cash flow hedges $ (782 ) $ (80 ) Net of tax The following table represents the changes in accumulated other comprehensive loss by component, after tax, for the three months ended March 31, 2020 and 2019 (amounts in thousands): Three Months Ended March 31, 2020 Debt Securities Cash Flow Currency Translation Accumulated Other Available-for-sale Hedges Adjustments Comprehensive Loss (1) Ending balance at December 31, 2019 $ (44 ) $ (13,088 ) (247,886 ) $ (261,018 ) Other comprehensive loss before reclassifications 170 (21,350 ) (94,201 ) (115,381 ) Reclassifications, net — 782 — 782 Net current period other comprehensive loss 170 (20,568 ) (94,201 ) (114,599 ) Ending balance at March 31, 2020 $ 126 (33,656 ) $ (342,087 ) $ (375,617 ) Three Months Ended March 31, 2019 Debt Securities Cash Flow Currency Translation Accumulated Other Available-for-sale Hedges Adjustments Comprehensive Loss (1) Ending balance December 31, 2018 $ (83 ) $ 44 $ (242,070 ) $ (242,109 ) Other comprehensive loss before reclassifications 45 (5,795 ) (742 ) (6,492 ) Reclassifications, net — 80 — 80 Net current period other comprehensive loss 45 (5,715 ) (742 ) (6,412 ) Ending balance March 31, 2019 $ (38 ) $ (5,671 ) $ (242,812 ) $ (248,521 ) (1) Net of deferred taxes for unrealized losses from cash flow hedges of $10.0 million and $1.7 million for the three months ended March 31, 2020 and 2019, respectively. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings per Share: Basic earnings per share ("EPS") are computed by dividing net income available to common stockholders of PRA Group, Inc. by weighted average common shares outstanding. Diluted EPS are computed using the same components as basic EPS with the denominator adjusted for the dilutive effect of the Notes and nonvested share awards, if dilutive. There has been no dilutive effect of the convertible senior notes since issuance through March 31, 2020 . Share-based awards that are contingent upon the attainment of performance goals are included in the computation of diluted EPS if the effect is dilutive. The dilutive effect of nonvested shares is computed using the treasury stock method, which assumes any proceeds that could be obtained upon the vesting of nonvested shares would be used to purchase common shares at the average market price for the period. The following table provides a reconciliation between the computation of basic EPS and diluted EPS for the three months ended March 31, 2020 and 2019 (amounts in thousands, except per share amounts): For the Three Months Ended March 31, 2020 2019 Net Income Attributable to PRA Group, Inc. Weighted EPS Net Income Attributable to PRA Group, Inc. Weighted EPS Basic EPS $ 19,135 45,452 $ 0.42 $ 15,227 45,338 $ 0.34 Dilutive effect of nonvested share awards — 332 — — 81 — Diluted EPS $ 19,135 45,784 $ 0.42 $ 15,227 45,419 $ 0.34 There were no antidilutive options outstanding for the three months ended March 31, 2020 and 2019 . |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes: The Company follows the guidance of FASB ASC Topic 740 "Income Taxes" ("ASC 740") as it relates to the provision for income taxes and uncertainty in income taxes. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. On May 10, 2017, the Company reached a settlement with the Internal Revenue Service ("IRS") regarding the IRS assertion that tax revenue recognition using the cost recovery method did not clearly reflect taxable income. In accordance with the settlement, the Company changed its tax accounting method used to recognize finance receivables revenue effective with tax year 2017. Under the new method, a portion of the annual collections amortizes principal and the remaining portion is taxable income. The deferred tax liability related to the difference in timing between the new method and the cost recovery method has been incorporated evenly into the Company’s tax filings over four years effective with tax year 2017. The Company was not required to pay any interest or penalties in connection with the settlement. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted into U.S. law in response to COVID-19 with varying legislation enacted in many of the countries in which the Company operates. While the Company is continuing to evaluate impact, it intends to implement the tax payment and filing deferral provisions as applicable and does not believe that any of the other provisions will have a material impact to its financial reporting. As international tax legislative updates continue to be released, they will be monitored by the Company. At March 31, 2020 , the tax years subject to examination by the major federal, state and international taxing jurisdictions are 2013 and subsequent years. The Company intends for predominantly all international earnings to be indefinitely reinvested in its international operations and, therefore, the recording of deferred tax liabilities for such unremitted earnings is not required. If international earnings were repatriated, the Company may need to accrue and pay taxes, although foreign tax credits may be available to partially reduce U.S. income taxes. The amount of cash on hand related to international operations with indefinitely reinvested earnings was $115.4 million and $109.7 million as of March 31, 2020 and December 31, 2019 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingencies | Commitments and Contingencies: Employment Agreements: The Company has entered into employment agreements, most of which expire on December 31, 2020, with all of its U.S. executive officers and with several members of its U.S. senior management group. Such agreements provide for base salary payments as well as potential discretionary bonuses that take into consideration the Company’s overall performance against its short and long-term financial and strategic objectives. At March 31, 2020 , estimated future compensation under these agreements was approximately $6.2 million . The agreements also contain confidentiality and non-compete provisions. Outside the U.S., employment agreements are in place with employees pursuant to local country regulations. Generally, these agreements do not have expiration dates and therefore it is impractical to estimate the amount of future compensation under these agreements. Accordingly, the future compensation under these agreements is not included in the $6.2 million total above. Forward Flow Agreements: The Company is party to several forward flow agreements that allow for the purchase of nonperforming loans at pre-established prices. The maximum remaining amount to be purchased under forward flow agreements at March 31, 2020 , was approximately $629.2 million . Finance Receivables: Certain agreements for the purchase of finance receivables portfolios contain provisions that may, in limited circumstances, require the Company to refund a portion or all of the collections subsequently received by the Company on particular accounts. The potential refunds as of the balance sheet date are not considered to be significant. Litigation and Regulatory Matters: The Company and its subsidiaries are from time to time subject to a variety of routine legal and regulatory claims, inquiries and proceedings and regulatory matters, most of which are incidental to the ordinary course of its business. The Company initiates lawsuits against customers and is occasionally countersued by them in such actions. Also, customers, either individually, as members of a class action, or through a governmental entity on behalf of customers, may initiate litigation against the Company in which they allege that the Company has violated a state or federal law in the process of collecting on an account. From time to time, other types of lawsuits are brought against the Company. Additionally, the Company receives subpoenas and other requests or demands for information from regulators or governmental authorities who are investigating the Company's debt collection activities. The Company accrues for potential liability arising from legal proceedings and regulatory matters when it is probable that such liability has been incurred and the amount of the loss can be reasonably estimated. This determination is based upon currently available information for those proceedings in which the Company is involved, taking into account the Company's best estimate of such losses for those cases for which such estimates can be made. The Company's estimate involves significant judgment, given the varying stages of the proceedings (including the fact that many of them are currently in preliminary stages), the number of unresolved issues in many of the proceedings (including issues regarding class certification and the scope of many of the claims), and the related uncertainty of the potential outcomes of these proceedings. In making determinations of the likely outcome of pending litigation, the Company considers many factors, including, but not limited to, the nature of the claims, the Company's experience with similar types of claims, the jurisdiction in which the matter is filed, input from outside legal counsel, the likelihood of resolving the matter through alternative mechanisms, the matter's current status and the damages sought or demands made. Accordingly, the Company's estimate will change from time to time, and actual losses could be more than the current estimate. The Company believes that the estimate of the aggregate range of reasonably possible losses in excess of the amount accrued for its legal proceedings outstanding at March 31, 2020 , where the range of loss can be estimated, was not material. In certain legal proceedings, the Company may have recourse to insurance or third-party contractual indemnities to cover all or portions of its litigation expenses, judgments, or settlements. Loss estimates and accruals for potential liability related to legal proceedings are typically exclusive of potential recoveries, if any, under the Company's insurance policies or third-party indemnities. During the year ended December 31, 2019 , the Company recorded $1.0 million in recoveries receivable under the Company's insurance policies or third-party indemnities which is included in other receivables, net at December 31, 2019 . Matters that are not considered routine legal proceedings were disclosed previously in the 2019 Form 10-K. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 3 Months Ended |
