PRA Group
Aug 5, 2014

PRA Reports Second Quarter 2014 Results

NORFOLK, Va., Aug. 5, 2014 (GLOBE NEWSWIRE) -- PRA Group (Nasdaq:PRAA), a world leader in acquiring non-performing consumer debt, today reported its financial results for the second quarter 2014.

Second Quarter Highlights

"We are excited to have closed both the acquisition of Aktiv Kapital and Pamplona Capital Management's Individual Voluntary Arrangements (IVA) Master Servicing Platform. Geir Olsen and his team at Aktiv Kapital bring us entry into 13 new countries and expertise with the dynamics of the European markets," said Steve Fredrickson, chairman, president and chief executive officer, PRA Group.

"Andrew Berardi and his team that join us with the IVA Master Servicing Platform acquisition bring with them the ability for us to acquire consumer insolvencies from major retail banks, credit card providers and other specialty finance providers in the U.K. These acquisitions align with our strategy of product and geographic diversification allowing us flexibility when investing capital," Fredrickson said.

REVENUES

 
Cash Collection Source ($ in thousands)Q22014Q12014Q42013Q32013Q22013
Call Center and Other Collections  $ 95,072  $ 97,736  $ 84,375  $ 89,512  $ 90,229
External Legal Collections  55,011  50,990  46,066  48,274  50,131
Internal Legal Collections  45,090  43,939  34,101  33,288  30,365
Bankruptcy Court Trustee Payments  124,101  120,702  114,384  120,577  125,672
Total Cash Collections  $ 319,274  $ 313,367  $ 278,926  $ 291,651  $ 296,397
 

EXPENSES AND OPERATING INCOME

PORTFOLIO ACQUISITIONS

 
Portfolio Purchase Source 
($ in thousands)

Q22014

Q12014

Q42013

Q32013

Q22013
Core Customer Debt  $ 93,025  $ 80,711  $ 67,522  $ 100,081  $ 118,195
Bankruptcy Court Claims  16,187  72,003  31,987  41,794  82,273
Total Portfolio Purchases  $ 109,212  $ 152,714  $ 99,509  $ 141,875  $ 200,468
 

BALANCE SHEET

Conference Call Information

PRA will hold a conference call today at 5:30 p.m. ET to discuss results with institutional investors and stock analysts. To listen to a webcast of the call, visit http://ir.pragroup.com/events.cfm until November 5, 2014. To listen by phone, call 888-695-7639 in the U.S. or 970-315-0482 outside the U.S. The conference ID is 69453282. A question-and-answer session on the call will be open only to analysts or investors. To listen to a replay of the call until August 13, 2014, use the same conference ID when calling 855-859-2056 in the U.S. or 404-537-3406 outside the U.S.  

About PRA Group

By acquiring non-performing consumer debt, Portfolio Recovery Associates, Inc., doing business as PRA Group, returns capital to global banks and other creditors to help expand financial services for consumers in North America and Europe. PRA Group companies collaborate with customers to create affordable, realistic debt repayment plans and provide a broad range of additional revenue and recovery services to business and government clients in the U.S. and the U.K.

In 2013 and 2012, PRA was named one of Fortune's 100 Fastest-Growing Companies and one of Forbes' Top 25 Best Small Companies in America. PRA has been annually ranked on the Forbes list since 2007. PRA employs more than 4,000 people and is headquartered in Norfolk, Virginia. For more information, please visit www.pragroup.com.

About Forward-Looking Statements

Statements made herein which are not historical, including PRA's or its management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, including, but not limited to, statements with respect to future revenue, earnings per share growth and return on equity, and statements with respect to future contributions of Aktiv Kapital; the ability of Aktiv Kapital, or of any of PRA's subsidiaries, to contribute to earnings and future portfolio-purchase opportunities, all of which, 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.

The forward-looking statements in this press release are based upon management's beliefs, assumptions and expectations of PRA's future operations and economic performance, taking into account currently available information. These statements are not statements of historical fact and there can be no assurance that we will achieve our targets. Forward-looking statements involve risks and uncertainties, some of which are not currently known to PRA.

