PRA Investorroom
Portfolio Recovery Associates Reports Third Quarter 2010 Results
NORFOLK, VA, Oct 27, 2010 (MARKETWIRE via COMTEX) --
Portfolio Recovery Associates, Inc. (NASDAQ: PRAA), a company that purchases, collects and manages portfolios of defaulted consumer receivables and provides a broad range of receivables management and payments processing services, today reported net income of $18.5 million for the quarter ended September 30, 2010. Net income increased 83% from $10.1 million in the same period a year earlier. Earnings were $1.08 per diluted share for the third quarter of 2010 compared with $0.65 in the third quarter of 2009, representing an increase of 66%.
In the third quarter of 2010, total revenue was up 39% from the year-earlier period to a record $95.5 million. Total revenue consists 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 third quarter of 2010, the Company applied 41.8% of cash collections to reduce the carrying basis of its owned debt portfolios, compared with 41.2% in the third quarter of 2009. The third quarter 2010 amortization rate included a $6.5 million net allowance charge, equivalent to approximately $4.0 million after tax, or 23 cents per diluted share, against certain pools of finance receivables accounts.
"Portfolio Recovery Associates has had a very strong year thus far, even in the face of a continued weakened economy," said Steven D. Fredrickson, chairman, president and chief executive officer. "In the third quarter, we produced record cash collections, record cash receipts and record revenue. At the same time, net income and earnings per share both demonstrated strong growth. This fine performance was due to long-term initiatives in a number of areas, including the continued success of our bankruptcy business, our ongoing search for greater operational efficiencies, the expansion of our internal legal collections channel, and the continued contributions of our fee-based businesses."
Fredrickson continued: "I am extremely pleased with PRA's performance across all of our businesses. The credit, of course, goes to our staff, which has continued to work smarter and more efficiently than ever."
Financial and Operating Highlights
-- Cash collections increased 49% to a record $137.4 million in the third
quarter of 2010, up from $92.4 million in the year-ago period. Call
center and other collections increased 6%, external legal collections
increased 32%, internal legal collections grew 96%, and purchased
bankruptcy collections gained 140% when compared with the year-earlier
period. The table below displays our cash collections by source, by
quarter for the past five quarters:
Cash Collection Source ($ in
thousands) Q32010 Q22010 Q12010 Q42009 Q32009
-------- -------- -------- -------- --------
Call Center & Other
Collections $ 51,711 $ 54,477 $ 56,987 $ 45,365 $ 48,590
External Legal Collections 20,217 18,819 18,276 15,496 15,330
Internal Legal Collections 12,130 11,362 10,713 7,570 6,196
Purchased Bankruptcy 53,319 43,748 33,219 26,855 22,251
-- Up 96% from the prior year, internal legal collections grew to $12.1
million in the third quarter of 2010. 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, emerging collections channel the Company has been
developing over the past four years.
-- Productivity finished at a record $190 for the first nine months of 2010
vs. $145 for all of 2009. Productivity is measured by cash collections
per hour paid, the Company's key measure of collector performance.
Excluding the impact of trustee remittances from purchased bankrupt
accounts, the comparison is $129 for the first nine months of 2010,
compared with $113 for all of 2009. Excluding trustee remittances on
purchased bankrupt accounts and external legal collections, the
comparison is $101 for the first nine months of 2010 and $87 for all
of 2009.
-- In the third quarter, revenue was a record $95.5 million, up 39% when
compared with the same period a year ago, driven by record cash receipts
of $152.9 million, up 43.4% from $106.6 million a year earlier. Cash
receipts are comprised of both cash collections and revenue from the
Company's fee-based businesses.