Mar. 31, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recently Issued Accounting Standards | Change in Accounting Principle: Financial Instruments - Credit Losses In June 2016, FASB issued ASU 2016-13, which introduced a new methodology requiring the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. ASU 2016-13 utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to-maturity debt securities and other receivables measured at amortized cost. The new methodology requires an entity to present on the balance sheet the net amount expected to be collected. This methodology replaces the multiple impairment methods under prior GAAP, including for purchased credit impaired ("PCI") assets, and introduces the concept of PCD assets. The Company's PCI assets previously accounted for under ASC 310-30 are now accounted for as PCD assets upon adoption of ASU 2016-13. ASU 2016-13 requires PCD assets to be recognized at their purchase price plus the allowance for credit losses expected at the time of acquisition. ASU 2016-13 also requires that financial assets should be written off when they are deemed uncollectible. In November 2019, FASB issued ASU 2019-11, which amended the PCD asset guidance in ASU 2016-13 to clarify that expected recoveries of amounts previously written off and expected to be written off should be included in the valuation account. Additionally, they should not exceed the aggregate of amounts previously written off and expected to be written off by an entity. Further, ASU 2019-11 clarifies that a negative allowance is recognized when an entity determines, after a full or partial writeoff of the amortized cost basis, that it will recover all or a portion of the basis. The Company adopted ASC Topic 326 on January 1, 2020 on a prospective basis. In accordance with the guidance, substantially all the Company’s PCI assets were transitioned using the PCD guidance, with immediate writeoff of the amortized cost basis of individual accounts and establishment of a negative allowance for expected recoveries equal to the amortized cost basis written off. Accounts previously accounted for under ASC Topic 310-30, were aggregated into annual pools based on similar risk characteristics and an effective interest rate was established based on the estimated remaining cash flows of the annual pool. The immediate writeoff and subsequent recognition of expected recoveries had no impact on the Company’s Consolidated Income Statements or the Consolidated Balance Sheets at the date of adoption. The Company develops its estimate of expected recoveries by applying discounted cash flow methodologies to its ERC and recognizes income over the estimated life of the pool at the constant effective interest rate of the pool. Changes (favorable and unfavorable) in expected cash flows are recognized in current period earnings by adjusting the present value of the expected recoveries. Following the transition guidance for PCD assets, the Company grossed up the amortized cost of its net finance receivables at January 1, 2020 as shown below (amounts in thousands): Amortized cost $ 3,514,165 Allowance for credit losses 125,757,689 Noncredit discount 3,240,131 Face value $ 132,511,985 Allowance for credit losses $ 125,757,689 Writeoffs, net (125,757,689 ) Expected recoveries 3,514,165 Initial negative allowance for expected recoveries $ 3,514,165 Recently issued accounting standards adopted: Financial Instruments - Credit Losses Effective January 1, 2020, the Company adopted ASC 326 on a prospective basis. Prior to January 1, 2020, substantially all of the Company's investment in finance receivables were accounted for under ASC 310-30. Refer to Note 2 for comprehensive details. Intangibles - Goodwill and Other In January 2017, FASB issued ASU 2017-04 which eliminates Step 2 of the goodwill impairment test. Instead, an entity performs its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company adopted ASU 2017-04 on January 1, 2020 which had no impact on its consolidated financial statements. Fair Value Measurement In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” ("ASU 2018-13"). ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. The Company adopted ASU 2018-13 on January 1, 2020 which had no impact to the Company's Notes to Consolidated Financial Statements. Recently issued accounting standards not yet adopted: Income Taxes I n December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes. This standard is effective for annual and interim periods beginning af ter December 15, 2020 on a prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2019-12 on its c onsolidated financial statements and expects that the adoption of the standard will result in additional and modified disclosures. Investments-Equity Securities I n January 2020, the FASB issued ASU 2020-01 “Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815” (“ASU 2020-01”). ASU 2020-01 clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments-Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. Additionally, it clarifies that, when determining the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. This standard is effective for public entities for financial statements issued for fiscal years and interim periods beginning after December 15, 2020. The Company is evaluating the impact of ASU 2020-01 but does not expect adoption to have a material effect on its consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference London Inter-bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued. ASU 2020-04 is effective immediately for a limited time through December 31, 2022. The Company is currently evaluating the impact of ASU 2020-04. The Company does not expect that any other recently issued accounting pronouncements will have a material effect on its consolidated financial statements. |
Subsequent Events (Notes)
Subsequent Events (Notes) | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events: On May 6, 2020 , the Company entered into the Second Amendment to the North American Credit Facility, which, among other things, includes: • the consolidated total leverage ratio limit will increase to 3.25 from 2.75 effective after June 30, 2020 through December 31, 2020. After December 31, 2020, the consolidated total leverage ratio limit will decrease to 3.0 until maturity; • the LIBOR floor increases from zero to 100% on the revolving loans; • the consolidated senior secured leverage ratio limit will increase from 2.25 to 2.75 until March 31, 2021. On March 31, 2021, the senior secured leverage ratio will decrease to 2.25 until maturity; • the ERC borrowing base on all domestic Core eligible pools will increase from 35% to 40% effective July 31, 2020 until January 31, 2021. If the ERC advance rate drops to 35% or below during this period, the ERC borrowing base will return to 35% |
Organization and Business (Poli
Organization and Business (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Goodwill and Intangible Assets | Goodwill and intangible assets |
Basis of Presentation | Basis of presentation : The accompanying interim financial statements have been prepared in accordance with the instructions for Quarterly Reports on Form 10-Q and, therefore, do not include all information and Notes to the Consolidated Financial Statements necessary for a complete presentation of financial position, results of operations, comprehensive income/(loss) and cash flows in conformity with GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the Company's Consolidated Balance Sheets as of March 31, 2020 , its Consolidated Income Statements, and Statements of Comprehensive Income/(Loss) for the three months ended March 31, 2020 and 2019 , and its Statements of Changes in Equity and Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019, have been included. The Consolidated Income Statements of the Company for the three months ended March 31, 2020 may not be indicative of future results. |