Actual events or results may differ materially from those expressed or implied in any such forward-looking statements as a result of various factors, including our ability to successfully integrate the Aktiv Kapital business or fully realize the expected benefits of the acquisition of Aktiv Kapital; our ability to manage risks associated with our international operations, which risks will increase as a result of the Aktiv Kapital acquisition; our ability to realize the anticipated synergies and benefits of the Aktiv acquisition; a prolonged economic recovery or a deterioration in the economic or inflationary environment in the United States or Europe; changes in, or interpretations of, state or federal laws or the administrative practices of various bankruptcy courts, which may impact our ability to collect on our defaulted receivables; governmental investigations into or enforcement actions against our business practices; our ability to employ and retain qualified employees; the degree, nature, and resources of our competition; changes in interest or exchange rates; and the risk factors and other risks that are described from time to time in PRA's filings with the Securities and Exchange Commission including but not limited to PRA's 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 PRA's website, which contain detailed discussion of PRA's business, including risks and uncertainties that may affect future results.

Due to such uncertainties and risks, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of today. Information in this press release may be superseded by recent information or statements, which may be disclosed in later press releases, subsequent filings with the Securities and Exchange Commission or otherwise. Except as required by law, PRA assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA'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 Months Ended June 30,Six Months Ended June 30,
 2014201320142013
         
Revenues:        
Income recognized on finance receivables, net $ 182,518 $ 168,570 $ 360,488 $ 323,362
Fee income 14,825 14,391 30,777 29,158
         
Total revenues 197,343 182,961 391,265 352,520
         
Operating expenses:        
Compensation and employee services 52,461 48,202 103,846 93,199
Legal collection fees 11,371 10,609 22,204 21,138
Legal collection costs 25,429 22,717 51,962 43,218
Agent fees 1,464 1,280 2,914 2,889
Outside fees and services 12,113 8,634 22,904 16,081
Communications 7,958 6,675 17,112 14,754
Rent and occupancy 2,219 1,824 4,366 3,511
Depreciation and amortization 4,211 3,534 8,158 6,900
Other operating expenses 7,653 5,660 13,745 11,117
         
Total operating expenses 124,879 109,135 247,211 212,807
         
Income from operations 72,464 73,826 144,054 139,713
         
Other income and (expense):        
Interest income 1 -- 2 --
Interest expense (5,068) (2,923) (9,928) (5,612)
Other expense (6,224) -- (6,224) --
         
Income before income taxes 61,173 70,903 127,904 134,101
         
Provision for income taxes 23,666 27,489 49,557 52,170
         
Net income $ 37,507 $ 43,414 $ 78,347 $ 81,931
         
Adjustment for loss attributable to redeemable noncontrolling interest -- 185 -- 268
         
Net income attributable to Portfolio Recovery Associates, Inc. $ 37,507 $ 43,599 $ 78,347 $ 82,199
         
Net income per common share attributable to Portfolio Recovery Associates, Inc.:      
Basic  $ 0.75  $ 0.86  $ 1.57  $ 1.62
Diluted  $ 0.74  $ 0.85  $ 1.55  $ 1.60
         
Weighted average number of shares outstanding:        
Basic 50,065 50,751 49,997 50,781
Diluted 50,437 51,183 50,400 51,228
     
     
Portfolio Recovery Associates, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except per share amounts)
     
ASSETSJune 30,
2014
December 31,
2013
     
Cash and cash equivalents $ 270,526 $ 162,004
Finance receivables, net 1,219,595 1,239,191
Accounts receivable, net 12,458 12,359
Income taxes receivable 6,072 11,710
Property and equipment, net 38,902 31,541
Net deferred tax asset 1,404 1,361
Goodwill 105,122 103,843
Intangible assets, net 13,805 15,767
Other assets 27,478 23,456
     