-- The Company's net allowance charge totaled $6.5 million in the third
quarter, representing 0.81% of net finance receivables at period-end and
4.75% of cash collections. The table below displays net allowance
charges incurred by quarter, by buying period since 2005, as well as
purchases of charged-off consumer debt, net of buybacks:
($ in thousands)
------------------------------------------------------
Allowance Purchase Period
Period 1996-2003 2004 2005 2006 2007
--------- --------- ---------- ---------- ----------
Q1 05 $ - $ - $ - $ - $ -
Q2 05 - - - - -
Q3 05 - - - - -
Q4 05 200 - - - -
Q1 06 - - 175 - -
Q2 06 75 - 125 - -
Q3 06 200 - 75 - -
Q4 06 - - 450 - -
Q1 07 (245) - 610 - -
Q2 07 90 - - - -
Q3 07 200 320 660 - -
Q4 07 190 150 615 340 -
Q1 08 120 650 910 1,105 -
Q2 08 260 720 - 2,330 650
Q3 08 (90) 60 325 1,135 2,350
Q4 08 (400) (140) 1,805 2,600 4,380
Q1 09 (225) 35 1,150 910 2,300
Q2 09 (230) (220) 495 765 685
Q3 09 (25) (190) 1,170 1,965 340
Q4 09 (120) - 1,375 1,220 110
Q1 10 - - 2,795 1,175 2,900
Q2 10 - (80) 1,600 2,100 700
Q3 10 - (80) 1,650 2,050 2,750
--------- --------- ---------- ---------- ----------
Total $ - $ 1,225 $ 15,985 $ 17,695 $ 17,165
========= ========= ========== ========== ==========
Portfolio Purchases,
net $ 203,026 $ 59,177 $ 143,171 $ 107,701 $ 258,271
========= ========= ========== ========== ==========
($ in thousands)
------------------------------------------
Allowance
Allowance Purchase Period Charge as
Period 2008 2009-2010 Total % of NFR
---------- ---------- ---------- ---------
Q1 05 $ - $ - $ - 0.0%
Q2 05 - - - 0.0%
Q3 05 - - - 0.0%
Q4 05 - - 200 0.1%
Q1 06 - - 175 0.1%
Q2 06 - - 200 0.1%
Q3 06 - - 275 0.1%
Q4 06 - - 450 0.2%
Q1 07 - - 365 0.1%
Q2 07 - - 90 0.0%
Q3 07 - - 1,180 0.4%
Q4 07 - - 1,295 0.3%
Q1 08 - - 2,785 0.6%
Q2 08 - - 3,960 0.8%
Q3 08 - - 3,780 0.7%
Q4 08 620 - 8,865 1.6%
Q1 09 2,050 - 6,220 1.1%
Q2 09 2,425 - 3,920 0.6%
Q3 09 4,750 - 8,010 1.2%
Q4 09 6,900 - 9,485 1.4%
Q1 10 - - 6,870 0.9%
Q2 10 2,000 - 6,320 0.8%
Q3 10 150 - 6,520 0.8%
---------- ---------- ----------
Total $ 18,895 $ - $ 70,965
========== ========== ==========
Portfolio Purchases,
net $ 275,130 $ 559,907 $1,606,383
========== ========== ==========
Acquired in 68 portfolios from nine different sellers, the Company purchased $1.38 billion of face-value debt during the third quarter of 2010 for $92.5 million. The tables below display purchase price amounts by year, net of buybacks, current net finance receivable balance, cash collections to date including sales, estimated remaining collections and estimated purchase price multiples:
($ in thousands)
Entire Portfolio
Unamortized Total
Purchase Estimated
Price Actual Cash Collections
Total Balance at Collections Estimated to
Purchase Purchase Estimated September Including Remaining Purchase
Period Price Collections 30, 2010 Cash Sales Collections Price
---------- ---------- ---------- ---------- ---------- ---------
1996 $ 3,080 $ 10,094 $ - $ 10,024 $ 70 328%
1997 7,685 25,244 - 25,057 187 328%
1998 11,089 36,913 - 36,506 407 333%
1999 18,898 68,282 - 66,901 1,381 361%
2000 25,020 113,442 - 110,146 3,296 453%
2001 33,481 169,035 - 165,568 3,467 505%
2002 42,325 187,309 - 182,872 4,437 443%
2003 61,448 248,438 - 240,944 7,494 404%
2004 59,177 184,196 462 176,311 7,885 311%
2005 143,171 309,500 23,563 265,608 43,892 216%
2006 107,701 218,553 29,349 163,894 54,659 203%
2007 258,271 505,819 111,183 316,096 189,723 196%
2008 275,130 538,306 166,926 246,306 292,000 196%
2009 281,641 713,656 213,969 190,109 523,547 253%
YTD 2010 278,266 585,030 261,787 47,901 537,129 210%
---------- ---------- ---------- ---------- ---------- ---------
Total $1,606,383 $3,913,817 $ 807,239 $2,244,243 $1,669,574 244%
========== ========== ========== ========== ========== =========
($ in thousands)
Purchased Bankruptcy (BK)
Portfolio
Unamortized Total
Purchase Estimated
Price Actual Cash Collections
Total Balance at Collections Estimated to