New Accounting Pronouncements | Financial Instruments - Credit Losses In June 2016, FASB issued ASU 2016-13, which introduced a new methodology requiring the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. ASU 2016-13 utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to-maturity debt securities and other receivables measured at amortized cost. The new methodology requires an entity to present on the balance sheet the net amount expected to be collected. This methodology replaces the multiple impairment methods under prior GAAP, including for purchased credit impaired ("PCI") assets, and introduces the concept of PCD assets. The Company's PCI assets previously accounted for under ASC 310-30 are now accounted for as PCD assets upon adoption of ASU 2016-13. ASU 2016-13 requires PCD assets to be recognized at their purchase price plus the allowance for credit losses expected at the time of acquisition. ASU 2016-13 also requires that financial assets should be written off when they are deemed uncollectible. In November 2019, FASB issued ASU 2019-11, which amended the PCD asset guidance in ASU 2016-13 to clarify that expected recoveries of amounts previously written off and expected to be written off should be included in the valuation account. Additionally, they should not exceed the aggregate of amounts previously written off and expected to be written off by an entity. Further, ASU 2019-11 clarifies that a negative allowance is recognized when an entity determines, after a full or partial writeoff of the amortized cost basis, that it will recover all or a portion of the basis. The Company adopted ASC Topic 326 on January 1, 2020 on a prospective basis. In accordance with the guidance, substantially all the Company’s PCI assets were transitioned using the PCD guidance, with immediate writeoff of the amortized cost basis of individual accounts and establishment of a negative allowance for expected recoveries equal to the amortized cost basis written off. Accounts previously accounted for under ASC Topic 310-30, were aggregated into annual pools based on similar risk characteristics and an effective interest rate was established based on the estimated remaining cash flows of the annual pool. The immediate writeoff and subsequent recognition of expected recoveries had no impact on the Company’s Consolidated Income Statements or the Consolidated Balance Sheets at the date of adoption. The Company develops its estimate of expected recoveries by applying discounted cash flow methodologies to its ERC and recognizes income over the estimated life of the pool at the constant effective interest rate of the pool. Changes (favorable and unfavorable) in expected cash flows are recognized in current period earnings by adjusting the present value of the expected recoveries. Recently issued accounting standards adopted: Financial Instruments - Credit Losses Effective January 1, 2020, the Company adopted ASC 326 on a prospective basis. Prior to January 1, 2020, substantially all of the Company's investment in finance receivables were accounted for under ASC 310-30. Refer to Note 2 for comprehensive details. Intangibles - Goodwill and Other In January 2017, FASB issued ASU 2017-04 which eliminates Step 2 of the goodwill impairment test. Instead, an entity performs its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company adopted ASU 2017-04 on January 1, 2020 which had no impact on its consolidated financial statements. Fair Value Measurement In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” ("ASU 2018-13"). ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. The Company adopted ASU 2018-13 on January 1, 2020 which had no impact to the Company's Notes to Consolidated Financial Statements. Recently issued accounting standards not yet adopted: Income Taxes I n December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes. This standard is effective for annual and interim periods beginning af ter December 15, 2020 on a prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2019-12 on its c onsolidated financial statements and expects that the adoption of the standard will result in additional and modified disclosures. Investments-Equity Securities I n January 2020, the FASB issued ASU 2020-01 “Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815” (“ASU 2020-01”). ASU 2020-01 clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments-Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. Additionally, it clarifies that, when determining the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. This standard is effective for public entities for financial statements issued for fiscal years and interim periods beginning after December 15, 2020. The Company is evaluating the impact of ASU 2020-01 but does not expect adoption to have a material effect on its consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference London Inter-bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued. ASU 2020-04 is effective immediately for a limited time through December 31, 2022. The Company is currently evaluating the impact of ASU 2020-04. The Company does not expect that any other recently issued accounting pronouncements will have a material effect on its consolidated financial statements. |
Organization and Business (Tabl
Organization and Business (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Revenue And Long-Lived Assets Held By Geographical Location | The following table shows the amount of revenue generated for the three months ended March 31, 2020 and 2019 , and long-lived assets held at March 31, 2020 and 2019 , both for the U.S., the Company's country of domicile, and outside of the U.S. (amounts in thousands): As of and for the As of and for the Three Months Ended March 31, 2020 Three Months Ended March 31, 2019 Revenues Long-Lived Assets Revenues Long-Lived Assets United States $ 153,335 $ 115,053 $ 167,576 $ 110,643 United Kingdom 36,340 3,076 29,756 3,993 Other (1) 62,109 8,408 48,545 10,377 Total $ 251,784 $ 126,537 $ 245,877 $ 125,013 (1) None of the countries included in "Other" comprise greater than 10% of the Company's consolidated revenues or long-lived assets. |
Change in Accounting Principle
Change in Accounting Principle (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | Following the transition guidance for PCD assets, the Company grossed up the amortized cost of its net finance receivables at January 1, 2020 as shown below (amounts in thousands): Amortized cost $ 3,514,165 Allowance for credit losses 125,757,689 Noncredit discount 3,240,131 Face value $ 132,511,985 Allowance for credit losses $ 125,757,689 Writeoffs, net (125,757,689 ) Expected recoveries 3,514,165 Initial negative allowance for expected recoveries $ 3,514,165 |
Finance Receivables, net (Table
Finance Receivables, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Receivables [Abstract] | |
Schedule of Finance Receivables, Net | Finance receivables, net consists of the following at March 31, 2020 (amounts in thousands): Amortized cost $ — Negative allowance for expected recoveries (1) 3,408,074 Balance at end of period $ 3,408,074 (1) The negative allowance balance includes certain portfolios of nonperforming loans for which the Company holds a beneficial interest representing approximately 1% of the balance. |
Schedule of Changes in Negative Allowance for Expected Recoveries | Changes in the negative allowance for expected recoveries by portfolio segment for the three months ended March 31, 2020 were as follows (amounts in thousands): Core Insolvency Total Balance at beginning of period $ 3,051,426 $ 462,739 $ 3,514,165 Initial negative allowance for expected recoveries - portfolio acquisitions (1) 233,687 39,550 273,237 Foreign currency translation adjustment (120,214 ) (9,642 ) (129,856 ) Recoveries applied to negative allowance (2) (199,038 ) (37,618 ) (236,656 ) Changes in expected recoveries (3) (16,477 ) 3,661 (12,816 ) Balance at end of period $ 2,949,384 $ 458,690 $ 3,408,074 (1) Initial negative allowance for expected recoveries - portfolio acquisitions Portfolio acquisitions for the three months ended March 31, 2020 were as follows (amounts in thousands): Core Insolvency Total Face value $ 1,891,142 $ 177,454 $ 2,068,596 Noncredit discount (213,289 ) (13,032 ) (226,321 ) Allowance for credit losses at acquisition (1,444,166 ) (124,872 ) (1,569,038 ) Purchase price $ 233,687 $ 39,550 $ 273,237 The initial negative allowance recorded on portfolio acquisitions for the three months ended March 31, 2020 was as follows (amounts in thousands): Core Insolvency Total Allowance for credit losses at acquisition $ (1,444,166 ) $ (124,872 ) $ (1,569,038 ) Writeoffs, net 1,444,166 124,872 1,569,038 Expected recoveries 233,687 39,550 273,237 Initial negative allowance for expected recoveries $ 233,687 $ 39,550 $ 273,237 (2) Recoveries applied to negative allowance Recoveries applied to the negative allowance were computed as follows for the three months ended March 31, 2020 (amounts in thousands): Core Insolvency Total Recoveries (a) $ 440,694 $ 57,984 $ 498,678 Less - amounts reclassified to portfolio income (b) 241,656 20,366 262,022 Recoveries applied to negative allowance $ 199,038 $ 37,618 $ 236,656 (a) Recoveries includes cash collections, buybacks and other adjustments. (b) The Company reported income on expected recoveries based on the constant effective interest rate in portfolio income on the Company's Consolidated Income Statements. (3) Changes in expected recoveries Changes in expected recoveries consists of the following for the three months ended March 31, 2020 (amounts in thousands): Core Insolvency Total Changes in expected future recoveries $ (20,524 ) $ (102 ) $ (20,626 ) Recoveries received in excess/(shortfall) of forecast 4,047 3,763 7,810 Changes in expected recoveries $ (16,477 ) $ 3,661 $ (12,816 ) |
