NORFOLK, VA, May 04, 2011 (MARKETWIRE via COMTEX) -- 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 first quarter results including net income of $23.1 million for the quarter ended March 31, 2011.
Net income for the first quarter of 2011 increased 56% from $14.8 million in the same period a year earlier. Earnings per diluted share were $1.34 in the first quarter of 2011, up 47% from $0.91 in the first quarter of 2010.
In the first quarter of 2011, total revenue rose 34% from the year-earlier period to a record $111.8 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 first quarter of 2011, the Company applied 42.4% of cash collections to reduce the carrying value of its owned debt portfolios, down slightly from 43.0% in the first quarter of 2010. The first quarter 2011 principal amortization rate included a $4.0 million net allowance charge against certain pools of finance receivables accounts.
"Portfolio Recovery Associates kicked off 2011 with record financial results, driven by significantly higher first-quarter cash collections on our portfolios of defaulted consumer debt," said Steven D. Fredrickson, chairman, president and chief executive officer. "This performance, building on the Company's strong results in 2010, in large part reflects the improvements we've continued to make in our collections operations over time. These long-term investments paid off particularly well in the first quarter, with all measurements of collector productivity up strongly from 2010."
Financial and Operating Highlights
-- Cash collections increased 40% to a record $166.7 million in the first
quarter of 2011 from $119.2 million in the year-ago period. Call center
and other collections increased 18%, external legal collections
increased 39%, internal legal collections grew 46%, and purchased
bankruptcy collections gained 76% when compared with the year-earlier
period. The table below displays cash collections by source, by quarter
for the past five quarters:
Cash Collection Source ($ in
thousands) Q12011 Q42010 Q32010 Q22010 Q12010
======== ======== ======== ======== ========
Call Center & Other
Collections $ 67,377 $ 53,775 $ 51,711 $ 54,477 $ 56,987
External Legal Collections 25,378 21,446 20,217 18,819 18,276
Internal Legal Collections 15,598 12,841 12,130 11,362 10,714
Purchased Bankruptcy
Collections 58,364 56,301 53,319 43,748 33,219
-------- -------- -------- -------- --------
Total Cash Collections $166,717 $144,363 $137,377 $128,406 $119,196
-- Internal legal collections grew to $15.6 million in the first quarter of
2011 from $10.7 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, emerging collections channel.
-- Productivity rose to a record $241 per collector hour paid for the first
quarter of 2011 from $194 for all of 2010. Productivity is measured by
cash collections per collector hour paid, the Company's key measure of
collector performance. Excluding the impact of trustee remittances from
purchased bankrupt accounts, the comparison is $162 for the first
quarter of 2011, compared with $129 for all of 2010. Excluding trustee
remittances on purchased bankrupt accounts and external legal
collections, the comparison is $125 for the first three months of 2011
and $100 for all of 2010.
-- In the first quarter of 2011, revenue was a record $111.8 million, up
34% compared with the same period a year ago. This was driven by record
cash receipts of $182.5 million in the first quarter, up 36% from $134.6
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 $4.0 million in the first
quarter of 2011, representing 0.5% of net finance receivables at
period-end and 2.4% of cash collections. The table below displays net
allowance charges incurred by quarter, by buying period since 2005, as
well as purchases of charged-off consumer debt, net of buybacks:
($ in thousands)
Entire Portfolio Purchase Period