Purchase Purchase Estimated September Including Remaining Purchase
Period Price Collections 30, 2010 Cash Sales Collections Price
---------- ---------- ---------- ---------- ---------- ---------
1996-2003 $ - $ - $ - $ - $ - 0%
2004 7,469 14,160 13 14,113 47 190%
2005 29,302 43,020 340 42,577 443 147%
2006 17,643 30,450 269 28,321 2,129 173%
2007 78,933 112,658 31,286 74,210 38,448 143%
2008 108,603 183,196 72,428 78,709 104,486 169%
2009 156,094 360,984 132,970 75,372 285,611 231%
YTD 2010 172,703 324,794 167,846 21,327 303,468 188%
---------- ---------- ---------- ---------- ---------- ---------
Total $ 570,747 $1,069,262 $ 405,152 $ 334,629 $ 734,632 187%
========== ========== ========== ========== ========== =========
($ in thousands)
Entire Portfolio less
Purchased BK
Unamortized Total
Purchase Estimated
Price Actual Cash Collections
Total Balance at Collections Estimated to
Purchase Purchase Estimated September Including Remaining Purchase
Period Price Collections 30, 2010 Cash Sales Collections Price
---------- ---------- ---------- ---------- ---------- ---------
1996 $ 3,080 $ 10,094 $ - $ 10,024 $ 70 328%
1997 7,685 25,244 - 25,057 187 328%
1998 11,089 36,913 - 36,506 407 333%
1999 18,898 68,282 - 66,901 1,381 361%
2000 25,020 113,442 - 110,146 3,296 453%
2001 33,481 169,035 - 165,568 3,467 505%
2002 42,325 187,309 - 182,872 4,437 443%
2003 61,448 248,438 - 240,944 7,494 404%
2004 51,708 170,036 449 162,198 7,838 329%
2005 113,869 266,479 23,223 223,031 43,448 234%
2006 90,058 188,104 29,080 135,573 52,531 209%
2007 179,338 393,160 79,897 241,886 151,274 219%
2008 166,527 355,111 94,498 167,597 187,514 213%
2009 125,547 352,673 80,999 114,737 237,936 281%
YTD 2010 105,563 260,236 93,941 26,574 233,662 247%
---------- ---------- ---------- ---------- ---------- ---------
Total $1,035,636 $2,844,556 $ 402,087 $1,909,614 $ 934,942 275%
========== ========== ========== ========== ========== =========
-- The Company's fee-for-service businesses generated revenue of $15.5
million in the third quarter of 2010, up 9% from $14.2 million in the
same period a year ago, due primarily to the acquisition of CCB earlier
this year. These businesses accounted for 16.2% of the Company's
overall revenue in the third quarter of 2010, down from 20.8% in Q3
2009.
-- During the third quarter of 2010, the Company recorded ongoing non-cash
equity-based compensation expense of $1.0 million, equivalent to
approximately $612,000 after tax, or 4 cents per diluted share.
-- The Company's cash balances were $20.3 million as of Sept. 30, 2010.
During the third quarter, the Company made net repayments of $1.0
million on its line of credit, leaving it with $288.5 million in
outstanding borrowings at quarter's end. Remaining borrowing
availability under the line was $76.5 million at Sept. 30, 2010.
-- The Company has included, for the first time, tables with additional
financial highlights for the three- and nine-month periods ended Sept.
30, 2010, as well as the past five quarters of the same data, at the
bottom of this release.
Kevin P. Stevenson, chief financial and administrative officer, said: "The third quarter of 2010 was another strong one for Portfolio Recovery Associates. A number of factors drove this performance, including the continued maturation of our sizeable investments in bankruptcy portfolios and steady improvements in call center and legal collections. Reflecting these improvements, recoveries per hour paid, our core measure of productivity, finished the first nine months of the year at a record $190. Taken together, these factors allowed us to overcome a $6.5 million allowance charge, additional significant investments in our legal pipeline, and a still-weak U.S. economy."
The Company's nine-month 2010 earnings totaled $52.8 million, or $3.15 per diluted share, compared with $31.9 million, or $2.07 per diluted share, for the first nine months of 2009. First-nine month 2010 revenue was $272.0 million, compared with $207.9 million in the first nine months of 2009.