Schedule of Changes in Finance Receivables | Changes in finance receivables, net for the three months ended March 31, 2019 were as follows (amounts in thousands): Three Months Ended March 31, 2019 Balance at beginning of period $ 3,084,777 Acquisitions of finance receivables (1) 313,446 Foreign currency translation adjustment 7,436 Cash collections (461,171 ) Income recognized on finance receivables 238,836 Net allowance charges (6,095 ) Balance at end of period $ 3,177,229 (1) Includes portfolio purchases adjusted for buybacks and acquisition related costs, and portfolios from the acquisition of a business in Canada made during the first quarter of 2019. |
Schedule of Cash Collections Applied to Principal | At the time of acquisition and each quarter thereafter, the life of each quarterly accounting pool is estimated based on projected amounts and timing of future cash collections using the proprietary models of the Company. Based upon current projections, cash collections expected to be applied to principal are estimated to be as follows for the twelve-month periods ending March 31, (amounts in thousands): 2020 $ 850,955 2021 718,010 2023 562,256 2024 426,004 2025 258,793 2026 137,843 2027 77,642 2028 47,138 2029 38,084 2030 28,474 Thereafter 32,030 Total ERC expected to be applied to principal $ 3,177,229 |
Schedule of Changes in Accretable Yield | Changes in accretable yield for the three months ended March 31, 2019 were as follows (amounts in thousands): Three Months Ended March 31, 2019 Balance at beginning of period $ 3,058,445 Income recognized on finance receivables (238,836 ) Net allowance charges 6,095 Additions from portfolio acquisitions 235,814 Reclassifications from nonaccretable difference 19,161 Foreign currency translation adjustment (511 ) Balance at end of period $ 3,080,168 |
Schedule of Valuation Allowance Account | The following is a summary of activity within the Company's valuation allowance account, all of which relates to acquired finance receivables, for the three months ended March 31, 2019 (amounts in thousands): Three Months Ended March 31, 2019 Beginning balance $ 257,148 Allowance charges 7,977 Reversal of previously recorded allowance charges (1,882 ) Net allowance charges 6,095 Foreign currency translation adjustment 81 Ending balance $ 263,324 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of Investments | Investments consisted of the following at March 31, 2020 and December 31, 2019 (amounts in thousands): March 31, 2020 December 31, 2019 Debt securities Available-for-sale $ 4,347 $ 5,052 Equity securities Private equity funds 7,141 7,218 Mutual funds 33,353 33,677 Equity method investments 7,870 10,229 Total investments $ 52,711 $ 56,176 |
Schedule of Amortized Cost and Estimated Fair Value in Debt Securities | The amortized cost and estimated fair value of investments in debt securities at March 31, 2020 and December 31, 2019 were as follows (amounts in thousands): March 31, 2020 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Aggregate Fair Value Available-for-sale Government bonds $ 4,219 $ 128 $ — $ 4,347 December 31, 2019 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Aggregate Fair Value Available-for-sale Government bonds $ 5,095 $ — $ 43 $ 5,052 |
Goodwill And Intangible Asset_2
Goodwill And Intangible Assets, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Goodwill | The following table represents the changes in goodwill for the three months ended March 31, 2020 and 2019 (amounts in thousands): Three Months Ended March 31, 2020 2019 Goodwill: Balance at beginning of period $ 480,794 $ 464,116 Changes: Acquisition (1) — 13,653 Foreign currency translation adjustment (62,229 ) 2,749 Net change in goodwill (62,229 ) 16,402 Balance at end of period $ 418,565 $ 480,518 (1) The $13.7 million addition to goodwill during the three months ended March 31, 2019, is related to the acquisition of a business in Canada. |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Lease, Cost | The components of lease expense for the three months ended March 31, 2020 and 2019, were as follows (amounts in thousands): Three months ended March 31, 2020 2019 Operating lease expense $ 3,063 $ 2,863 Short-term lease expense 693 842 Total lease expense $ 3,756 $ 3,705 Supplemental cash flow information and non-cash activity related to leases for the three months ended March 31, 2020 and 2019 were as follows (amounts in thousands): Three months ended March 31, 2020 2019 Cash paid for amounts included in the measurement of operating lease liabilities $ 2,991 $ 2,780 ROU assets obtained in exchange for operating lease obligations 531 76,175 Lease term and discount rate information related to operating leases were as follows as of the dates indicated: Three months ended March 31, 2020 2019 Weighted-average remaining lease term (years) 10.6 11.0 Weighted-average discount rate 4.89 % 4.95 % |
Lessee, Operating Lease, Liability, Maturity | Maturities of lease liabilities at March 31, 2020 are as follows for the following periods (amounts in thousands): Operating Leases For the nine months ending December 31, 2020 $ 8,747 For the year ending December 31, 2021 11,250 For the year ending December 31, 2022 9,281 For the year ending December 31, 2023 7,148 For the year ending December 31, 2024 6,387 Thereafter 49,434 Total lease payments $ 92,247 Less imputed interest 21,145 Total $ 71,102 |
Borrowings (Tables)
Borrowings (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The Company's borrowings consisted of the following as of the dates indicated (amounts in thousands): March 31, 2020 December 31, 2019 Americas revolving credit $ 749,211 $ 772,037 Europe revolving credit 1,058,348 1,017,465 Term loans 422,500 425,000 Convertible senior notes 632,500 632,500 2,862,559 2,847,002 Less: Debt discount and issuance costs (34,557 ) (38,577 ) Total $ 2,828,002 $ 2,808,425 |
Schedule of Maturities of Long-term Debt | The following principal payments are due on the Company's borrowings as of March 31, 2020 for the 12-month periods ending March 31, (amounts in thousands): 2021 $ 298,395 2022 10,895 2023 2,208,269 2024 345,000 Total $ 2,862,559 |
Schedule of Liability and Equity Components | The balances of the liability and equity components of the Notes outstanding were as follows as of the dates indicated (amounts in thousands): March 31, 2020 December 31, 2019 Liability component - principal amount $ 632,500 $ 632,500 Unamortized debt discount (28,197 ) (31,414 ) Liability component - net carrying amount $ 604,303 $ 601,086 Equity component $ 76,216 $ 76,216 |
Schedule of Debt Interest Expense | Interest expense related to the Notes was as follows for the periods indicated (amounts in thousands): Three Months Ended March 31, 2020 2019 Interest expense - stated coupon rate $ 5,175 $ 5,175 Interest expense - amortization of debt discount 3,217 3,042 Total interest expense - convertible senior notes $ 8,392 $ 8,217 |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The following table summarizes the fair value of derivative instruments in the Company's Consolidated Balance Sheets (amounts in thousands): March 31, 2020 December 31, 2019 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate contracts Other assets $ — Other assets $ 323 Interest rate contracts Other liabilities 43,674 Other liabilities 17,807 Derivatives not designated as hedging instruments: Foreign currency contracts Other assets 18,126 Other assets 552 Foreign currency contracts Other liabilities 15,614 Other liabilities 5,856 |
Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location | The following table summarizes the effects of derivatives designated as cash flow hedging instruments on the consolidated financial statements for the three months ended March 31, 2020 and 2019 (amounts in thousands): Gain or (loss) recognized in OCI, net of tax Gain or (loss) reclassified from OCI into income Three Months Ended March 31, Three Months Ended March 31, Derivatives designated as cash flow hedging instruments 2020 2019 Location of gain or (loss) reclassified from OCI into income 2020 2019 Interest rate contracts $ (21,350 ) $ (5,795 ) Interest expense, net $ (1,012 ) $ (80 ) |
Schedule of derivative instruments not designated as hedging instruments | The following table summarizes the effects of derivatives not designated as hedging instruments on the Company’s Consolidated Income Statements for the three months ended March 31, 2020 and 2019 (amounts in thousands): Amount of gain or (loss) recognized in income Three Months Ended March 31, Derivatives not designated as hedging instruments Location of gain or (loss) recognized in income 2020 2019 Foreign currency contracts Foreign exchange gain $ 26,786 $ (5,256 ) Foreign currency contracts Interest expense, net (1,001 ) — Interest rate contracts Interest expense, net 1,038 (349 ) |