Allowance 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
Q4 10 - (10) 832 1,720 1,150
Q1 11 - (15) 455 (100) 400
--------- ---------- ---------- ---------- ----------
Total $ - $ 1,200 $ 17,272 $ 19,315 $ 18,715
========= ========== ========== ========== ==========
Purchases, net $ 203,026 $ 59,177 $ 143,171 $ 107,710 $ 258,393
--------- ---------- ---------- ---------- ----------
($ in thousands)
Entire Portfolio Purchase Period
Net
Allowance
Charge as
Allowance Period 2008 2009-2011 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%
Q4 10 1,750 - 5,442 0.7%
Q1 11 3,300 - 4,040 0.5%
----------- ---------- ----------
Total $ 23,945 $ - $ 80,447
=========== ========== ==========
Purchases, net $ 275,143 $ 749,840 $1,796,460
----------- ---------- ----------
($ in thousands)
Purchased Bankruptcy
Portfolio Purchase Period
Allowance Period 1996-2003 2004 2005 2006 2007
---------- --------- --------- --------- ----------
Q1 05 $ - $ - $ - $ - $ -
Q2 05 - - - - -
Q3 05 - - - - -
Q4 05 - - - - -
Q1 06 - - - - -
Q2 06 - - - - -
Q3 06 - - - - -
Q4 06 - - - - -
Q1 07 - - - - -
Q2 07 - - - - -
Q3 07 $ - $ 320 $ 160 $ - $ -
Q4 07 - 150 - 150 -
Q1 08 - 530 60 405 -
Q2 08 - 15 - 450 -
Q3 08 - 115 - 30 -
Q4 08 - 110 315 325 -
Q1 09 - 10 100 50 -
Q2 09 - 15 (5) - -
Q3 09 - 20 70 - -
Q4 09 - - 100 70 110
Q1 10 - - 95 50 1,200
Q2 10 - (30) 25 - -
Q3 10 - (30) - (100) 600
Q4 10 - (10) (18) (30) 950
Q1 11 - (15) (95) (100) 1,150
---------- --------- --------- --------- ----------
Total $ - $ 1,200 $ 807 $ 1,300 $ 4,010
========== ========= ========= ========= ==========
Purchases, net $ - $ 7,468 $ 29,301 $ 17,648 $ 78,552
---------- --------- --------- --------- ----------
($ in thousands)
Purchased Bankruptcy
Portfolio Purchase Period
Net
Allowance
Charge as
Allowance Period 2008 2009-2011 Total % of NFR
---------- ---------- --------- ---------
Q1 05 $ - $ - $ - 0.0%
Q2 05 - - - 0.0%
Q3 05 - - - 0.0%
Q4 05 - - - 0.0%
Q1 06 - - - 0.0%
Q2 06 - - - 0.0%
Q3 06 - - - 0.0%
Q4 06 - - - 0.0%
Q1 07 - - - 0.0%
Q2 07 - - - 0.0%
Q3 07 $ - $ - $ 480 1.3%
Q4 07 - - 300 0.3%
Q1 08 - - 995 0.8%
Q2 08 - - 465 0.3%
Q3 08 - - 145 0.1%
Q4 08 - - 750 0.4%
Q1 09 - - 160 0.1%
Q2 09 - - 10 0.0%
Q3 09 - - 90 0.0%
Q4 09 - - 280 0.1%
Q1 10 - - 1,345 0.4%
Q2 10 - - (5) 0.0%
Q3 10 - - 470 0.1%
Q4 10 - - 892 0.2%
Q1 11 1,300 - 2,240 0.5%
---------- ---------- ---------
Total $ 1,300 $ - $ 8,617
========== ========== =========
Purchases, net $ 108,613 $ 413,156 $ 654,738
---------- ---------- ---------
($ in thousands)
Core Portfolio Purchase Period
Allowance 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 - 500 - -
Q4 07 190 - 615 190 -
Q1 08 120 120 850 700 -
Q2 08 260 705 - 1,880 650
Q3 08 (90) (55) 325 1,105 2,350
Q4 08 (400) (250) 1,490 2,275 4,380
Q1 09 (225) 25 1,050 860 2,300
Q2 09 (230) (235) 500 765 685
Q3 09 (25) (210) 1,100 1,965 340
Q4 09 (120) - 1,275 1,150 -
Q1 10 - - 2,700 1,125 1,700
Q2 10 - (50) 1,575 2,100 700
Q3 10 - (50) 1,650 2,150 2,150
Q4 10 - - 850 1,750 200
Q1 11 - - 550 - (750)
--------- ---------- ---------- ---------- ----------
Total $ - $ - $ 16,465 $ 18,015 $ 14,705
========= ========== ========== ========== ==========
Portfolio
Purchases, net $ 203,026 $ 51,709 $ 113,870 $ 90,062 $ 179,841
--------- ---------- ---------- ---------- ----------
($ in thousands)
Core Portfolio Purchase Period
Net
Allowance
Charge as
Allowance Period 2008 2009-2011 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 0.2%
Q4 06 - - 450 0.2%
Q1 07 - - 365 0.2%
Q2 07 - - 90 0.0%
Q3 07 - - 700 0.2%
Q4 07 - - 995 0.3%
Q1 08 - - 1,790 0.5%
Q2 08 - - 3,495 0.9%
Q3 08 - - 3,635 1.0%
Q4 08 620 - 8,115 2.1%
Q1 09 2,050 - 6,060 1.6%
Q2 09 2,425 - 3,910 1.0%
Q3 09 4,750 - 7,920 2.0%
Q4 09 6,900 - 9,205 2.3%
Q1 10 - - 5,525 1.4%
Q2 10 2,000 - 6,325 1.6%
Q3 10 150 - 6,050 1.5%
Q4 10 1,750 - 4,550 1.1%
Q1 11 2,000 - 1,800 0.4%
----------- ---------- ----------