Conference Call Information
The Company will hold a conference call with investors tonight, 5:30 p.m. EDT, Wednesday, Oct. 27, 2010, to discuss its third-quarter results. Investors can access the call live by dialing 888-713-4213 for domestic callers or 617-213-4865 for international callers using the pass code 82740845. Investors may also listen via webcast at the Company's website, www.portfoliorecovery.com.
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 91118122. 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.
For the fourth consecutive year, Portfolio Recovery Associates has been named to the Forbes 100 Best Small Companies in America annual rankings list, as announced in the Nov. 8, 2010, edition of the business magazine. PRA is ranked 56 among the top 100 small businesses listed.
About Portfolio Recovery Associates, Inc.
Portfolio Recovery Associates' business revolves around the detection, collection, and processing of both unpaid and normal-course receivables originally owed to credit grantors, governments, retailers and others. The Company's primary business is the purchase, collection and management of portfolios of defaulted consumer receivables. These are the unpaid obligations of individuals to credit originators, which include banks, credit unions, consumer and auto finance companies, and retail merchants. Portfolio Recovery Associates also provides fee-based services, including collateral-location services for credit originators via its IGS subsidiary, revenue administration, audit and debt discovery/recovery services for government entities through both its RDS and MuniServices businesses and class action claims recovery services and related payment processing through its CCB subsidiary.
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 Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
September September September September
30, 2010 30, 2009 30, 2010 30, 2009
--------- --------- --------- ---------
Revenues:
Income recognized on finance
receivables, net $ 80,026 $ 54,336 $ 224,897 $ 159,650
Fee income 15,518 14,229 47,054 48,225
--------- --------- --------- ---------
Total revenues 95,544 68,565 271,951 207,875
Operating expenses:
Compensation and employee
services 31,213 26,844 91,725 79,940
Legal and agency fees and
costs 16,748 11,296 43,573 34,460
Outside fees and services 3,470 2,284 9,454 6,854
Communications 4,000 3,472 13,160 11,157
Rent and occupancy 1,362 1,270 3,912 3,515
Depreciation and amortization 3,294 2,269 9,050 6,874
Other operating expenses 2,634 2,341 7,488 6,565
--------- --------- --------- ---------
Total operating expenses 62,721 49,776 178,362 149,365
--------- --------- --------- ---------
Income from operations 32,823 18,789 93,589 58,510
Other income and (expense):
Interest income - - 35 3
Interest expense (2,178) (1,964) (6,535) (5,891)
--------- --------- --------- ---------
Income before income taxes 30,645 16,825 87,089 52,622
Provision for income taxes 11,888 6,729 33,847 20,730
--------- --------- --------- ---------
Net income $ 18,757 $ 10,096 $ 53,242 $ 31,892
========= ========= ========= =========
Less net income
attributable to
redeemable noncontrolling
interest (276) - (431) -
--------- --------- --------- ---------
Net income attributable to
Portfolio Recovery
Associates, Inc. $ 18,481 $ 10,096 $ 52,811 $ 31,892
========= ========= ========= =========
Net income per common share:
Basic $ 1.08 $ 0.65 $ 3.15 $ 2.07
Diluted $ 1.08 $ 0.65 $ 3.15 $ 2.07
Weighted average number of
shares outstanding:
Basic 17,058 15,466 16,740 15,392
Diluted 17,093 15,502 16,792 15,428
Portfolio Recovery Associates, Inc.
Unaudited Consolidated Summary Balance Sheets
(in thousands, except per share amounts)
September 30, December 31,
ASSETS 2010 2009
------------ ------------
Cash and cash equivalents $ 20,297 $ 20,265
Finance receivables, net 807,239 693,462
Accounts receivable, net 7,789 9,169
Income taxes receivable 2,603 4,460
Property and equipment, net 22,794 21,864
Goodwill 61,665 29,299
Intangible assets, net 19,945 10,756
Other assets 5,405 5,158
------------ ------------
Total assets $ 947,737 $ 794,433
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities $ 23,645 $ 20,948
Deferred tax liability 151,638 117,206
Line of credit 288,500 319,300
Long term debt 998 1,499
------------ ------------
Total liabilities 464,781 458,953
------------ ------------
Redeemable noncontrolling Interest 14,531 -
------------ ------------
Stockholders' equity:
Portfolio Recovery Associates, Inc.
stockholders' equity:
Preferred stock, par value $0.01, authorized
shares, 2,000, issued and outstanding
shares - 0 - -
Common stock, par value $0.01, authorized
shares, 30,000, 17,061 issued and outstanding
shares at September 30, 2010, and 15,596
issued and 15,514 outstanding shares at
December 31, 2009 171 155
Additional paid-in capital 162,418 82,400
Retained earnings 306,164 253,353
Accumulated other comprehensive loss, net of
taxes (328) (428)
------------ ------------
Total stockholders' equity 468,425 335,480
============ ============
Total liabilities and stockholders'
equity $ 947,737 $ 794,433
============ ============
Portfolio Recovery Associates, Inc.