Fair Value Measurements and D_2
Fair Value Measurements and Disclosures (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of financial instruments not required to be carried at fair value | The carrying amounts in the table are recorded in the Consolidated Balance Sheets at March 31, 2020 and December 31, 2019 (amounts in thousands): March 31, 2020 December 31, 2019 Carrying Estimated Carrying Estimated Financial assets: Cash and cash equivalents $ 179,995 $ 179,995 $ 119,774 $ 119,774 Finance receivables, net 3,408,074 3,503,737 3,514,165 3,645,610 Financial liabilities: Interest-bearing deposits 97,465 97,465 106,246 106,246 Revolving lines of credit 1,807,559 1,807,559 1,789,502 1,789,502 Term loans 422,500 422,500 425,000 425,000 Convertible senior notes 604,303 589,742 601,086 648,968 |
Schedule of financial instruments required to be carried at fair value | The carrying amounts in the following table are measured at fair value on a recurring basis in the accompanying Consolidated Balance Sheets at March 31, 2020 and December 31, 2019 (amounts in thousands): Fair Value Measurements as of March 31, 2020 Level 1 Level 2 Level 3 Total Assets: Available-for-sale investments Government bonds $ 4,347 $ — $ — $ 4,347 Fair value through net income Mutual funds 33,353 — — 33,353 Derivative contracts (recorded in other assets) — 18,126 — 18,126 Liabilities: Derivative contracts (recorded in other liabilities) — 59,288 — 59,288 Fair Value Measurements as of December 31, 2019 Level 1 Level 2 Level 3 Total Assets: Available-for-sale investments Government bonds $ 5,052 $ — $ — $ 5,052 Fair value through net income Mutual funds 33,677 — — 33,677 Derivative contracts (recorded in other assets) — 875 — 875 Liabilities: Derivative contracts (recorded in other liabilities) — 23,663 — 23,663 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table represents the changes in accumulated other comprehensive loss by component, after tax, for the three months ended March 31, 2020 and 2019 (amounts in thousands): Three Months Ended March 31, 2020 Debt Securities Cash Flow Currency Translation Accumulated Other Available-for-sale Hedges Adjustments Comprehensive Loss (1) Ending balance at December 31, 2019 $ (44 ) $ (13,088 ) (247,886 ) $ (261,018 ) Other comprehensive loss before reclassifications 170 (21,350 ) (94,201 ) (115,381 ) Reclassifications, net — 782 — 782 Net current period other comprehensive loss 170 (20,568 ) (94,201 ) (114,599 ) Ending balance at March 31, 2020 $ 126 (33,656 ) $ (342,087 ) $ (375,617 ) Three Months Ended March 31, 2019 Debt Securities Cash Flow Currency Translation Accumulated Other Available-for-sale Hedges Adjustments Comprehensive Loss (1) Ending balance December 31, 2018 $ (83 ) $ 44 $ (242,070 ) $ (242,109 ) Other comprehensive loss before reclassifications 45 (5,795 ) (742 ) (6,492 ) Reclassifications, net — 80 — 80 Net current period other comprehensive loss 45 (5,715 ) (742 ) (6,412 ) Ending balance March 31, 2019 $ (38 ) $ (5,671 ) $ (242,812 ) $ (248,521 ) (1) Net of deferred taxes for unrealized losses from cash flow hedges of $10.0 million and $1.7 million for the three months ended March 31, 2020 and 2019, respectively. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Reconciliation Between the Computation of Basic and Diluted EPS | The following table provides a reconciliation between the computation of basic EPS and diluted EPS for the three months ended March 31, 2020 and 2019 (amounts in thousands, except per share amounts): For the Three Months Ended March 31, 2020 2019 Net Income Attributable to PRA Group, Inc. Weighted EPS Net Income Attributable to PRA Group, Inc. Weighted EPS Basic EPS $ 19,135 45,452 $ 0.42 $ 15,227 45,338 $ 0.34 Dilutive effect of nonvested share awards — 332 — — 81 — Diluted EPS $ 19,135 45,784 $ 0.42 $ 15,227 45,419 $ 0.34 |
Organization and Business (Deta
Organization and Business (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Number of reportable segments | segment | 1 | |
Revenues | $ 251,784 | $ 245,877 |
Long-Lived Assets | $ 126,537 | 125,013 |
Warranty period for international agreements | 24 months | |
UNITED STATES | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 153,335 | 167,576 |
Long-Lived Assets | 115,053 | 110,643 |
UNITED KINGDOM | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 36,340 | 29,756 |
Long-Lived Assets | 3,076 | 3,993 |
Outside the United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 62,109 | 48,545 |
Long-Lived Assets | $ 8,408 | $ 10,377 |
Minimum | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Warranty period | 90 days | |
Maximum | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Warranty period | 180 days |
Change in Accounting Principl_2
Change in Accounting Principle (Details) - USD ($) $ in Thousands | Jan. 01, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Purchase price | $ 3,514,165 | $ 273,237 | |
Allowance for credit losses | 125,757,689 | 1,569,038 | |
Noncredit discount | 3,240,131 | 226,321 | |
Face value | 132,511,985 | 2,068,596 | |
Writeoffs, net | (125,757,689) | ||
Expected recoveries | 3,514,165 | 236,656 | |
Initial negative allowance for expected recoveries | $ 3,514,165 | $ 3,408,074 | $ 3,514,165 |
Finance Receivables, net (Rollf
Finance Receivables, net (Rollforward) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | |
Receivables [Abstract] | |||
Amortized cost | $ 0 | ||
Initial negative allowance for expected recoveries | 3,408,074 | $ 3,514,165 | $ 3,514,165 |
Balance at end of period | $ 3,408,074 | ||
Beneficial interest, percentage of balance | 1.00% |
Finance Receivables, net Financ
Finance Receivables, net Finance Receivables, net (Allowance for Expected Recoveries) (Details) - USD ($) $ in Thousands | Jan. 01, 2020 | Mar. 31, 2020 | Mar. 31, 2019 |
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||
Balance at beginning of period | $ 3,514,165 | $ 3,514,165 | |
Initial negative allowance for expected recoveries - acquisitions | 273,237 | ||
Foreign currency translation adjustment | (129,856) | ||
Expected recoveries | (3,514,165) | (236,656) | |
Changes in estimated recoveries | (12,816) | $ 0 | |
Balance at end of period | 3,514,165 | 3,408,074 | |
Core | |||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||
Balance at beginning of period | 3,051,426 | 3,051,426 | |
Initial negative allowance for expected recoveries - acquisitions | 233,687 | ||
Foreign currency translation adjustment | (120,214) | ||
Expected recoveries | (199,038) | ||
Changes in estimated recoveries | (16,477) | ||
Balance at end of period | 2,949,384 | ||
Insolvency | |||
Financing Receivable, Allowance for Credit Losses [Roll Forward] | |||
Balance at beginning of period | $ 462,739 | 462,739 | |
Initial negative allowance for expected recoveries - acquisitions | 39,550 | ||
Foreign currency translation adjustment | (9,642) | ||
Expected recoveries | (37,618) | ||
Changes in estimated recoveries | 3,661 | ||
Balance at end of period | $ 458,690 |
Finance Receivables, net (Portf
Finance Receivables, net (Portfolio Acquisitions) (Details) - USD ($) $ in Thousands | Jan. 01, 2020 | Mar. 31, 2020 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Face value | $ 132,511,985 | $ 2,068,596 |
Noncredit discount | (3,240,131) | (226,321) |
Allowance for credit losses at acquisition | (125,757,689) | (1,569,038) |
Purchase price | $ 3,514,165 | 273,237 |
Insolvency | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Face value | 177,454 | |
Noncredit discount | (13,032) | |
Allowance for credit losses at acquisition | (124,872) | |
Purchase price | 39,550 | |
Core | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Face value | 1,891,142 | |
Noncredit discount | (213,289) | |
Allowance for credit losses at acquisition | (1,444,166) | |
Purchase price | $ 233,687 |
Finance Receivables, net Fina_2
Finance Receivables, net Finance Receivables, net (Initial Negative Allowance for Recoveries) (Details) - USD ($) $ in Thousands | Jan. 01, 2020 | Mar. 31, 2020 |
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Allowance for credit losses at acquisition | $ (125,757,689) | $ (1,569,038) |
Writeoffs, net | 1,569,038 | |
Expected recoveries | 273,237 | |
Initial negative allowance for expected recoveries | $ 3,514,165 | 273,237 |
Insolvency | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Allowance for credit losses at acquisition | (124,872) | |
Writeoffs, net | 124,872 | |
Expected recoveries | 39,550 | |
Initial negative allowance for expected recoveries | 39,550 | |
Core | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Allowance for credit losses at acquisition | (1,444,166) | |
Writeoffs, net | 1,444,166 | |
Expected recoveries | 233,687 | |
Initial negative allowance for expected recoveries | $ 233,687 |
Finance Receivables, net Fina_3
Finance Receivables, net Finance Receivables, net (Recoveries) (Details) - USD ($) $ in Thousands | Jan. 01, 2020 | Mar. 31, 2020 | Mar. 31, 2019 |
