PRA Group
Apr 30, 2013

PRA Reports First Quarter 2013 Results

NORFOLK, Va., April 30, 2013 (GLOBE NEWSWIRE) -- Portfolio Recovery Associates, Inc. (PRA), a financial and business services company operating in the U.S. and U.K., today reported its first quarter 2013 financial results.

First Quarter Highlights

"PRA began 2013 the same way we ended 2012, reporting record, year-over-year results," said Steve Fredrickson, chairman, president and chief executive officer, PRA.

"This quarter we produced across the board growth in cash collections, revenue and net income, which again drove return on average equity over our target of 20%. Our investment in new U.S. and U.K. portfolios of consumer debt surpassed even our extraordinary Q4 2012 level of acquisitions. PRA has now acquired $414 million in new accounts during the last six months that will drive revenue and income for years to come," Fredrickson said.

REVENUES

Finance Receivables Income and Cash Collections

Cash Collection Source ($ in thousands)Q12013Q42012Q32012Q22012Q12012
Call Center & Other Collections $ 89,037 $ 72,624 $ 72,394 $ 73,582 $ 79,805
External Legal Collections 47,910 41,521 39,913 41,464 34,852
Internal Legal Collections 29,283 23,968 25,650 25,361 23,345
Bankruptcy Court Trustee Collections 109,233 91,098 91,095 92,018 79,994
Total Cash Collections $ 275,463  $ 229,211  $ 229,052  $ 232,425  $ 217,996

Fee Income

OPERATING EXPENSES AND OPERATING INCOME

PORTFOLIO PURCHASING

           
Finance Receivables Portfolio Acquisitions ($ in thousands)Q12013Q42012Q32012Q22012Q12012
Core Customer Debt  $ 128,338  $ 88,107  $ 61,684  $ 71,599  $ 54,525
Bankruptcy Court Claims, U.S.  86,595  111,001  41,277  53,460  56,892
Total Portfolio Acquisitions  $ 214,933  $ 199,108  $ 102,961  $ 125,059  $ 111,417
           

BALANCE SHEET

Conference Call Information

PRA will hold a conference call today with investors at 5:30 p.m. ET to discuss its Q1 2013 results. Investors may access the call by calling 888-695-7639 in the U.S. or 970-315-0482 outside the U.S. The conference ID is 35708302. A replay will be available approximately one hour after the call ends and will remain available until May 7, 2013. Investors may access the replay of the call by calling 855-859-2056 in the U.S. or 404-537-3406 outside the U.S. To access the replay, use the conference ID 35708302. Investors also may listen to the conference call via webcast, both live and archived, at http://ir.PortfolioRecovery.com/events.cfm.

About PRA

As a leader in the U.S. debt buying industry, Portfolio Recovery Associates, Inc. (Nasdaq:PRAA) returns capital to banks and other creditors that helps expand financial services for consumers. PRA collaborates with its customers to create affordable, realistic debt repayment plans. The company also provides a broad range of fee-based services to local governments and law enforcement, U.S. businesses, institutional investors, global hedge funds, and U.K. banks and creditors. 

PRA has been annually ranked as one of Forbes' 100 Best Small Companies in America since 2007, advancing to the Top 25 in 2012. The company also was recognized last year as one of Fortune's 100 Fastest-Growing Companies in the U.S.  For more information, visit www.PortfolioRecovery.com.

About Forward-Looking Statements

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.

 
 
Portfolio Recovery Associates, Inc.
Unaudited Consolidated Income Statements
(in thousands, except per share amounts)
     
 Three MonthsThree Months
 EndedEnded
 March 31,March 31,
 20132012
     
Revenues:    
Income recognized on finance receivables, net $ 154,791 $ 124,226
Fee income 14,768 15,920
     
Total revenues 169,559 140,146
     
Operating expenses:    
Compensation and employee services 44,997 39,694
Legal collection fees 10,529 7,617
Legal collection costs 20,501 23,669
Agent fees 1,609 1,627
Outside fees and services 7,447 5,860
Communications 8,961 8,253
Rent and occupancy 1,687 1,611
Depreciation and amortization 3,366 3,656
Other operating expenses 4,575 3,738
     
Total operating expenses 103,672 95,725
     
Income from operations 65,887 44,421
     
Other income and (expense):    
Interest income -- 1
Interest expense (2,689) (2,653)
     
Income before income taxes 63,198 41,769
     
Provision for income taxes 24,681 16,580
     
Net income $ 38,517 $ 25,189
     
Adjustment for net loss attributable to redeemable noncontrolling interest 83 273
     