Total assets $ 1,695,362 $ 1,601,232
     
LIABILITIES AND EQUITY    
     
Liabilities:    
Accounts payable $ 20,396 $ 14,819
Accrued expenses and other liabilities 33,594 27,655
Accrued compensation 14,320 27,431
Net deferred tax liability 226,011 210,071
Borrowings 448,785 451,780
     
Total liabilities 743,106 731,756
     
Stockholders' equity:    
Preferred stock, par value $0.01, authorized shares, 2,000, issued and outstanding shares - 0 -- --
Common stock, par value $0.01, 100,000 authorized shares, 50,073 issued and outstanding shares at June 30, 2014, and 49,840 issued and outstanding shares at December 31, 2013 501 498
Additional paid-in capital 137,512 135,441
Retained earnings 807,852 729,505
Accumulated other comprehensive income 6,391 4,032
Total stockholders' equity 952,256 869,476
     
Total liabilities and equity $ 1,695,362 $ 1,601,232
     
     
Portfolio Recovery Associates, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
     
     
     
 Six Months Ended June 30,
 20142013
Cash flows from operating activities:    
 Net income $ 78,347 $ 81,931
 Adjustments to reconcile net income to net cash provided by operating activities:    
 Amortization of share-based compensation 5,437 6,651
 Depreciation and amortization 8,158 6,900
 Amortization of debt discount 2,005 --
 Deferred tax expense 15,940 2,488
 Changes in operating assets and liabilities:    
 Other assets (3,874) (1,284)
 Accounts receivable (34) (46)
 Accounts payable 5,480 (2,633)
 Income tax payable/receivable, net 5,665 (5,748)
 Accrued expenses 5,886 7,313
 Accrued compensation (20,635) 1,757
     
Net cash provided by operating activities 102,375 97,329
     
Cash flows from investing activities:    
Purchases of property and equipment (13,224) (6,639)
Acquisition of finance receivables, net of buybacks (252,168) (407,347)
Collections applied to principal on finance receivables 272,153 248,498
     
Net cash provided by/(used in) investing activities 6,761 (165,488)
     
Cash flows from financing activities:    
Income tax benefit from share-based compensation 4,152 2,659
Proceeds from line of credit -- 217,000
Principal payments on line of credit -- (128,000)
Repurchases of common stock -- (8,506)
Cash paid for noncontrolling interest -- (1,150)
Distributions paid to noncontrolling interest -- (51)
Principal payments on long-term debt (5,000) (2,768)
     
Net cash (used in)/provided by financing activities (848) 79,184
     
Effect of exchange rate on cash 234 (253)
     
Net increase in cash and cash equivalents 108,522 10,772
     
Cash and cash equivalents, beginning of period 162,004 32,687
     
Cash and cash equivalents, end of period $ 270,526 $ 43,459
     
Supplemental disclosure of cash flow information:    
Cash paid for interest  $ 7,634 $ 5,581
Cash paid for income taxes  25,414  52,809
     
Noncash investing and financing activities:    
Adjustment of the redeemable noncontrolling interest measurement amount $ -- $ (245)
Purchase of noncontrolling interest  --   9,162
Distributions payable relating to noncontrolling interest  --   2
Employee stock relinquished for payment of taxes  (7,515)  (4,025)
             
             
FINANCIAL HIGHLIGHTS
             
 As of and for the
Three Months Ended June 30,
As of and for the
Six Months Ended June 30,
  2014 2013 Change 2014 2013 Change
EARNINGS (in thousands)            
Income recognized on finance receivables, net  $ 182,518  $ 168,570 8%  $ 360,488  $ 323,362 11%
Fee income  14,825  14,391 3%  30,777  29,158 6%
Total revenues  197,343  182,961 8%  391,265  352,520 11%
Operating expenses  124,879  109,135 14%  247,211  212,807 16%
Income from operations  72,464  73,826 -2%  144,054  139,713 3%
Net interest expense  5,067  2,923 73%  9,926  5,612 77%
Net income  37,507  43,414 -14%  78,347  81,931 -4%
Net income attributable to Portfolio Recovery Associates, Inc.  37,507  43,599 -14%  78,347  82,199 -5%
             