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Financing Receivable, Allowance For Credit Losses, Recoveries And Other Adjustments | $ 498,678 | ||
Financing Receivable, Allowance For Credit Losses, Recoveries Reclassified To Income | 262,022 | $ 0 | |
Expected recoveries | $ 3,514,165 | 236,656 | |
Core | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Financing Receivable, Allowance For Credit Losses, Recoveries And Other Adjustments | 440,694 | ||
Financing Receivable, Allowance For Credit Losses, Recoveries Reclassified To Income | 241,656 | ||
Expected recoveries | 199,038 | ||
Insolvency | |||
Financing Receivable, Allowance for Credit Losses [Line Items] | |||
Financing Receivable, Allowance For Credit Losses, Recoveries And Other Adjustments | 57,984 | ||
Financing Receivable, Allowance For Credit Losses, Recoveries Reclassified To Income | 20,366 | ||
Expected recoveries | $ 37,618 |
Finance Receivables, net (Chang
Finance Receivables, net (Changes in Estimated Future Recoveries) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Financing Receivable, Allowance For Credit Loss, Changes In Expected Future Recoveries | $ (20,626) | |
Financing Receivable, Allowance For Credit Loss, Recoveries In Excess (Shortfall) Of Forecast | 7,810 | |
Changes in estimated recoveries | (12,816) | $ 0 |
Core | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Financing Receivable, Allowance For Credit Loss, Changes In Expected Future Recoveries | (20,524) | |
Financing Receivable, Allowance For Credit Loss, Recoveries In Excess (Shortfall) Of Forecast | 4,047 | |
Changes in estimated recoveries | (16,477) | |
Insolvency | ||
Financing Receivable, Allowance for Credit Losses [Line Items] | ||
Financing Receivable, Allowance For Credit Loss, Changes In Expected Future Recoveries | (102) | |
Financing Receivable, Allowance For Credit Loss, Recoveries In Excess (Shortfall) Of Forecast | 3,763 | |
Changes in estimated recoveries | $ 3,661 |
Finance Receivables, net (Sched
Finance Receivables, net (Schedule of Changes In Finance Receivables) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount [Roll Forward] | ||
Balance at beginning of period | $ 3,514,165 | |
Acquisitions of finance receivables | $ 313,446 | |
Foreign currency translation adjustment | 7,436 | |
Cash collections | (461,171) | |
Income recognized on finance receivables | 0 | 238,836 |
Net allowance charges | 0 | (6,095) |
Balance at end of period | $ 3,408,074 | $ 3,177,229 |
Finance Receivables, net (Narra
Finance Receivables, net (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Changes in estimated recoveries | $ (12,816) | $ 0 |
Face value of receivable portfolios | 4,700,000 | |
Payments to acquire finance receivables | 318,800 | |
Estimated remaining collections on purchased receivables | 541,100 | |
Unamortized purchased principal (purchase price) under the cost recovery method | $ 43,500 | |
Financing Receivable, Allowance For Credit Loss, Changes In Expected Future Recoveries | (20,626) | |
Financing Receivable, Allowance For Credit Loss, Recoveries In Excess (Shortfall) Of Forecast | $ 7,810 | |
Minimum | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Financing Receivables Assumptions, Changes In Timing Of Collections, Period | 6 months | |
Maximum | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Financing Receivables Assumptions, Changes In Timing Of Collections, Period | 12 months |
Finance Receivables, net (Sch_2
Finance Receivables, net (Schedule of Cash Collections Applied to Principal) (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Receivables [Abstract] | |
2020 | $ 850,955 |
2021 | 718,010 |
2022 | 562,256 |
2023 | 426,004 |
2024 | 258,793 |
2025 | 137,843 |
2026 | 77,642 |
2027 | 47,138 |
2028 | 38,084 |
2029 | 28,474 |
Thereafter | 32,030 |
Total ERC expected to be applied to principal | $ 3,177,229 |
Finance Receivables, net (Sch_3
Finance Receivables, net (Schedule of Changes in Accretable Yield) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||
Balance at beginning of period | $ 3,058,445 | |
Income recognized on finance receivables | $ 0 | (238,836) |
Net allowance charges | $ 0 | 6,095 |
Additions from portfolio acquisitions | 235,814 | |
Reclassifications from nonaccretable difference | 19,161 | |
Foreign currency translation adjustment | (511) | |
Balance at end of period | $ 3,080,168 |
Finance Receivables, net (Sch_4
Finance Receivables, net (Schedule of Valuation Allowance Account) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance For Loan Losses [Roll Forward] | ||
Beginning balance | $ 257,148 | |
Allowance charges | 7,977 | |
Reversal of previously recorded allowance charges | (1,882) | |
Net allowance charges | $ 0 | 6,095 |
Foreign currency translation adjustment | 81 | |
Ending balance | $ 263,324 |
Investments - Summary of Invest
Investments - Summary of Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt securities | ||
Available-for-sale | $ 4,347 | $ 5,052 |
Equity securities | ||
Equity method investments | 7,870 | 10,229 |
Investments | 52,711 | 56,176 |
Private equity funds | ||
Equity securities | ||
Equity securities | 7,141 | 7,218 |
Mutual funds | ||
Equity securities | ||
Equity securities | $ 33,353 | $ 33,677 |
Investments - Amortized Costs (
Investments - Amortized Costs (Details) - Government Bonds and Fixed Income Funds - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Available-for-sale | ||
Amortized Cost | $ 4,219 | $ 5,095 |
Gross Unrealized Gains | 128 | 0 |
Gross Unrealized Losses | 0 | 43 |
Aggregate Fair Value | $ 4,347 | $ 5,052 |
Investments - Narrative (Detail
Investments - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Debt and Equity Securities, FV-NI [Line Items] | ||
Cost-method investment, ownership percentage | 1.00% | |
Unrealized gain on equity securities | $ 7.6 | $ 2.1 |
RCB Investimentos S.A. | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Ownership percentage | 11.70% |
Goodwill And Intangible Asset_3
Goodwill And Intangible Assets, Net Schedule of Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Goodwill [Roll Forward] | ||
Goodwill, balance at beginning of year | $ 480,794 | $ 464,116 |
Goodwill | 480,794 | |
Acquisition | 0 | 13,653 |
Foreign currency translation adjustment | (62,229) | 2,749 |
Net change in goodwill | (62,229) | 16,402 |
Goodwill | $ 418,565 | $ 480,518 |
Leases - Narrative (Details)
Leases - Narrative (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Lessee, Lease, Description [Line Items] | |
Renewal term | 5 years |
Termination period | 1 year |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 20 years |
Leases - Lease Cost and Other I
Leases - Lease Cost and Other Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Operating lease expense | $ 3,063 | $ 2,863 |
Short-term lease expense | 693 | 842 |
Total lease expense | 3,756 | 3,705 |
Cash paid for amounts included in the measurement of operating lease liabilities | 2,991 | 2,780 |
ROU assets obtained in exchange for operating lease obligations | $ 531 | $ 76,175 |
Weighted-average remaining lease term (years) | 10 years 7 months 6 days | 11 years |
Weighted-average discount rate | 4.89% | 4.95% |
Leases - Schedule of Operating
Leases - Schedule of Operating Lease Liability Maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
For the nine months ending December 31, 2020 | $ 8,747 | |
For the year ending December 31, 2021 | 11,250 | |
For the year ending December 31, 2022 | 9,281 | |
For the year ending December 31, 2023 | 7,148 | |
For the year ending December 31, 2024 | 6,387 | |
Thereafter | 49,434 | |
Total lease payments | 92,247 | |
Less imputed interest | (21,145) | |
Total | $ 71,102 | $ 73,377 |
Borrowings - Components of Borr
Borrowings - Components of Borrowings (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Debt outstanding | $ 2,862,559 | $ 2,847,002 |
Less: Debt discount and issuance costs | (34,557) | (38,577) |
Total | 2,828,002 | 2,808,425 |
Term Loan | ||
Debt Instrument [Line Items] | ||
Debt outstanding | 422,500 | 425,000 |
Convertible Senior Notes | ||
Debt Instrument [Line Items] | ||
Debt outstanding | 632,500 | 632,500 |
Americas revolving credit | Line of Credit | ||
Debt Instrument [Line Items] | ||
Debt outstanding | 749,211 | 772,037 |
Europe revolving credit | Line of Credit | ||
Debt Instrument [Line Items] | ||
Debt outstanding | $ 1,058,348 | $ 1,017,465 |
Borrowings - Long-Term Debt Mat
Borrowings - Long-Term Debt Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Disclosure [Abstract] | ||
2021 | $ 298,395 | |
2022 | 10,895 | |
2023 | 2,208,269 | |
2024 | 345,000 | |
Total | $ 2,862,559 | $ 2,847,002 |
Borrowings - North American Rev
Borrowings - North American Revolving Credit and Term Loan (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020USD ($) | Dec. 31, 2019 | |
Credit Agreement | ||
Debt Instrument [Line Items] | ||
Unused commitment fee | 0.375% | |
Credit agreement consolidated leverage ratio | 2.75 | |
Maximum cash dividends | $ 20,000,000 | |
Stock repurchases authorized amount | 100,000,000 | |
North American Credit Agreement | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | 1,540,500,000 | |