Net income attributable to Portfolio Recovery Associates, Inc. $ 38,600 $ 25,462
     
Net income per common share attributable to Portfolio Recovery Associates, Inc.:    
Basic  $ 2.28  $ 1.48
Diluted  $ 2.26  $ 1.47
     
Weighted average number of shares outstanding:    
Basic 16,934 17,196
Diluted 17,091 17,267
 
 
Portfolio Recovery Associates, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except per share amounts)
     
 March 31,December 31,
ASSETS20132012
     
Cash and cash equivalents $ 39,111 $ 32,687
Finance receivables, net 1,169,747 1,078,951
Accounts receivable, net 9,234 10,486
Property and equipment, net 25,470 25,312
Goodwill 106,912 109,488
Intangible assets, net 18,550 20,364
Other assets 13,715 11,668
     
Total assets $ 1,382,739 $ 1,288,956
     
LIABILITIES AND EQUITY    
     
Liabilities:    
Accounts payable $ 12,590 $ 12,155
Accrued expenses and other liabilities 20,283 18,953
Income taxes payable 22,349 3,125
Accrued payroll and bonuses 9,260 12,804
Net deferred tax liability 185,772 185,277
Line of credit 172,000 127,000
Long-term debt 199,159 200,542
     
Total liabilities 621,413 559,856
     
Redeemable noncontrolling Interest 10,336 20,673
     
Stockholders' equity:    
Preferred stock, par value $0.01, authorized shares, 2,000, issued and outstanding shares - 0 -- --
Common stock, par value $0.01, 60,000 authorized shares, 16,959 issued and outstanding shares at March 31, 2013, and 16,909 issued and outstanding shares at December 31, 2012 170 169
Additional paid-in capital 159,596 151,216
Retained earnings 592,791 554,191
Accumulated other comprehensive (loss)/income (1,567) 2,851
Total stockholders' equity 750,990 708,427
     
Total liabilities and equity $ 1,382,739 $ 1,288,956
 
 
Portfolio Recovery Associates, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
     
 Three MonthsThree Months
 EndedEnded
 March 31,March 31,
 20132012
Cash flows from operating activities:    
Net income $ 38,517 $ 25,189
Adjustments to reconcile net income to net cash provided by operating activities:    
Amortization of share-based compensation 2,983 2,347
Depreciation and amortization 3,366 3,656
Deferred tax expense 529 403
Changes in operating assets and liabilities:    
Other assets (2,070) 711
Accounts receivable 1,149 2,922
Accounts payable 588 (3,687)
Income taxes 19,088 1,118
Accrued expenses (2,503) (3,419)
Accrued payroll and bonuses (3,537) (9,181)
     
Net cash provided by operating activities 58,110 20,059
     
Cash flows from investing activities:    
Purchases of property and equipment (2,463) (1,152)
Acquisition of finance receivables, net of buybacks (212,389) (108,176)
Collections applied to principal on finance receivables 120,671 93,770
Business acquisitions, net of cash acquired -- (48,653)
     
Net cash used in investing activities (94,181) (64,211)
     
Cash flows from financing activities:    
Income tax benefit from share-based compensation 2,207 1,440
Proceeds from line of credit 95,000 95,000
Principal payments on line of credit (50,000) (50,000)
Repurchases of common stock (1,912) (2,081)
Purchase of portion of noncontrolling interest (1,150) --
Distributions paid to noncontrolling interest (51) --
Principal payments on long-term debt (1,384) (310)
     
Net cash provided by financing activities 42,710 44,049
     
Effect of exchange rate on cash (215) 1,474
     
Net increase in cash and cash equivalents 6,424 1,371
     
Cash and cash equivalents, beginning of year 32,687 26,697
     
Cash and cash equivalents, end of period $ 39,111 $ 28,068
     
Supplemental disclosure of cash flow information:    
Cash paid for interest $ 2,656 $ 2,557
Cash paid for income taxes  2,866  12,497
     
Noncash investing and financing activities:    
Adjustment of the noncontrolling interest measurement amount $ (60) $ (1,225)
Distributions payable relating to noncontrolling interest  2  -- 
Employee stock relinquished for payment of taxes  (4,002)  (2,066)
 