Total $ 22,645 $ - $ 71,830
=========== ========== ==========
Portfolio
Purchases, net $ 166,530 $ 336,684 $1,141,722
----------- ---------- ----------
-- The Company purchased $1.49 billion of face-value debt during the first
quarter of 2011 for $107.9 million. This was acquired in 79 portfolios
from nine different sellers. The tables below display purchase price
amounts by year, net of buybacks, current net finance receivable
balance, cash collections to date including sales, estimated remaining
and total collections and estimated purchase price multiples:
($ in thousands)
Entire Portfolio
Net
Finance Actual
Receivables Cash Total
Balance Collections Estimated
Total at Including Estimated Collections
Purchase Purchase Estimated March Cash Remaining to Purchase
Period Price Collections 31, 2011 Sales Collections Price
---------- ---------- -------- ---------- ---------- ---------
1996 $ 3,080 $ 10,139 $ - $ 10,056 $ 83 329%
1997 7,685 25,395 - 25,176 219 330%
1998 11,089 37,039 - 36,719 320 334%
1999 18,898 68,459 - 67,408 1,051 362%
2000 25,020 114,253 - 111,518 2,735 457%
2001 33,481 171,854 - 167,820 4,034 513%
2002 42,325 191,508 - 186,151 5,357 452%
2003 61,448 254,708 - 245,989 8,719 415%
2004 59,177 189,433 - 181,113 8,320 320%
2005 143,171 310,185 17,951 275,712 34,473 217%
2006 107,710 217,899 23,750 174,373 43,526 202%
2007 258,393 506,495 88,892 354,838 151,657 196%
2008 275,143 534,146 140,404 294,161 239,985 194%
2009 281,571 726,328 182,260 282,049 444,279 258%
2010 360,199 776,111 306,217 138,768 637,343 215%
YTD 2011 108,070 214,642 107,518 3,473 211,169 199%
---------- ---------- -------- ---------- ---------- ---------
Total $1,796,460 $4,348,594 $866,992 $2,555,324 $1,793,270 242%
========== ========== ======== ========== ========== =========
($ in thousands)
Purchased Bankruptcy Portfolio
Net
Finance Actual
Receivables Cash Total
Balance Collections Estimated
Total at Including Estimated Collections
Purchase Purchase Estimated March Cash Remaining to Purchase
Period Price Collections 31, 2011 Sales Collections Price
---------- ---------- -------- ---------- ---------- ---------
1996-2003 $ - $ - $ - $ - $ - 0%
2004 7,468 14,254 - 14,195 59 191%
2005 29,301 43,176 152 42,958 218 147%
2006 17,648 30,998 209 29,460 1,538 176%
2007 78,552 110,615 22,144 83,798 26,817 141%
2008 108,613 182,494 61,507 96,737 85,757 168%
2009 156,062 361,033 117,641 121,515 239,518 231%
2010 210,488 387,349 190,642 60,446 326,903 184%
YTD 2011 46,606 72,505 46,606 185 72,320 156%
---------- ---------- -------- ---------- ---------- ---------
Total $ 654,738 $1,202,424 $438,901 $ 449,294 $ 753,130 184%
========== ========== ======== ========== ========== =========
($ in thousands)
Core Portfolio
Net
Finance Actual
Receivables Cash Total
Balance Collections Estimated
Total at Including Estimated Collections
Purchase Purchase Estimated March Cash Remaining to Purchase
Period Price Collections 31, 2011 Sales Collections Price
---------- ---------- -------- ---------- ---------- ---------
1996 $ 3,080 $ 10,139 $ - $ 10,056 $ 83 329%
1997 7,685 25,395 - 25,176 219 330%
1998 11,089 37,039 - 36,719 320 334%
1999 18,898 68,459 - 67,408 1,051 362%
2000 25,020 114,253 - 111,518 2,735 457%
2001 33,481 171,854 - 167,820 4,034 513%
2002 42,325 191,508 - 186,151 5,357 452%
2003 61,448 254,708 - 245,989 8,719 415%
2004 51,709 175,179 - 166,918 8,261 339%
2005 113,870 267,009 17,799 232,754 34,255 234%
2006 90,062 186,901 23,541 144,913 41,988 208%
2007 179,841 395,880 66,748 271,040 124,840 220%
2008 166,530 351,652 78,897 197,424 154,228 211%
2009 125,509 365,295 64,619 160,534 204,761 291%
2010 149,711 388,762 115,575 78,322 310,440 260%
YTD 2011 61,464 142,137 60,912 3,288 138,849 231%
---------- ---------- -------- ---------- ---------- ---------
Total $1,141,722 $3,146,170 $428,091 $2,106,030 $1,040,140 276%