Unused portion | 371,200,000 | |
Current borrowing capacity | $ 175,700,000 | |
Consolidated Senior Secured Leverage | Credit Agreement | ||
Debt Instrument [Line Items] | ||
Credit agreement consolidated leverage ratio | 2.25 | 2.25 |
Unsecured Debt | Senior Unsecured Debt other than Convertible Notes Due 2020 | ||
Debt Instrument [Line Items] | ||
Maximum allowable debt | $ 750,000,000 | |
Eurodollar Rate | ||
Debt Instrument [Line Items] | ||
Basis spread variable rate | 1.00% | |
Eurodollar Rate | Credit Agreement | ||
Debt Instrument [Line Items] | ||
Basis spread variable rate | 2.50% | |
Base Rate | Credit Agreement | ||
Debt Instrument [Line Items] | ||
Basis spread variable rate | 1.50% | |
Federal Funds Rate | ||
Debt Instrument [Line Items] | ||
Basis spread variable rate | 0.50% | |
Canadian Prime Rate | ||
Debt Instrument [Line Items] | ||
Basis spread variable rate | 1.50% | |
Line of Credit | Line of Credit | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 422,500,000 | |
Revolving Credit Facility | North American Credit Agreement | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | 1,068,000,000 | |
Line of credit facility, optional increase in borrowing capacity | 500,000,000 | |
Line of credit facility, option for letters of credit | 25,000,000 | |
Line of credit facility, option to reduce borrowing capacity | 25,000,000 | |
Canadian Revolving Credit Facility | North American Credit Agreement | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | 50,000,000 | |
Acquisition Subsequent to 2014 | Credit Agreement | ||
Debt Instrument [Line Items] | ||
Maximum business combinations | 250,000,000 | |
Maximum business combinations, non-loan | $ 50,000,000 | |
Eligible Core Asset Pool | Credit Agreement | ||
Debt Instrument [Line Items] | ||
Percentage of maximum level of borrowings of ERC of eligible asset pools | 35.00% | 35.00% |
Eligible Insolvent Asset Pool | Credit Agreement | ||
Debt Instrument [Line Items] | ||
Percentage of maximum level of borrowings of ERC of insolvent asset pools | 55.00% | |
Eligible Accounts Receivable | Credit Agreement | ||
Debt Instrument [Line Items] | ||
Percentage of maximum level of borrowings of eligible accounts receivable | 75.00% |
Borrowings - European Revolving
Borrowings - European Revolving Credit Facility and Term Loan (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020SEK (kr) | Mar. 31, 2019 | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Line of Credit Facility [Line Items] | ||||
Debt outstanding | $ 2,862,559 | $ 2,847,002 | ||
European Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Loan-to-value covenant | 45.00% | |||
European Revolving Credit Facility | Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Current borrowing capacity | 281,700 | |||
Debt Instrument, covenant, interest bearing deposits, maximum | kr | kr 1,200,000,000 | |||
European Revolving Credit Facility | Overdraft Facility | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | 40,000 | |||
Facility line fee | 0.125% | |||
Line of Credit | Europe revolving credit | ||||
Line of Credit Facility [Line Items] | ||||
Debt outstanding | 1,058,348 | $ 1,017,465 | ||
Line of Credit | European Revolving Credit Facility | Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Line Of Credit Facility, Additional Borrowing Capacity | 200,000 | |||
Debt Instrument, Additional Term | 2 years | |||
Maximum borrowing capacity | 1,300,000 | |||
Unused commitment fee | 1.23% | |||
Unused line fee as a percentage of margin | 35.00% | |||
Current borrowing capacity | 56,400 | |||
Debt instrument, covenant, maximum GIBD | 3.25 | |||
Line of Credit | European Revolving Credit Facility | Term Loan Facility | ||||
Line of Credit Facility [Line Items] | ||||
Increase in rate | 0.05% | |||
Minimum | Line of Credit | European Revolving Credit Facility | Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Line Of Credit Facility, Accordion Feature, Increase Limit | 50,000 | |||
Minimum | Interbank Offered Rate (IBOR) | Line of Credit | European Revolving Credit Facility | Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread variable rate | 2.70% | |||
Maximum | Line of Credit | European Revolving Credit Facility | Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Line Of Credit Facility, Accordion Feature, Increase Limit | $ 500,000 | |||
Maximum | Interbank Offered Rate (IBOR) | Line of Credit | European Revolving Credit Facility | Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread variable rate | 3.80% |
Borrowings - Colombian Revolvin
Borrowings - Colombian Revolving Credit Facility (Details) - Revolving Credit Facility - Colombian Revolving Credit Facility $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Debt Instrument [Line Items] | |
Maximum borrowing capacity | $ 4.9 |
Outstanding borrowings under credit facility | $ 2.4 |
Debt, Weighted Average Interest Rate | 7.13% |
Debt Instrument, Unused Borrowing Capacity, Amount | $ 2.5 |
Indicador Bancario De Referencia Rate (IBR) | |
Debt Instrument [Line Items] | |
Basis spread variable rate | 2.74% |
Borrowings - Convertible Senior
Borrowings - Convertible Senior Notes (Details) - Convertible Senior Notes | May 26, 2017USD ($)day$ / shares | Aug. 13, 2013USD ($)$ / shares | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Debt Instrument [Line Items] | ||||
Carrying amount of convertible debt | $ 76,216,000 | $ 76,216,000 | ||
Note Due 2020 | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 287,500,000 | |||
Stated percentage | 3.00% | |||
Conversion ratio | 15.2172 | |||
Minimum average share price triggering dilutive effect (usd per share) | $ / shares | $ 65.72 | |||
Convertible debt, estimated fair value | $ 255,300,000 | |||
Carrying amount of convertible debt | 32,200,000 | |||
Debt Issuance Cost | 7,300,000 | |||
Equity and debt issuance costs | 8,200,000 | |||
Equity Issuance Costs | $ 900,000 | |||
Interest rate at period end | 4.92% | |||
Note Due 2023 | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 345,000,000 | |||
Stated percentage | 3.50% | |||
Minimum sales price for conversion | 130.00% | |||
Trading days threshold | day | 20 | |||
Consecutive treading days threshold | 30 | |||
Conversion ratio | 21.6275 | |||
Minimum average share price triggering dilutive effect (usd per share) | $ / shares | $ 46.24 | |||
Convertible debt, estimated fair value | $ 298,800,000 | |||
Carrying amount of convertible debt | 46,200,000 | |||
Debt Issuance Cost | 8,300,000 | |||
Equity and debt issuance costs | 9,600,000 | |||
Equity Issuance Costs | $ 1,300,000 | |||
Interest rate at period end | 6.20% |
Borrowings - Balances of Liabil
Borrowings - Balances of Liability and Equity Components (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Debt outstanding | $ 2,862,559 | $ 2,847,002 |
Convertible Senior Notes | ||
Debt Instrument [Line Items] | ||
Debt outstanding | 632,500 | 632,500 |
Less: Debt discount and issuance costs | (28,197) | (31,414) |
Total | 604,303 | 601,086 |
Equity component | $ 76,216 | $ 76,216 |
Borrowings - Interest Expense (
Borrowings - Interest Expense (Details) - Convertible Senior Notes - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Debt Instrument [Line Items] | ||
Interest expense - stated coupon rate | $ 5,175 | $ 5,175 |
Amortization of debt discount | 3,217 | 3,042 |
Total interest expense - convertible notes | $ 8,392 | $ 8,217 |
Derivatives - Schedule of Deriv
Derivatives - Schedule of Derivatives by Balance Sheet Location (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Derivatives, Fair Value [Line Items] | ||
Derivative contracts (recorded in other liabilities) | $ 59,288,000 | $ 23,663,000 |
Derivative contracts (recorded in other assets) | 18,126,000 | 875,000 |
Interest rate contracts | Designated as Hedging Instrument | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative contracts (recorded in other liabilities) | 43,674 | 17,807 |
Interest rate contracts | Designated as Hedging Instrument | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative contracts (recorded in other assets) | 0 | 323 |
Foreign currency contracts | Not Designated as Hedging Instrument | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative contracts (recorded in other liabilities) | 15,614 | 5,856 |
Foreign currency contracts | Not Designated as Hedging Instrument | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative contracts (recorded in other assets) | $ 18,126 | $ 552 |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Designated as Hedging Instrument | Interest rate contracts | ||
Derivative [Line Items] | ||
Net derivative gain (loss) included in OCI to be reclassified next 12 months | $ 8.4 | |
Derivative, Notional Amount1 | 922.2 | $ 959 |
Not Designated as Hedging Instrument | Foreign currency contracts | ||
Derivative [Line Items] | ||
Derivative, Notional Amount1 | $ 747.8 | $ 469.9 |
Maximum | ||
Derivative [Line Items] | ||
Derivative, Term of Contract | 7 years | |
Minimum | ||
Derivative [Line Items] | ||
Derivative, Term of Contract | 2 years |
Derivatives - Schedule of Effec