Unaudited Consolidated Summary Statements of Cash Flows
(in thousands)
Nine Months Nine Months
Ended Ended
September 30, September 30,
2010 2009
------------- -------------
Cash flows from operating activities:
Net income $ 53,242 $ 31,892
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of share-based
compensation 3,114 3,240
Depreciation and amortization 9,050 6,874
Deferred tax expense 34,368 22,000
Changes in operating assets and
liabilities:
Other assets (244) (14)
Accounts receivable 1,380 1,369
Accounts payable and accrued
liabilities 639 1,112
Income taxes receivable 1,857 (2,306)
------------- -------------
Net cash provided by operating
activities 103,406 64,167
------------- -------------
Cash flows from investing activities:
Purchases of property and equipment (6,162) (3,079)
Acquisition of finance receivables, net of
buybacks (273,858) (210,116)
Collections applied to principal on finance
receivables 160,081 113,067
Business acquisitions, net of cash acquired (23,000) -
Contingent payment made for business
acquisition (104) (100)
------------- -------------
Net cash used in investing activities (143,043) (100,228)
------------- -------------
Cash flows from financing activities:
Proceeds from exercise of options 57 1,630
Income tax benefit from share-based
compensation 225 746
Payment of liability-classified contingent
consideration (1,000) -
Proceeds from line of credit 131,000 84,500
Principal payments on line of credit (161,800) (46,500)
Proceeds from stock offering, net of
offering costs 71,688 -
Proceeds from long-term debt - 2,036
Principal payments on long-term debt (501) (373)
Principal payments on capital lease
obligations - (5)
------------- -------------
Net cash provided by financing
activities 39,669 42,034
------------- -------------
Net increase in cash and cash
equivalents 32 5,973
Cash and cash equivalents, beginning of
period 20,265 13,901
------------- -------------
Cash and cash equivalents, end of period $ 20,297 $ 19,874
============= =============
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 6,508 $ 6,028
Cash paid for income taxes $ 89 $ 321
Noncash investing and financing activities:
Net unrealized change in fair value of
derivative instrument $ 164 $ (655)
Common stock issued for acquisition $ 4,950 $ 1,170
FINANCIAL HIGHLIGHTS Three Months Ended
September 30, %
(dollars in thousands) 2010 2009 Change
--------- --------- ------
EARNINGS
Income recognized on finance receivables, net $ 80,026 $ 54,336 47%
Fee income 15,518 14,229 9%
Total revenues 95,544 68,565 39%
Operating expenses 62,721 49,776 26%
Income from operations 32,823 18,789 75%
Net interest expense 2,178 1,964 11%
Net income 18,757 10,096 86%
Net income attributable to Portfolio Recovery
Associates, Inc. 18,481 10,096 83%
PERIOD-END BALANCES
Cash and cash equivalents $ 20,297 $ 19,874 2%
Finance receivables, net 807,239 660,879 22%
Goodwill and intangible assets, net 81,610 40,724 100%
Total assets 947,737 759,682 25%
Line of credit 288,500 306,300 -6%
Total liabilities 464,781 437,576 6%
Total equity 468,425 322,106 45%
FINANCE RECEIVABLE COLLECTIONS
Cash collections $ 137,377 $ 92,367 49%
Principal amortization without allowance 50,830 30,022 69%
Principal amortization with allowance 57,350 38,032 51%
Principal amortization w/ allowance as % of
cash collections:
Including fully amortized pools 41.7% 41.2% 1%
Excluding fully amortized pools 44.7% 44.3% 1%
Estimated remaining collections - core $ 934,942 $ 872,752 7%
Estimated remaining collections - bankruptcy 734,632 459,160 60%
Estimated remaining collections - total 1,669,574 1,331,912 25%