========== ========== ======== ========== ========== =========
-- The Company's fee-for-service businesses generated revenue of $15.8
million in the first quarter of 2011, an increase of 2% from the same
period a year ago. This increase was primarily due to the performance
of Claims Compensation Bureau, LLC, or CCB. Portfolio Recovery
Associates acquired a 62% controlling interest in CCB, on March 15,
2010. Together, the fee businesses accounted for 14.1% of the Company's
overall revenue in the first quarter of 2011, down from 18.5% in the
first quarter of 2010.
-- During the first quarter of 2011, the Company recorded ongoing non-cash
equity-based compensation expense of $1.7 million.
-- Cash balances were $35.4 million as of March 31, 2011, down from $41.1
million as of December 31, 2010. During the first quarter of 2011, the
Company had net repayments of $10 million on its line of credit, leaving
it with $290 million in outstanding borrowings at quarter end. Remaining
borrowing availability under the line was $117.5 million as of March 31,
2011.
Kevin P. Stevenson, chief financial and administrative officer, said: "Portfolio Recovery Associates turned in a strong performance across the board in the first quarter, building on record cash collections driven by the long-term investments we have made in portfolio purchases and our collections operations. In addition, we saw our fee businesses make progress in the quarter, led by strong results from our claims processing subsidiary, CCB. Our other fee businesses continued to meet their challenges head on, with a new leadership team at our government services business and with process and strategy improvements and management changes at our auto location business."
Conference Call Information
The Company will hold a conference call with investors tonight, 5:30 p.m. EDT, Wednesday, May 4, 2011, to discuss its first-quarter results. Investors can access the call live by dialing 888-679-8037 for domestic callers or 617-213-4849 for international callers using the pass code 69150702. 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 94862609. 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.
About Portfolio Recovery Associates, Inc.
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 $56 billion of defaulted consumer debt since its inception, has operations in 10 states, approximately 25 million customer accounts and nearly 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 www.portfoliorecovery.com.
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 Months Three Months
Ended March Ended March
31, 2011 31, 2010
----------- -----------
Revenues:
Income recognized on finance receivables, net $ 95,974 $ 67,951
Fee income 15,803 15,427
----------- -----------
Total revenues 111,777 83,378
Operating expenses:
Compensation and employee services 34,153 29,642
Legal and agency fees and costs 17,726 13,338
Outside fees and services 3,414 2,829
Communications 6,313 5,058
Rent and occupancy 1,398 1,252
Depreciation and amortization 3,216 2,550
Other operating expenses 2,852 2,274
----------- -----------
Total operating expenses 69,072 56,943
----------- -----------
Income from operations 42,705 26,435
Other income and (expense):
Interest income - 36
Interest expense (2,867) (2,180)
----------- -----------
Income before income taxes 39,838 24,291
Provision for income taxes 16,129 9,486
----------- -----------
Net income $ 23,709 $ 14,805
=========== ===========
Less net income attributable to
noncontrolling interest (588) (5)
----------- -----------
Net income attributable to Portfolio
Recovery Associates, Inc. $ 23,121 $ 14,800
=========== ===========
Net income per common share attributable to
Portfolio Recovery Associates, Inc.:
Basic $ 1.35 $ 0.91
Diluted $ 1.34 $ 0.91
Weighted average number of shares outstanding:
Basic 17,092 16,191
Diluted 17,199 16,203
Portfolio Recovery Associates, Inc.