PERIOD-END BALANCES (in thousands)            
Cash and cash equivalents  $ 270,526  $ 43,459 522%  $ 270,526  $ 43,459 522%
Finance receivables, net  1,219,595  1,236,859 -1%  1,219,595  1,236,859 -1%
Goodwill and intangible assets, net  118,927  124,349 -4%  118,927  124,349 -4%
Total assets  1,695,362  1,457,246 16%  1,695,362  1,457,246 16%
Borrowings  448,785  413,774 8%  448,785  413,774 8%
Total liabilities  743,106  655,012 13%  743,106  655,012 13%
Total equity  952,256  791,898 20%  952,256  791,898 20%
             
FINANCE RECEIVABLE COLLECTIONS (dollars in thousands)            
Cash collections  $ 319,274  $ 296,397 8%  $ 632,641  $ 571,860 11%
Cash collections on fully amortized pools  16,943  10,612 60%  33,459  16,957 97%
Principal amortization without allowance charges  139,055  129,012 8%  276,405  247,510 12%
Principal amortization with allowance charges  136,756  127,827 7%  272,153  248,498 10%
Principal amortization w/ allowance charges as % of cash collections:            
 Including fully amortized pools 42.8% 43.1% -1% 43.0% 43.5% -1%
 Excluding fully amortized pools 45.2% 44.7% 1% 45.4% 44.8% 1%
             
ALLOWANCE FOR FINANCE RECEIVABLES (dollars in thousands)            
Allowance (reversal)/charge  (2,299)  (1,185) 94%  (4,252)  988 -530%
Allowance (reversal)/charge to period-end net finance receivables -0.2% -0.1% 97% -0.3% 0.1% -537%
Allowance (reversal)/charge to net finance receivable income -1.3% -0.7% 79% -1.2% 0.3% -486%
Allowance (reversal)/charge to cash collections -0.7% -0.4% 80% -0.7% 0.2% -489%
             
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)            
Purchase price - core  $ 91,904  $ 113,314 -19%  $ 170,989  $ 240,265 -29%
Face value - core  770,985  1,178,229 -35%  1,608,021  2,577,189 -38%
Purchase price - bankruptcy  16,187  82,273 -80%  81,688  168,868 -52%
Face value - bankruptcy  180,179  1,926,515 -91%  737,399  2,363,023 -69%
Purchase price - other  1,121  4,881 -77%  9,249  6,268 48%
Face value - other  15,747  81,852 -81%  534,865  100,422 433%
Purchase price - total  109,212  200,468 -46%  261,926  415,401 -37%
Face value - total  966,911  3,186,596 -70%  2,880,285  5,040,634 -43%
Number of portfolios - total 85 94 -10% 189 185 2%
             
ESTIMATED REMAINING COLLECTIONS (in thousands)            
Estimated remaining collections - core  $ 1,948,414  $ 1,694,262 15%  $ 1,948,414  $ 1,694,262 15%
Estimated remaining collections - bankruptcy  729,406  925,223 -21%  729,406  925,223 -21%
Estimated remaining collections - other  24,119  16,744 44%  24,119  16,744 44%
Estimated remaining collections - total  2,701,939  2,636,229 2%  2,701,939  2,636,229 2%
             
SHARE DATA-ADJUSTED (7) (share amounts in thousands)            
Net income per common share - diluted  $ 0.74  $ 0.85 -13%  $ 1.55  $ 1.60 -3%
Weighted average number of shares outstanding - diluted  50,437  51,183 -1%  50,400  51,228 -2%
Shares repurchased  --  166 -100%  --  214 -100%
Average price paid per share repurchased (including acquisitions costs)  $ --   $ 39.82 -100%  $ --   $ 39.71 -100%
Closing market price  $ 59.53  $ 51.21 16%  $ 59.53  $ 51.21 16%
             