ALLOWANCE FOR FINANCE RECEIVABLES
Balance at period-end $ 70,965 $ 41,770 70%
Balance at period-end to net finance
receivables 8.79% 6.32% 39%
Allowance charge $ 6,520 $ 8,010 -19%
Allowance charge to finance receivable income 7.53% 12.85% -41%
Allowance charge to cash collections 4.75% 8.67% -45%
PURCHASES OF FINANCE RECEIVABLES
Purchase price - excluding bankruptcy $ 31,831 $ 30,137 6%
Face value - excluding bankruptcy 588,551 679,975 -13%
Purchase price - bankruptcy 60,687 46,523 30%
Face value - bankruptcy 788,967 1,069,266 -26%
Purchase price - total 92,518 76,660 21%
Face value - total 1,377,518 1,749,241 -21%
Number of portfolios - total 68 100 -32%
PER SHARE DATA
Net income per common share - diluted $ 1.08 $ 0.65 66%
Weighted average number of shares outstanding
- diluted 17,093 15,502 10%
Closing market price $ 64.66 $ 45.33 43%
RATIOS AND OTHER DATA
Return on average equity (1) 16.04% 12.75% 26%
Return on revenue (2) 19.63% 14.72% 33%
Operating margin (3) 34.35% 27.40% 25%
Operating expense to cash receipts (4) 41.02% 46.69% -12%
Debt to equity (5) 61.80% 95.61% -35%
Cash collections per hour paid:
Total $ 200 $ 144 39%
Excluding bankruptcy collections $ 127 $ 111 14%
Excluding bankruptcy and external legal
collections $ 97 $ 87 11%
Number of collectors 1,422 1,312 8%
Number of employees 2,421 2,146 13%
Cash receipts (1) $ 152,895 $ 106,596 43%
Line of credit - unused portion 76,500 58,700 30%
FINANCIAL HIGHLIGHTS Nine Months Ended
September 30, %
(dollars in thousands) 2010 2009 Change
--------- --------- ------
EARNINGS
Income recognized on finance receivables, net $ 224,897 $ 159,650 41%
Fee income 47,054 48,225 -2%
Total revenues 271,951 207,875 31%
Operating expenses 178,362 149,365 19%
Income from operations 93,588 58,510 60%
Net interest expense 6,500 5,888 10%
Net income 53,242 31,892 67%
Net income attributable to Portfolio Recovery
Associates, Inc. 52,811 31,892 66%
PERIOD-END BALANCES
Cash and cash equivalents $ 20,297 $ 19,874 2%
Finance receivables, net 807,239 660,879 22%
Goodwill and intangible assets, net 81,610 40,724 100%
Total assets 947,737 759,682 25%
Line of credit 288,500 306,300 -6%
Total liabilities 464,781 437,576 6%
Total equity 468,425 322,106 45%
FINANCE RECEIVABLE COLLECTIONS
Cash collections $ 384,978 $ 272,717 41%
Principal amortization without allowance 140,371 94,917 48%
Principal amortization with allowance 160,081 113,067 42%
Principal amortization w/ allowance as % of
cash collections:
Including fully amortized pools 41.6% 41.5% 0%
Excluding fully amortized pools 45.0% 44.7% 1%
Estimated remaining collections - core $ 934,942 $ 872,752 7%
Estimated remaining collections - bankruptcy 734,632 459,160 60%
Estimated remaining collections - total 1,669,574 1,331,912 25%
ALLOWANCE FOR FINANCE RECEIVABLES
Balance at period-end $ 70,965 $ 41,770 70%
Balance at period-end to net finance
receivables 8.79% 6.32% 39%
Allowance charge $ 19,710 $ 18,150 9%
Allowance charge to finance receivable income 8.76% 11.37% -23%
Allowance charge to cash collections 5.12% 6.66% -23%
PURCHASES OF FINANCE RECEIVABLES
Purchase price - excluding bankruptcy $ 105,146 $ 95,819 10%
Face value - excluding bankruptcy 2,067,011 3,520,023 -41%
Purchase price - bankruptcy 176,774 117,963 50%
Face value - bankruptcy 2,869,052 2,574,948 11%
Purchase price - total 281,919 213,783 32%
Face value - total 4,936,063 6,094,973 -19%
Number of portfolios - total 230 306 -25%
PER SHARE DATA
Net income per common share - diluted $ 3.15 $ 2.07 52%
Weighted average number of shares outstanding
- diluted 16,792 15,428 9%
Closing market price $ 64.66 $ 45.33 43%