 
Purchase Price Multiples at March 31, 2013, Entire Domestic Portfolio
($ in thousands)
        Actual Cash    
    Total Net Finance Collections Estimated Total Estimated
Purchase Purchase Estimated Receivables Including Cash Remaining  Collections to
Period Price Collections Balance Sales Collections Purchase Price
1996  $ 3,080  $ 10,228  $ --   $ 10,189  $ 39 332%
1997  7,685  25,569  --   25,447  122 333%
1998  11,089  37,600  --   37,224  376 339%
1999  18,898  69,926  --   69,012  914 370%
2000  25,020  118,185  --   115,739  2,446 472%
2001  33,481  178,140  --   174,230  3,910 532%
2002  42,325  202,393  --   196,092  6,301 478%
2003  61,448  272,718  --   261,489  11,229 444%
2004  59,176  206,023  --   195,148  10,875 348%
2005  143,168  317,055  7,470  304,195  12,860 221%
2006  107,673  215,887  7,665  202,391  13,496 201%
2007  258,397  509,239  27,384  458,571  50,668 197%
2008  275,157  521,136  44,184  444,740  76,396 189%
2009  281,443  860,202  62,846  638,313  221,889 306%
2010  358,122  968,637  121,384  594,480  374,157 270%
2011  394,145  900,943  226,888  380,980  519,963 229%
2012  515,690  935,365  450,434  144,714  790,651 181%
2013  213,740  386,529  209,537  10,656  375,873 181%
Total  $ 2,809,737  $ 6,735,775  $ 1,157,792  $ 4,263,610  $ 2,472,165 240%
             
Purchase Price Multiples at March 31, 2013, Purchased Bankruptcy Portfolio - Domestic
($ in thousands)
        Actual Cash    
    Total Net Finance Collections Estimated Total Estimated
Purchase Purchase Estimated Receivables Including Cash Remaining  Collections to
Period Price Collections Balance Sales Collections Purchase Price
1996-2003  $ --   $ --   $ --   $ --   $ --  0%
2004  7,468  14,497  --   14,422  75 194%
2005  29,301  43,631  53  43,524  107 149%
2006  17,630  31,623  103  31,280  343 179%
2007  78,544  104,998  430  103,337  1,661 134%
2008  108,604  170,787  10,837  157,158  13,629 157%
2009  156,050  448,290  37,568  332,950  115,340 287%
2010  209,215  486,660  77,060  299,758  186,902 233%
2011  182,133  290,759  128,778  100,400  190,359 160%
2012  256,209  345,435  233,316  42,118  303,317 135%
2013  86,595  118,629  82,732  5,842  112,787 137%
Total  $ 1,131,749  $ 2,055,309  $ 570,877  $ 1,130,789  $ 924,520 182%
             
Purchase Price Multiples at March 31, 2013, Core Portfolio - Domestic
($ in thousands)
        Actual Cash    
    Total Net Finance Collections Estimated Total Estimated
Purchase Purchase Estimated Receivables Including Cash Remaining  Collections to
Period Price Collections Balance Sales Collections Purchase Price
1996  $ 3,080  $ 10,228  $ --   $ 10,189  $ 39 332%
1997  7,685  25,569  --   25,447  122 333%
1998  11,089  37,600  --   37,224  376 339%
1999  18,898  69,926  --   69,012  914 370%
2000  25,020  118,185  --   115,739  2,446 472%
2001  33,481  178,140  --   174,230  3,910 532%
2002  42,325  202,393  --   196,092  6,301 478%
2003  61,448  272,718  --   261,489  11,229 444%
2004  51,708  191,526  --   180,726  10,800 370%
2005  113,867  273,424  7,417  260,671  12,753 240%
2006  90,043  184,264  7,562  171,111  13,153 205%
2007  179,853  404,241  26,954  355,234  49,007 225%
2008  166,553  350,349  33,347  287,582  62,767 210%
2009  125,393  411,912  25,278  305,363  106,549 328%
2010  148,907  481,977  44,324  294,722  187,255 324%
2011  212,012  610,184  98,110  280,580  329,604 288%
2012  259,481  589,930  217,118  102,596  487,334 227%
2013  127,145  267,900  126,805  4,814  263,086 211%
Total  $ 1,677,988  $ 4,680,466  $ 586,915  $ 3,132,821  $ 1,547,645 279%
 
 
FINANCIAL HIGHLIGHTS
 Three Months Ended  
 March 31, %
  2013 2012 Change
EARNINGS (in thousands)      
Income recognized on finance receivables, net  $ 154,791  $ 124,226 25%
Fee income  14,768  15,920 -7%
Total revenues  169,559  140,146 21%
Operating expenses  103,672  95,725 8%
Income from operations  65,887  44,421 48%
Net interest expense  2,689  2,652 1%
Net income  38,517  25,189 53%
Net income attributable to Portfolio Recovery Associates, Inc.  38,600  25,462 52%
       