RATIOS AND OTHER DATA (dollars in thousands)            
Return on average equity (1) 16.0% 22.5% -29% 17.1% 21.8% -22%
Return on revenue (2) 19.0% 23.7% -20% 20.0% 23.2% -14%
Return on average assets (3) 9.0% 12.1% -26% 9.5% 11.7% -19%
Operating margin (4) 36.7% 40.4% -9% 36.8% 39.6% -7%
Operating expense to cash receipts (5) 37.4% 35.1% 6% 37.3% 35.4% 5%
Debt to equity (6) 47.1% 52.3% -10% 47.1% 52.3% -10%
Number of collectors 2,258 2,190 3% 2,258 2,190 3%
Number of full-time equivalent employees 3,567 3,362 6% 3,567 3,362 6%
Cash receipts (5)  $ 334,099  $ 310,788 8%  $ 663,418  $ 601,018 10%
Line of credit - unused portion at period end  650,000  184,000 253%  650,000  184,000 253%
(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 annualized net income divided by average assets for the period
(4) Calculated as income from operations divided by total revenues
(5) "Cash receipts" is defined as cash collections plus fee income
(6) For purposes of this ratio, "debt" equals borrowings
(7) All per share data has been adjusted for a 3 for 1 stock split by means of a stock dividend which was declared on June 10, 2013 and payable August 1, 2013 to holders of record as of July 1, 2013
           
           
FINANCIAL HIGHLIGHTS
           
 For the Quarter Ended
 June 30
2014
March 31
2014
December 31
2013
September 30
2013
June 30
2013
EARNINGS (in thousands)          
Income recognized on finance receivables, net  $ 182,518  $ 177,970  $ 168,728  $ 171,456  $ 168,570
Fee income  14,825  15,952  16,125  26,306  14,391
Total revenues  197,343  193,922  184,853  197,762  182,961
Operating expenses  124,879  122,332  106,503  118,294  109,135
Income from operations  72,464  71,590  78,350  79,468  73,826
Net interest expense  5,067  4,859  4,860  3,995  2,923
Net income  37,507  40,840  45,777  49,211  43,414
Net income attributable to Portfolio Recovery Associates, Inc.  37,507  40,840  45,777  47,338  43,599
           
PERIOD-END BALANCES (in thousands)          
Cash and cash equivalents  $ 270,526  $ 191,819  $ 162,004  $ 108,705  $ 43,459
Finance receivables, net  1,219,595  1,253,961  1,239,191  1,256,822  1,236,859
Goodwill and intangible assets, net  118,927  118,800  119,610  119,636  124,349
Total assets  1,695,362  1,642,613  1,601,232  1,547,985  1,457,246
Borrowings  448,785  450,278  451,780  452,229  413,774
Total liabilities  743,106  732,395  731,756  721,001  655,012
Total equity  952,256  910,218  869,476  816,647  791,898
           
FINANCE RECEIVABLE COLLECTIONS (dollars in thousands)          
Cash collections  $ 319,274  $ 313,367  $ 278,926  $ 291,651  $ 296,397
Cash collections on fully amortized pools  16,943  16,516  9,801  8,762  10,612
Principal amortization without allowance charges  139,055  137,350  110,626  122,776  129,012
Principal amortization with allowance charges  136,756  135,397  110,197  120,195  127,827
Principal amortization w/ allowance charges as % of cash collections:        
 Including fully amortized pools 42.8% 43.2% 39.5% 41.2% 43.1%
 Excluding fully amortized pools 45.2% 45.6% 40.9% 42.5% 44.7%
           
ALLOWANCE FOR FINANCE RECEIVABLES (dollars in thousands)        
Allowance (reversal)/charge  (2,299)  (1,953)  (429)  (2,581)  (1,185)
Allowance (reversal)/charge to period-end net finance receivables -0.2% -0.2% 0.0% -0.2% -0.1%
Allowance (reversal)/charge to net finance receivable income -1.3% -1.1% -0.3% -1.5% -0.7%
Allowance (reversal)/charge to cash collections -0.7% -0.6% -0.2% -0.9% -0.4%
           