RATIOS AND OTHER DATA
Return on average equity (1) 16.36% 13.99% 17%
Return on revenue (2) 19.58% 15.34% 28%
Operating margin (3) 34.41% 28.15% 22%
Operating expense to cash receipts (4) 41.28% 46.54% -11%
Debt to equity (5) 61.80% 95.61% -35%
Cash collections per hour paid:
Total $ 190 $ 145 31%
Excluding bankruptcy collections $ 129 $ 115 13%
Excluding bankruptcy and external legal
collections $ 101 $ 88 15%
Number of collectors 1,422 1,312 8%
Number of employees 2,421 2,146 13%
Cash receipts (1) $ 432,032 $ 320,942 35%
Line of credit - unused portion 76,500 58,700 30%
Notes:
(1) Calculated as annualized net income divided by average equity for the
period
(2) Calculated as net income divided by revenue
(3) Calculated as income from operations divided by total revenue
(4) "Cash receipts" is defined as cash collections plus fee-based
commission revenue
(5) For purposes of this ratio, "debt" equals the line of credit balance
plus long-term debt
FINANCIAL HIGHLIGHTS For the Quarter Ended
------------------------------------------
September 30 June 30 March 31 December 31
(dollars in thousands) 2010 2010 2010 2009
--------- --------- --------- ---------
EARNINGS
Income recognized on finance
receivables, net $ 80,026 $ 76,920 $ 67,951 $ 55,962
Fee income 15,518 16,109 15,427 17,254
Total revenues 95,544 93,029 83,378 73,216
Operating expenses 62,721 58,700 56,943 51,115
Income from operations 32,823 34,329 26,435 22,101
Net interest expense 2,178 2,177 2,144 2,018
Net income 18,757 19,678 14,805 12,416
Net income attributable to
Portfolio Recovery
Associates, Inc. 18,481 19,528 14,800 12,416
PERIOD-END BALANCES
Cash and cash equivalents $ 20,297 $ 18,250 $ 23,006 $ 20,265
Finance receivables, net 807,239 775,606 742,484 693,462
Goodwill and intangible
assets, net 81,610 83,090 79,071 40,055
Total assets 947,737 915,021 882,450 794,433
Line of credit 288,500 289,500 296,300 319,300
Total liabilities 464,781 451,214 444,318 458,953
Total equity 468,425 448,727 422,804 335,480
FINANCE RECEIVABLE COLLECTIONS
Cash collections $ 137,377 $ 128,406 $ 119,196 $ 95,286
Principal amortization without
allowance 50,830 45,166 44,374 29,839
Principal amortization with
allowance 57,350 51,486 51,244 39,324
Principal amortization w/
allowance as % of cash
collections:
Including fully
amortized pools 41.7% 40.1% 43.0% 41.3%
Excluding fully
amortized pools 44.7% 43.5% 47.1% 44.8%
Estimated remaining
collections - core $ 934,942 $ 929,144 $ 912,423 $ 893,716
Estimated remaining
collections - bankruptcy 734,632 682,365 623,706 521,730
Estimated remaining
collections - total 1,669,574 1,611,509 1,536,129 1,415,446
ALLOWANCE FOR FINANCE
RECEIVABLES
Balance at period-end $ 70,965 $ 64,445 $ 58,125 $ 51,255
Balance at period-end to net
finance receivables 8.79% 8.31% 7.83% 7.39%
Allowance charge 6,520 6,320 6,870 9,485
Allowance charge to finance
receivable income 7.53% 7.59% 9.18% 14.49%
Allowance charge to cash
collections 4.75% 4.92% 5.76% 9.95%
PURCHASES OF FINANCE
RECEIVABLES
Purchase price - excluding
bankruptcy $ 31,831 $ 42,277 $ 31,038 $ 30,514
Face value - excluding
bankruptcy 588,551 885,321 593,139 915,044
Purchase price - bankruptcy 60,687 44,505 71,582 44,592
Face value - bankruptcy 788,967 781,976 1,298,108 1,099,677
Purchase price - total 92,518 86,782 102,620 75,106
Face value - total 1,377,518 1,667,297 1,891,247 2,014,721
Number of portfolios - total 68 78 84 101
PER SHARE DATA
Net income per common share -
diluted $ 1.08 $ 1.14 $ 0.91 $ 0.80
Weighted average number of
shares outstanding - diluted 17,093 17,080 16,203 15,531