Derivatives - Schedule of Effects of Derivatives Designated as Cash Flow Hedging Instruments (Details) - Interest rate contracts - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain or (loss) recognized in OCI, net of tax | $ (21,350) | $ (5,795) |
Interest expense, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain or (loss) reclassified from OCI into income | $ (1,012) | $ (80) |
Derivatives - Schedule of Eff_2
Derivatives - Schedule of Effects of Derivatives Not Designated as Hedging Instruments (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Foreign currency contracts | Foreign exchange gain | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gain or (loss) recognized in income | $ 26,786 | $ (5,256) |
Foreign currency contracts | Interest expense, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gain or (loss) recognized in income | (1,001) | 0 |
Interest rate contracts | Interest expense, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Amount of gain or (loss) recognized in income | $ 1,038 | $ (349) |
Fair Value Measurements And D_3
Fair Value Measurements And Disclosures - Financial Instruments Not Required to be Carried at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Jun. 30, 2018 |
Financial assets: | ||||
Cash and cash equivalents, carrying amount | $ 179,995 | $ 119,774 | $ 102,102 | |
Finance receivables, net, carrying amount | 3,408,074 | 3,514,165 | $ 3,177,229 | $ 3,084,777 |
Financial liabilities: | ||||
Interest-bearing deposits, carrying value | 97,465 | 106,246 | ||
Reported Value Measurement [Member] | ||||
Financial assets: | ||||
Cash and cash equivalents, carrying amount | 179,995 | 119,774 | ||
Finance receivables, net, carrying amount | 3,408,074 | 3,514,165 | ||
Financial liabilities: | ||||
Interest-bearing deposits, carrying value | 97,465 | 106,246 | ||
Outstanding borrowings under credit facility | 1,807,559 | 1,789,502 | ||
Term loans, carrying amount | 422,500 | 425,000 | ||
Convertible debt | 604,303 | 601,086 | ||
Estimate of Fair Value Measurement [Member] | ||||
Financial assets: | ||||
Cash and cash equivalents, estimated fair value | 179,995 | 119,774 | ||
Finance receivables, net, estimated fair value | 3,503,737 | 3,645,610 | ||
Financial liabilities: | ||||
Interest-bearing deposits, fair value | 97,465 | 106,246 | ||
Revolving lines of credit, estimated fair value | 1,807,559 | 1,789,502 | ||
Term loans, estimated fair value | 422,500 | 425,000 | ||
Convertible debt, estimated fair value | $ 589,742 | $ 648,968 |
Fair Value Fair Value Measureme
Fair Value Fair Value Measurements and Disclosures - Financial Instruments Required to be Carried at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Assets: | ||
Government bonds | $ 4,347 | $ 5,052 |
Derivative contracts (recorded in other assets) | 18,126 | 875 |
Liabilities: | ||
Derivative contracts (recorded in other liabilities) | 59,288 | 23,663 |
Level 1 | ||
Assets: | ||
Derivative contracts (recorded in other assets) | 0 | 0 |
Liabilities: | ||
Derivative contracts (recorded in other liabilities) | 0 | 0 |
Level 2 | ||
Assets: | ||
Derivative contracts (recorded in other assets) | 18,126 | 875 |
Liabilities: | ||
Derivative contracts (recorded in other liabilities) | 59,288 | 23,663 |
Level 3 | ||
Assets: | ||
Derivative contracts (recorded in other assets) | 0 | 0 |
Liabilities: | ||
Derivative contracts (recorded in other liabilities) | 0 | 0 |
Government bonds | ||
Assets: | ||
Government bonds | 4,347 | 5,052 |
Government bonds | Level 1 | ||
Assets: | ||
Government bonds | 4,347 | 5,052 |
Government bonds | Level 2 | ||
Assets: | ||
Government bonds | 0 | 0 |
Government bonds | Level 3 | ||
Assets: | ||
Government bonds | 0 | 0 |
Mutual funds | ||
Assets: | ||
Mutual funds | 33,353 | 33,677 |
Mutual funds | Level 1 | ||
Assets: | ||
Mutual funds | 33,353 | 33,677 |
Mutual funds | Level 2 | ||
Assets: | ||
Mutual funds | 0 | 0 |
Mutual funds | Level 3 | ||
Assets: | ||
Mutual funds | $ 0 | $ 0 |
Fair Value - Narrative (Details
Fair Value - Narrative (Details) - Private equity funds - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Private equity funds | $ 7.1 | $ 7.2 |
Minimum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Private equity funds, liquidating investment, period | 1 year | |
Maximum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Private equity funds, liquidating investment, period | 5 years |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss - Reclassifications out of AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Interest rate swaps | $ (76) | $ (352) |
Income tax effect of item above | 3,100 | 3,867 |
Net income | 22,436 | 16,912 |
Reclassification out of Accumulated Other Comprehensive Income | Cash Flow Hedges | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Interest rate swaps | (1,012) | (80) |
Income tax effect of item above | 230 | 0 |
Net income | $ (782) | $ (80) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Loss - AOCI by Component (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | $ 1,227,013 | $ 1,123,969 |
Other comprehensive (loss)/income before reclassifications, net | (115,381) | (6,492) |
Reclassifications | 782 | 80 |
Other comprehensive loss attributable to PRA Group, Inc. | (114,599) | (6,412) |
Ending balance | 1,120,676 | 1,126,039 |
Debt Securities Available-for-sale | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | (44) | (83) |
Other comprehensive (loss)/income before reclassifications, net | 170 | 45 |
Reclassifications | 0 | 0 |
Other comprehensive loss attributable to PRA Group, Inc. | 170 | 45 |
Ending balance | 126 | (38) |
Deferred taxes | 10,000 | 1,700 |
Cash Flow Hedges | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | (13,088) | 44 |
Other comprehensive (loss)/income before reclassifications, net | (21,350) | (5,795) |
Reclassifications | 782 | 80 |
Other comprehensive loss attributable to PRA Group, Inc. | (20,568) | (5,715) |
Ending balance | (33,656) | (5,671) |
Currency Translation Adjustments | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | (247,886) | (242,070) |
Other comprehensive (loss)/income before reclassifications, net | (94,201) | (742) |
Reclassifications | 0 | 0 |
Other comprehensive loss attributable to PRA Group, Inc. | (94,201) | (742) |
Ending balance | (342,087) | (242,812) |
Accumulated Other Comprehensive (Loss) | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Beginning balance | (261,018) | (242,109) |
Ending balance | $ (375,617) | $ (248,521) |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Net income | $ 19,135 | $ 15,227 |
Weighted Average Common Shares, Basic EPS | 45,452,000 | 45,338,000 |
Weighted Average Common Shares, Dilutive effect of nonvested share awards | 332,000 | 81,000 |
Weighted Average Common Shares, Diluted EPS | 45,784,000 | 45,419,000 |
EPS, Basic (in dollars per share) | $ 0.42 | $ 0.34 |
EPS, Dilutive effect of nonvested share awards (in dollars per share) | 0 | 0 |
EPS, Diluted (in dollars per share) | $ 0.42 | $ 0.34 |
Antidilutive options outstanding | 0 | 0 |
Income Taxes - Additional Discl
Income Taxes - Additional Disclosures (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Income Tax Disclosure [Abstract] | ||
Cash on hand related to foreign operations with permanently reinvested earnings | $ 115.4 | $ 109.7 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Future compensation under employment agreements | $ 6.2 | |
Amount to be purchased under forward flow agreements | $ 629.2 | |
Recoveries receivable | $ 1 |
Subsequent Events (Details)
Subsequent Events (Details) - Credit Agreement | May 06, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | |||
Credit agreement consolidated leverage ratio | 2.75 | ||
June 30, 2020 Through December 31, 2020 | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Credit agreement consolidated leverage ratio | 3.25 | ||
January 1, 2021 Through Maturity | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Credit agreement consolidated leverage ratio | 3 | ||
London Interbank Offered Rate (LIBOR) | |||
Subsequent Event [Line Items] | |||
Basis spread variable rate | 0.00% | ||
London Interbank Offered Rate (LIBOR) | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Basis spread variable rate | 0.01% | ||
Eligible Core Asset Pool | |||
Subsequent Event [Line Items] | |||
Percentage of maximum level of borrowings of ERC of eligible asset pools | 35.00% | 35.00% | |
ERC rate floor | 35.00% | ||
Eligible Core Asset Pool | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Percentage of maximum level of borrowings of ERC of eligible asset pools | 40.00% | ||
Consolidated Senior Secured Leverage | |||
Subsequent Event [Line Items] | |||
Credit agreement consolidated leverage ratio | 2.25 | 2.25 | |
Consolidated Senior Secured Leverage | May 7th, 2020 Through March 31, 2021 | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Credit agreement consolidated leverage ratio | 2.75 | ||
Consolidated Senior Secured Leverage | April 1, 2021 Through Maturity | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Credit agreement consolidated leverage ratio | 2.25 |
Uncategorized Items - praa-2020
Label | Element | Value |
Restricted Cash | us-gaap_RestrictedCash | $ 4,005,000 |
Restricted Cash | us-gaap_RestrictedCash | $ 0 |