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)        
Purchase price - core  $ 91,904  $ 79,085  $ 65,759  $ 89,044  $ 113,314
Face value - core  770,985  837,036  774,543  1,352,877  1,178,229
Purchase price - bankruptcy  16,187  65,501  31,987  41,794  82,273
Face value - bankruptcy  180,179  557,220  235,064  215,957  1,926,515
Purchase price - other  1,121  8,128  1,763  11,037  4,881
Face value - other  15,747  519,118  22,493  218,528  81,852
Purchase price - total  109,212  152,714  99,509  141,875  200,468
Face value - total  966,911  1,913,374  1,032,100  1,787,362  3,186,596
Number of portfolios - total 85 104 83 79 94
           
ESTIMATED REMAINING COLLECTIONS (in thousands)          
Estimated remaining collections - core  $ 1,948,414  $ 1,891,511  $ 1,824,132  $ 1,762,369  $ 1,694,262
Estimated remaining collections - bankruptcy  729,406  788,774  822,988  877,722  925,223
Estimated remaining collections - other  24,119  24,439  22,150  32,272  16,744
Estimated remaining collections - total  2,701,939  2,704,724  2,669,270  2,672,363  2,636,229
           
SHARE DATA-ADJUSTED (7) (share amounts in thousands)          
Net income per common share - diluted  $ 0.74  $ 0.81  $ 0.91  $ 0.93  $ 0.85
Weighted average number of shares outstanding - diluted  50,437  50,363  50,375  50,660  51,183
Shares repurchased  --  --  --  989  166
Average price paid per share repurchased (including acquisitions costs)  $ --   $ --   $ --   $ 50.55  $ 39.82
Closing market price  $ 59.53  $ 57.86  $ 52.84  $ 59.93  $ 51.21
           
RATIOS AND OTHER DATA (dollars in thousands)          
Return on average equity (1) 16.0% 18.2% 21.5% 23.5% 22.5%
Return on revenue (2) 19.0% 21.1% 24.8% 24.9% 23.7%
Return on average assets (3) 9.0% 10.0% 11.5% 12.5% 12.1%
Operating margin (4) 36.7% 36.9% 42.4% 40.2% 40.4%
Operating expense to cash receipts (5) 37.4% 37.1% 36.1% 37.2% 35.1%
Debt to equity (6) 47.1% 49.5% 52.0% 55.4% 52.3%
Number of collectors 2,258 2,379 2,313 2,054 2,190
Number of full-time equivalent employees 3,567 3,621 3,543 3,223 3,362
Cash receipts (5)  $ 334,099  $ 329,319  $ 295,051  $ 317,957  $ 310,788
Line of credit - unused portion at period end  650,000  435,500  435,500  435,500  184,000
(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 annualized net income divided by average assets for the period
(4) Calculated as income from operations divided by total revenues
(5) "Cash receipts" is defined as cash collections plus fee income
(6) For purposes of this ratio, "debt" equals borrowings
(7) All per share data has been adjusted to reflect the 3-for-1 stock split by means of a stock dividend which was declared on June 10, 2013 and payable August 1, 2013 to holders of record as of July 1, 2013
             
             
Summary Portfolio Data at June 30, 2014, Entire Domestic Portfolio
($ in thousands)