Closing market price $ 64.66 $ 66.78 $ 54.87 $ 44.85
RATIOS AND OTHER DATA
Return on average equity (1) 16.04% 17.86% 15.05% 15.03%
Return on revenue (2) 19.63% 21.15% 17.76% 16.96%
Operating margin (3) 34.35% 36.90% 31.71% 30.19%
Operating expense to cash
receipts (4) 41.02% 40.62% 42.30% 45.42%
Debt to equity (5) 61.80% 64.78% 70.40% 95.62%
Cash collections per hour paid:
Total $ 200 $ 188 $ 182 $ 148
Excluding bankruptcy
collections $ 127 $ 127 $ 135 $ 109
Excluding bankruptcy and
external legal collections $ 97 $ 100 $ 106 $ 84
Number of collectors 1,422 1,384 1,379 1,325
Number of employees 2,421 2,377 2,329 2,213
Cash receipts (1) $ 152,895 $ 144,515 $ 134,623 $ 112,540
Line of credit - unused portion 76,500 75,500 68,700 45,700
FINANCIAL HIGHLIGHTS For the Quarter Ended
----------------------
September
30
(dollars in thousands) 2009
---------
EARNINGS
Income recognized on finance
receivables, net $ 54,336
Fee income 14,229
Total revenues 68,565
Operating expenses 49,776
Income from operations 18,789
Net interest expense 1,964
Net income 10,096
Net income attributable to
Portfolio Recovery
Associates, Inc. 10,096
PERIOD-END BALANCES
Cash and cash equivalents $ 19,874
Finance receivables, net 660,879
Goodwill and intangible
assets, net 40,724
Total assets 759,682
Line of credit 306,300
Total liabilities 437,576
Total equity 322,106
FINANCE RECEIVABLE COLLECTIONS
Cash collections $ 92,367
Principal amortization without
allowance 30,022
Principal amortization with
allowance 38,032
Principal amortization w/
allowance as % of cash
collections:
Including fully
amortized pools 41.2%
Excluding fully
amortized pools 44.3%
Estimated remaining
collections - core $ 872,752
Estimated remaining
collections - bankruptcy 459,160
Estimated remaining
collections - total 1,331,912
ALLOWANCE FOR FINANCE
RECEIVABLES
Balance at period-end $ 41,770
Balance at period-end to net
finance receivables 6.32%
Allowance charge 8,010
Allowance charge to finance
receivable income 12.85%
Allowance charge to cash
collections 8.67%
PURCHASES OF FINANCE
RECEIVABLES
Purchase price - excluding
bankruptcy $ 30,137
Face value - excluding
bankruptcy 679,975
Purchase price - bankruptcy 46,523
Face value - bankruptcy 1,069,266
Purchase price - total 76,660
Face value - total 1,749,241
Number of portfolios - total 100
PER SHARE DATA
Net income per common share -
diluted $ 0.65
Weighted average number of
shares outstanding - diluted 15,502
Closing market price $ 45.33
RATIOS AND OTHER DATA
Return on average equity (1) 12.75%
Return on revenue (2) 14.72%
Operating margin (3) 27.40%
Operating expense to cash
receipts (4) 46.69%
Debt to equity (5) 95.61%
Cash collections per hour paid:
Total $ 144
Excluding bankruptcy
collections $ 111
Excluding bankruptcy and
external legal collections $ 87
Number of collectors 1,312
Number of employees 2,146
Cash receipts (1) $ 106,596
Line of credit - unused portion 58,700
Notes:
(1) Calculated as annualized net income divided by average equity for the
period
(2) Calculated as net income divided by revenue
(3) Calculated as income from operations divided by total revenue
(4) "Cash receipts" is defined as cash collections plus fee-based
commission revenue
(5) For purposes of this ratio, "debt" equals the line of credit balance
plus long-term debt
Investor Relations Jim Fike Vice President, Finance 757-519-9300 ext. 13010 info@portfoliorecovery.com Media Relations Tanya M. Madison Vice President, Corporate Communications 757-961-3525 tmmadison@portfoliorecovery.com
SOURCE: Portfolio Recovery Associates, Inc.
mailto:info@portfoliorecovery.com mailto:tmmadison@portfoliorecovery.com