PERIOD-END BALANCES (in thousands)      
Cash and cash equivalents  $ 39,111  $ 28,068 39%
Finance receivables, net  1,167,747  945,242 24%
Goodwill and intangible assets, net  125,462  124,659 1%
Total assets  1,382,739  1,142,026 21%
Line of credit and long-term debt  371,159  265,936 40%
Total liabilities  621,413  502,531 24%
Total equity  750,990  620,712 21%
       
FINANCE RECEIVABLE COLLECTIONS (dollars in thousands)      
Cash collections  $ 275,463  $ 217,996 26%
Principal amortization without allowance charges  118,498  93,276 27%
Principal amortization with allowance charges  120,671  93,770 29%
Principal amortization w/ allowance charges as % of cash collections:      
Including fully amortized pools 43.8% 43.0% 2%
Excluding fully amortized pools 45.2% 44.8% 1%
       
ALLOWANCE FOR FINANCE RECEIVABLES (dollars in thousands)      
Balance at period-end  $ 95,296  $ 87,065 9%
Allowance charge  2,173  494 340%
Allowance charge to period-end net finance receivables 0.19% 0.05% 256%
Allowance charge to net finance receivable income 1.40% 0.40% 253%
Allowance charge to cash collections 0.79% 0.23% 248%
       
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)      
Purchase price - core  $ 126,951  $ 52,104 144%
Face value - core  1,398,960  972,268 44%
Purchase price - bankruptcy  86,595  56,892 52%
Face value - bankruptcy  436,508  368,447 18%
Purchase price - UK  1,387  2,421 -43%
Face value - UK  18,570  115,351 -84%
Purchase price - total  214,933  111,417 93%
Face value - total  1,854,038  1,456,066 27%
Number of portfolios - total 91 91 0%
       
ESTIMATED REMAINING COLLECTIONS (in thousands)      
Estimated remaining collections - core  $ 1,562,384  $ 1,236,712 26%
Estimated remaining collections - bankruptcy  924,519  796,161 16%
Estimated remaining collections - total  2,486,903  2,032,873 22%
       
SHARE DATA (share amounts in thousands)      
Net income per common share - diluted  $ 2.26  $ 1.47 54%
Weighted average number of shares outstanding - diluted  17,091  17,267 -1%
Shares repurchased  16  31 100%
Average price paid per share repurchased (including acquisitions costs)  $ 118.03  $ 68.02 100%
Closing market price  $ 126.92  $ 71.72 77%
       
RATIOS AND OTHER DATA (dollars in thousands)      
Return on average equity (1) 21.1% 16.7% 26%
Return on revenue (2) 22.7% 18.0% 26%
Operating margin (3) 38.9% 31.7% 23%
Operating expense to cash receipts (4) 35.7% 40.9% -13%
Debt to equity (5) 49.4% 42.8% 15%
Number of collectors 2,159 1,934 12%
Number of full-time equivalent employees 3,250 3,014 8%
Cash receipts (4)  $ 290,231  $ 233,916 24%
Line of credit - unused portion at period end  228,000  142,500 60%
(1) Calculated as annualized net income divided by average equity for the period
(2) Calculated as net income divided by total revenues
(3) Calculated as income from operations divided by total revenues
(4) "Cash receipts" is defined as cash collections plus fee income
(5) For purposes of this ratio, "debt" equals the line of credit balance plus long-term debt
 
 
FINANCIAL HIGHLIGHTS
 For the Quarter Ended
 March 31December 31September 30June 30March 31
 20132012201220122012
EARNINGS (in thousands)          
Income recognized on finance receivables, net  $ 154,791  $ 138,068  $ 135,754  $ 132,587  $ 124,226
Fee income  14,768  16,183  14,765  15,298  15,920
Total revenues  169,559  154,251  150,519  147,885  140,146
Operating expenses  103,672  94,262  93,461  93,289  95,725
Income from operations  65,887  59,989  57,058  54,596  44,421
Net interest expense  2,689  1,816  2,189  2,374  2,652
Net income  38,517  35,732  33,127  32,051  25,189
Net income attributable to Portfolio Recovery Associates, Inc.  38,600  35,802  33,314  32,015  25,462
           