Purchase
Period


Purchase
Price

Total
Estimated
Collections

Net Finance
Receivables
Balance
Actual Cash
Collections
Including Cash
Sales

Estimated
Remaining 
Collections

Total Estimated
Collections to
Purchase Price
1996  $ 3,080  $ 10,227  $ --   $ 10,214  $ 13 332%
1997  7,685  25,592  --   25,534  58 333%
1998  11,089  37,634  --   37,426  208 339%
1999  18,898  69,766  --   69,495  271 369%
2000  25,020  118,549  --   117,130  1,419 474%
2001  33,481  178,921  --   176,789  2,132 534%
2002  42,325  204,216  --   199,971  4,245 482%
2003  61,447  273,734  --   267,451  6,283 445%
2004  59,176  206,543  --   200,122  6,421 349%
2005  143,167  331,551  5,826  314,819  16,732 232%
2006  107,666  228,180  6,013  211,770  16,410 212%
2007  258,364  541,739  18,192  489,963  51,776 210%
2008  275,114  537,362  22,193  486,888  50,474 195%
2009  281,313  921,889  15,940  803,271  118,618 328%
2010  357,767  1,061,805  56,506  829,401  232,404 297%
2011  392,778  1,039,572  124,237  658,407  381,165 265%
2012  508,426  1,036,009  268,072  483,553  552,456 204%
2013  621,545  1,159,021  453,419  324,169  834,852 186%
2014  253,011  434,437  234,218  32,552  401,885 172%
Total  $ 3,461,352  $ 8,416,747  $ 1,204,616  $ 5,738,925  $ 2,677,822 243%
             
Summary Portfolio Data at June 30, 2014, Purchased Bankruptcy Portfolio - Domestic
($ in thousands)


Purchase
Period


Purchase
Price

Total
Estimated
Collections

Net Finance
Receivables
Balance
Actual Cash
Collections
Including Cash
Sales

Estimated
Remaining 
Collections

Total Estimated
Collections to
Purchase Price
1996-2003  $ --   $ --   $ --   $ --   $ --  0%
2004  7,468  14,598  --   14,538  60 195%
2005  29,301  43,794  26  43,699  95 149%
2006  17,627  31,913  52  31,716  197 181%
2007  78,526  106,108  319  104,523  1,585 135%
2008  108,584  169,098  1,525  165,351  3,747 156%
2009  156,027  480,855  1,771  442,339  38,516 308%
2010  209,160  536,047  29,442  445,475  90,572 256%
2011  181,784  326,398  64,713  208,701  117,697 180%
2012  252,363  348,010  137,798  170,889  177,121 138%
2013  229,189  303,806  164,703  93,104  210,702 133%
2014  81,587  103,526  69,938  14,412  89,114 127%
Total  $ 1,351,616  $ 2,464,153  $ 470,287  $ 1,734,747  $ 729,406 182%
             
Summary Portfolio Data at June 30, 2014, Core Portfolio - Domestic
($ in thousands)


Purchase
Period


Purchase
Price

Total
Estimated
Collections

Net Finance
Receivables
Balance
Actual Cash
Collections
Including Cash
Sales

Estimated
Remaining 
Collections

Total Estimated
Collections to
Purchase Price
1996  $ 3,080  $ 10,227  $ --   $ 10,214  $ 13 332%
1997  7,685  25,592  --   25,534  58 333%
1998  11,089  37,634  --   37,426  208 339%
1999  18,898  69,766  --   69,495  271 369%
2000  25,020  118,549  --   117,130  1,419 474%
2001  33,481  178,921  --   176,789  2,132 534%
2002  42,325  204,216  --   199,971  4,245 482%
2003  61,447  273,734  --   267,451  6,283 445%
2004  51,708  191,945  --   185,584  6,361 371%
2005  113,866  287,757  5,800  271,120  16,637 253%
2006  90,039  196,267  5,961  180,054  16,213 218%
2007  179,838  435,631  17,873  385,440  50,191 242%
2008  166,530  368,264  20,668  321,537  46,727 221%
2009  125,286  441,034  14,169  360,932  80,102 352%
2010  148,607  525,758  27,064  383,926  141,832 354%
2011  210,994  713,174  59,524  449,706  263,468 338%
2012  256,063  687,999  130,274  312,664  375,335 269%
2013  392,356  855,215  288,716  231,065  624,150 218%
2014  171,424  330,911  164,280  18,140  312,771 193%
Total  $ 2,109,736  $ 5,952,594  $ 734,329  $ 4,004,178  $ 1,948,416 282%

Use of Non-GAAP Financial Measures

Management believes that the presentation of certain financial information in this press release, excluding the costs associated with the Aktiv Kapital acquisition and foreign exchange losses that were recorded during the three and six months ended June 30, 2014, which is non-GAAP financial information, is useful to investors and improves the comparability of the Company's ongoing operational results between periods. The non-GAAP information should be considered in addition to, not as a substitute for, financial information prepared in accordance with GAAP.

