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Portfolio Recovery Associates Reports Record Second Quarter 2011 Results

EPS Totals $1.48 in Quarter as Net Income Increases 31% to Record $25.6 Million; Revenues Up 23% to Record $114.8 Million as Cash Collections Grow 37% to Record $176.3 Million; Portfolio Acquisitions Total $89.5 Million

ID: 1025630
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(businesspress24) - NORFOLK, VA -- (Marketwire) -- 07/28/11 -- Portfolio Recovery Associates, Inc. (NASDAQ: PRAA), a specialized financial services company and market leader in the consumer debt purchase and collection industry, today reported record second quarter results including net income of $25.6 million for the quarter ended June 30, 2011. The Company's net income for the second quarter of 2011 increased 31% from $19.5 million in the same period a year earlier. Earnings per diluted share were $1.48 in the second quarter of 2011, up 30% from $1.14 in the second quarter of 2010. The Company's second quarter 2011 earnings included ongoing non-cash equity-based compensation expense of $1.2 million, after tax, or $0.07 per share, and a gain from the sale of real property of $690,000, after tax, or $0.04 per share.

Total revenues for the second quarter of 2011 grew 23% from the year-earlier period to a record $114.8 million. Total revenues consist of cash collections reduced by amounts applied to principal on the Company's owned debt portfolios, plus fee income earned from its fee-for-service businesses. During the second quarter of 2011, the Company applied 43.1% of cash collections to reduce the carrying value of its owned debt portfolios, up from 40.1% in the second quarter of 2010. The second quarter 2011 principal amortization rate included a $2.3 million net allowance charge against certain pools of finance receivables accounts.

"Portfolio Recovery Associates ended the first half of 2011 with yet another record quarter, which saw strong growth in net income, earnings per share, revenues and cash collections," said Steven D. Fredrickson, chairman, president and chief executive officer. "Collections were a key driver of our second-quarter performance. Bankruptcy collections were up strongly in the quarter, internal and external legal collections both produced impressive growth, and our call centers performed well despite the difficult economy. Collector productivity advanced to another new record as well."

Fredrickson continued: "This outstanding performance reflects the efforts of our entire PRA staff, including the Company's more than 1,500 call-center collectors. I'm proud of the hard work and dedication of our very talented team and look forward to our future successes."

Cash collections rose 37% to a record $176.3 million in the second quarter of 2011, up from $128.4 million in the year-ago period. Call center and other collections increased 19%, external legal collections increased 45%, internal legal collections grew 41%, and purchased bankruptcy collections gained 56% when compared with the year-earlier period. The table below displays cash collections by source, by quarter for the past five quarters:

Internal legal collections grew to $16.0 million in the second quarter of 2011 from $11.4 million in the year ago quarter. Internal legal collections, in which the Company uses its own staff attorneys or in select cases, third-party attorneys working on a fixed price basis, represent an important, developing collections channel.

Productivity rose to a record $242 per collector hour paid for the first half of 2011 from $194 for all of 2010. Productivity, the Company's key measure of collector performance, is measured by cash collections per collector hour paid. Excluding the impact of trustee remittances from purchased bankrupt accounts, the comparison is $158 for the first two quarters of 2011, compared to $129 for all of 2010. Excluding trustee remittances on purchased bankrupt accounts and external legal collections, the comparison is $121 for the first six months of 2011 and $100 for all of 2010.

In the second quarter of 2011, revenues were a record $114.8 million, up 23% compared with the same period a year ago. This was driven by record cash receipts of $190.8 million in the second quarter, up 32% from $144.5 million a year earlier. Cash receipts are comprised of both cash collections and revenues from the Company's fee-based businesses.

The Company's net allowance charge totaled $2.3 million in the second quarter of 2011, representing 0.26% of net finance receivables at period-end and 1.3% of cash collections. The table below displays net allowance charges incurred by quarter, by buying period since 2005, as well as purchases of charged-off consumer debt, net of buybacks:

The Company purchased $1.41 billion of face-value debt during the second quarter of 2011 for $89.5 million. This was acquired in 76 portfolios from 10 different sellers. The tables below display purchase price amounts by year, net of buybacks, current net finance receivable balance, cash collections to date including sales, estimated remaining and total collections and estimated purchase price multiples:

The Company's fee-for-service businesses generated revenues of $14.5 million in the second quarter of 2011, a decline of 10% from the same period a year ago due largely to a decrease in revenues generated by PRA Location Services. Together, the fee-for-service businesses accounted for 12.6% of the Company's overall revenues in the second quarter of 2011, down from 17.3% in the second quarter of 2010.