PERIOD-END BALANCES (in thousands)          
Cash and cash equivalents  $ 39,111  $ 32,687  $ 31,488  $ 42,621  $ 28,068
Finance receivables, net  1,167,747  1,078,951  973,594  966,508  945,242
Goodwill and intangible assets, net  125,462  129,852  121,623  121,748  124,659
Total assets  1,382,739  1,288,956  1,169,698  1,173,738  1,142,026
Line of credit and long-term debt  371,159  327,542  250,675  292,850  265,936
Total liabilities  621,413  559,856  479,211  520,911  502,531
Total equity  750,990  708,427  670,489  633,446  620,712
           
FINANCE RECEIVABLE COLLECTIONS (dollars in thousands)          
Cash collections  $ 275,463  $ 229,211  $ 229,053  $ 232,425  $ 217,996
Principal amortization without allowance charges  118,498  88,851  91,736  97,634  93,276
Principal amortization with allowance charges  120,671  91,142  93,299  99,838  93,770
Principal amortization w/ allowance charges as % of cash collections:          
 Including fully amortized pools 43.8% 39.8% 40.7% 43.0% 43.0%
 Excluding fully amortized pools 45.2% 40.9% 42.0% 44.4% 44.8%
           
ALLOWANCE FOR FINANCE RECEIVABLES (dollars in thousands)          
Balance at period-end  $ 95,296  $ 93,123  $ 90,832  $ 89,269  $ 87,065
Allowance charge  2,173  2,291  1,563  2,204  494
Allowance charge to period-end net finance receivables 0.19% 0.21% 0.16% 0.23% 0.05%
Allowance charge to net finance receivable income 1.40% 1.66% 1.15% 1.66% 0.40%
Allowance charge to cash collections 0.79% 1.00% 0.68% 0.95% 0.23%
           
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)          
Purchase price - core  $ 126,951  $ 85,476  $ 52,703  $ 69,512  $ 52,104
Face value - core  1,398,960  901,512  674,135  1,033,331  972,268
Purchase price - bankruptcy  86,595  111,001  41,277  53,460  56,892
Face value - bankruptcy  436,508  946,927  341,359  448,244  368,447
Purchase price - UK  1,387  2,631  8,981  2,087  2,421
Face value - UK  18,570  59,953  248,667  44,779  115,351
Purchase price - total  214,933  199,108  102,961  125,059  111,417
Face value - total  1,854,038  1,908,392  1,264,161  1,526,354  1,456,066
Number of portfolios - total 91 104 107 114 91
           
ESTIMATED REMAINING COLLECTIONS (in thousands)          
Estimated remaining collections - core  $ 1,562,384  $ 1,410,053  $ 1,346,562  $ 1,315,809  $ 1,236,712
Estimated remaining collections - bankruptcy  924,519  905,136  791,018  802,353  796,161
Estimated remaining collections - total  2,486,903  2,315,189  2,137,580  2,118,162  2,032,873
           
SHARE DATA (share amounts in thousands)          
Net income per common share - diluted  $ 2.26  $ 2.10  $ 1.96  $ 1.87  $ 1.47
Weighted average number of shares outstanding - diluted  17,091  17,072  17,022  17,133  17,267
Shares repurchased  16  0  --  301  31
Average price paid per share repurchased (including acquisitions costs)  $ 118.03  $ 93.02  $ --   $ 68.62  $ 68.02
Closing market price  $ 126.92  $ 106.86  $ 104.43  $ 91.26  $ 71.72
           
RATIOS AND OTHER DATA (dollars in thousands)          
Return on average equity (1) 21.09% 20.64% 20.29% 20.34% 16.70%
Return on revenue (2) 22.72% 23.16% 22.01% 21.67% 17.97%
Operating margin (3) 38.86% 38.89% 37.91% 36.92% 31.70%
Operating expense to cash receipts (4) 35.72% 38.41% 38.33% 37.66% 40.92%
Debt to equity (5) 49.42% 46.24% 37.39% 46.33% 42.84%
Number of collectors 2,159 2,153 1,992 1,952 1,934
Number of full-time equivalent employees 3,250 3,221 3,103 3,032 3,014
Cash receipts (4)  $ 290,231  $ 245,394  $ 243,818  $ 247,723  $ 233,916
Line of credit - unused portion at period end  228,000  273,000  214,450  166,450  142,500
(1) Calculated as annualized net income divided by average equity for the period
(2) Calculated as net income divided by total revenues
(3) Calculated as income from operations divided by total revenues
(4) "Cash receipts" is defined as cash collections plus fee income
(5) For purposes of this ratio, "debt" equals the line of credit balance plus long-term debt
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          Vice President, Corporate Communications

          757-961-3525

          RickGoulart@PortfolioRecovery.com