             
             
Portfolio Recovery Associates, Inc.
Reconciliation of Net Income, Earnings Per Share and Financial Ratios to GAAP Net Income, Earnings Per Share and Financial Ratios
(in thousands, except per share amounts)
             
 GAAP Three
Months Ended
June 30, 2014
Less: Adjustments
Related to Aktiv
Kapital Acquisition
Adjusted Three
Months Ended
June 30, 2014
GAAP Six
Months Ended
June 30, 2014
Less: Adjustments
Related to Aktiv
Kapital Acquisition
Adjusted Six
Months Ended
June 30, 2014
             
Revenues:            
Income recognized on finance receivables, net $ 182,518   $ 182,518 $ 360,488   $ 360,488
Fee income 14,825   14,825 30,777   30,777
             
Total revenues 197,343   197,343 391,265   391,265
             
Operating expenses:            
Compensation and employee services 52,461   52,461 103,846   103,846
Legal collection fees 11,371   11,371 22,204   22,204
Legal collection costs 25,429   25,429 51,962   51,962
Agent fees 1,464   1,464 2,914   2,914
Outside fees and services 12,113 (4,052) 8,061 22,904 (8,413) 14,491
Communications 7,958   7,958 17,112   17,112
Rent and occupancy 2,219   2,219 4,366   4,366
Depreciation and amortization 4,211   4,211 8,158   8,158
Other operating expenses 7,653   7,653 13,745   13,745
             
Total operating expenses 124,879 (4,052) 120,827 247,211 (8,413) 238,798
             
Income from operations 72,464 4,052 76,516 144,054 8,413 152,467
             
Other income and (expense):            
Interest income 1   1 2   2
Interest expense (5,068)   (5,068) (9,928)   (9,928)
Other expense (6,224) 6,224 -- (6,224) 6,224 --
             
Income before income taxes 61,173 10,276 71,449 127,904 14,637 142,541
             
Provision for income taxes 23,666 3,976 27,642 49,557 5,671 55,228
             
Net income $ 37,507 $ 6,300 $ 43,807 $ 78,347 $ 8,966 $ 87,313
             
Adjustment for loss attributable to redeemable noncontrolling interest --   -- --   --
             
Net income attributable to Portfolio Recovery Associates, Inc. $ 37,507 $ 6,300 $ 43,807 $ 78,347 $ 8,966 $ 87,313
             
Net income per common share attributable to Portfolio Recovery Associates, Inc.:          
Basic  $ 0.75  $ 0.13  $ 0.88  $ 1.57  $ 0.18  $ 1.75
Diluted  $ 0.74  $ 0.13  $ 0.87  $ 1.55  $ 0.18  $ 1.73
             
Weighted average number of shares outstanding:            
Basic 50,065   50,065 49,997   49,997
Diluted 50,437   50,437 50,400   50,400
             
Operating margin: 36.7%   38.8% 36.8%   39.0%
             
Net income margin: 19.0%   22.2% 20.0%   22.3%
             
Return on average equity: 16.0%   18.7% 17.1%   19.0%
CONTACT: Investor Contact:

         Darby Schoenfeld

         Director of Investor Relations

         (757) 431-7913

         DCSchoenfeld@PRAGroup.com

         

         News Media Contact:

         Rick Goulart

         Vice President, Corporate Communications

         (757) 961-3525

         RickGoulart@PRAGroup.com