Cash balances were $25.5 million as of June 30, 2011, down from $41.1 million as of December 31, 2010. During the second quarter of 2011, the Company had net repayments of $40 million on its line of credit, leaving it with $250 million in outstanding borrowings at quarter end. Remaining borrowing availability under the line was $157.5 million as of June 30, 2011.

Kevin P. Stevenson, chief financial and administrative officer, said: "Portfolio Recovery Associates turned in another strong performance in the second quarter of 2011, due in large part to the long-term investments we have made in people, technology and portfolios. The Company purchased $89.5 million of charged-off debt in the second quarter, bringing our total purchases for the first half of the year to $197.4 million. These portfolios will provide additional opportunities for our collectors in the quarters and years to come. Importantly, we were able to accomplish this while paying down $40 million in principal on our line of credit during the quarter, strengthening our ability to continue making smart investments in the future."

The Company's first-half 2011 earnings totaled $48.7 million, or $2.83 per diluted share, compared with $34.3 million, or $2.06 per diluted share, for the first six months of 2010. First-half 2011 revenues were $226.6 million, compared to $176.4 million in the first half of 2010.

The Company will hold a conference call with investors this evening at 5:30 p.m. EDT, Thursday, July 28, 2011, to discuss its second-quarter results. Investors can access the call live by dialing 888-713-4211 for domestic callers or 617-213-4864 for international callers using the pass code 68414138. Investors may also listen via webcast at the Company's website, .

Following the live call, investors may listen to the call via a taped replay, which will be available for seven days, by dialing 888-286-8010 for domestic callers and 617-801-6888 for international callers using the pass code 41859487. The replay will be available approximately two hours after today's conference call ends. There will also be an archived webcast available at the Company's website.

Portfolio Recovery Associates, Inc. (NASDAQ: PRAA), a specialized financial services company, is a market leader in the consumer debt purchase and collection industry. The Company, which has purchased more than $57 billion of face value defaulted consumer debt since its inception, has operations in 10 states, more than 25 million customer accounts and more than 2,500 employees. Portfolio Recovery Associates also provides a broad range of fee-based services through its subsidiaries: PRA Government Services, LLC; MuniServices, LLC; PRA Location Services, LLC; and Claims Compensation Bureau, LLC. Working every day with people in financial distress, the Company seeks to engage collaboratively with its customers to create realistic, affordable repayment plans. Portfolio Recovery Associates has a longstanding culture of compliance, and for four consecutive years has been named to the Forbes 100 Best Small Companies in America annual rankings list (2007 - 2010). Additional information about Portfolio Recovery Associates is available at .

Statements herein which are not historical, including Portfolio Recovery Associates' or management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, including future revenue and earnings growth, statements with respect to future contributions of its subsidiaries to earnings and future portfolio-purchase opportunities, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include references to Portfolio Recovery Associates' presentations and web casts. The forward-looking statements in this press release are based upon management's beliefs, assumptions and expectations of the Company's future operations and economic performance, taking into account currently available information. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties, some of which are not currently known to us. Actual events or results may differ from those expressed or implied in any such forward-looking statements as a result of various factors, including the risk factors and other risks that are described from time to time in the Company's filings with the Securities and Exchange Commission including but not limited to its annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, filed with the Securities and Exchange Commission and available through the Company's website, which contain a more detailed discussion of the Company's business, including risks and uncertainties that may affect future results. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Information in this press release may be superseded by more recent information or statements, which may be disclosed in later press releases, subsequent filings with the Securities and Exchange Commission or otherwise. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part.

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Date: 07/28/2011 - 20:00
Language: English
News-ID 1025630
Character count: 0
Firma: Portfolio Recovery Associates, Inc.
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