Key Points
European cash collections exceeded internal targets by 3%.
Workforce reductions eliminated over 215 corporate and overhead roles since late 2025.
Third-quarter U.S. legal cash collections grew 19% to $148 million.
On its third-quarter 2026 earnings call, held on Nov. 5, 2026, PRA Group (NASDAQ:PRAA) announced that disciplined cost management helped drive trailing 12-month adjusted EBITDA, a measure of cash-oriented operating profit, up 9% year over year. Debt buyers rely on tight expense controls and selective portfolio purchasing to maintain returns across shifting credit cycles. Three key takeaways from management explain how these operational moves position the business for the long term.
1. Capital Deployment Shifts Toward Higher European Returns
Management is prioritizing net returns by redirecting capital away from a competitive U.S. market and toward European debt portfolios. European cash collections exceeded internal expectations by 3% during the quarter, supporting the strategic pivot.
We have seen a good level of supply in Europe and have shifted more capital deployment to Europe using our global capital allocation framework. We benefit from access to a global set of markets and can shift capital to where we can earn the strongest returns.
-- Martin Sjolund, President and Chief Executive Officer
2. Overhead Reductions Lower Operating Costs Across the Business
Operational restructuring has eliminated more than 215 corporate roles since October 2025, trimming overhead staffing by over 25%. These workforce reductions cut third-quarter compensation and benefits expenses by 11% year over year, establishing a lower cost base for future operations.
The actions we took over the past year to simplify the organization, reduce corporate and overhead costs, and improve efficiency are beginning to show up in our financial results.
-- Martin Sjolund, President and Chief Executive Officer
3. Legal Collection Expenses Near Peak Levels Before Expected 2027 Decline
Upfront investments in court-based debt recovery expanded third-quarter U.S. legal cash collections by 19% year over year to $148 million. As teams clear the remaining backlog of accounts, management projects annual legal collection costs will crest in 2026 and decline in 2027, freeing up future cash flow.
Looking ahead, we expect to be nearing our peak in legal collection costs. As we work through the remaining backlog of accounts, we expect annual legal collection costs to begin declining and to be lower in 2027 than they are in 2026.
-- Rakesh Sehgal, Executive Vice President and Chief Financial Officer
Looking Ahead
Multimarket flexibility allows the business to maintain buying discipline while expanding digital debt recovery capabilities. Deleveraging, or reducing debt relative to earnings, brought net leverage down to 2.6 times earnings for an eighth consecutive quarter.
We have strengthened our funding position, reduced costs, grown adjusted EBITDA to near record levels, lowered leverage, advanced our technology capabilities, and continue building a stronger foundation for long-term growth.
-- Martin Sjolund, President and Chief Executive Officer
Cloud infrastructure upgrades and automated workflow tools continue to enhance agent efficiency. Management expects these structural operational changes to compound long-term returns.
Our execution is driving higher portfolio income, lowering costs, and growing adjusted EBITDA, and we believe that our significant investments in legal and technology will strengthen the business in the years to come.
-- Martin Sjolund, President and Chief Executive Officer
The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.