Unaudited Consolidated Summary Balance Sheets
(in thousands, except per share amounts)
March 31, December
ASSETS 2011 31, 2010
---------- -----------
Cash and cash equivalents $ 35,443 $ 41,094
Finance receivables, net 866,992 831,330
Accounts receivable, net 7,369 8,932
Property and equipment, net 24,469 24,270
Goodwill 61,678 61,678
Intangible assets, net 17,215 18,466
Other assets 6,933 10,138
---------- -----------
Total assets $1,020,099 $ 995,908
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities $ 17,995 $ 23,576
Net deferred tax liability 179,043 164,971
Line of credit 290,000 300,000
Long term debt 2,098 2,396
---------- -----------
Total liabilities 489,136 490,943
---------- -----------
Redeemable noncontrolling Interest 15,253 14,449
---------- -----------
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, 17,099 issued and outstanding shares at
March 31, 2011, and 17,064 issued and
outstanding shares at December 31, 2010 171 171
Additional paid-in capital 165,611 163,538
Retained earnings 349,928 326,807
---------- -----------
Total stockholders' equity 515,710 490,516
========== ===========
Total liabilities and stockholders' equity $1,020,099 $ 995,908
========== ===========
Portfolio Recovery Associates, Inc.
Unaudited Consolidated Summary Statements of Cash Flows
(in thousands)
Three Months Three Months
Ended March Ended March
31, 2011 31, 2010
----------- -----------
Cash flows from operating activities:
Net income $ 23,709 $ 14,805
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of share-based compensation 2,614 880
Depreciation and amortization 3,216 2,550
Deferred tax expense 14,072 9,070
Changes in operating assets and
liabilities:
Other assets 3,205 2,408
Accounts receivable 1,563 417
Accounts payable and accrued
liabilities (5,059) (2,606)
----------- -----------
Net cash provided by operating
activities 43,320 27,524
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (2,163) (1,706)
Acquisition of finance receivables, net of
buybacks (106,405) (100,266)
Collections applied to principal on finance
receivables 70,743 51,244
Business acquisitions, net of cash acquired - (22,500)
Contingent payment made for business acquisition - (100)
----------- -----------
Net cash used in investing activities (37,825) (73,328)
----------- -----------
Cash flows from financing activities:
Proceeds from exercise of options 149 -
Income tax benefit from share-based compensation 294 22
Proceeds from line of credit 2,000 70,500
Principal payments on line of credit (12,000) (93,500)
Proceeds from stock offering, net of offering
costs - 71,688
Distributions paid to noncontrolling interest (1,291) -
Principal payments on long-term debt (298) (165)
----------- -----------
Net cash (used in)/provided by financing
activities (11,146) 48,545
----------- -----------
Net (decrease)/increase in cash and cash
equivalents (5,651) 2,741
Cash and cash equivalents, beginning of year 41,094 20,265
----------- -----------
Cash and cash equivalents, end of period $ 35,443 $ 23,006
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,711 $ 2,151
Cash paid for income taxes 15 61
Noncash investing and financing activities:
Net unrealized change in fair value of
derivative instrument $ - $ (108)
Distributions payable to noncontrolling interest 769 -
Adjustment to reflect redemption amount of
noncontrolling interest 985 -
FINANCIAL HIGHLIGHTS Three Months Ended
March 31, %
(dollars in thousands) 2011 2010 Change
---------- ---------- ------
EARNINGS
Income recognized on finance receivables,
net $ 95,974 $ 67,951 41%
Fee income 15,803 15,427 2%
Total revenues 111,777 83,378 34%
Operating expenses 69,072 56,943 21%
Income from operations 42,705 26,435 62%
Net interest expense 2,867 2,144 34%
Net income 23,709 14,805 60%
Net income attributable to Portfolio
Recovery Associates, Inc. 23,121 14,800 56%
---------- ---------- ------
PERIOD-END BALANCES
Cash and cash equivalents $ 35,443 $ 23,006 54%
Finance receivables, net 866,992 742,484 17%
Goodwill and intangible assets, net 78,893 79,071 0%
Total assets 1,020,099 882,450 16%
Line of credit 290,000 296,300 -2%
Total liabilities 489,136 444,318 10%
Total equity 515,710 422,804 22%
---------- ---------- ------
FINANCE RECEIVABLE COLLECTIONS
Cash collections $ 166,717 $ 119,196 40%
Principal amortization without allowance
charges 66,703 44,374 50%
Principal amortization with allowance
charges 70,743 51,245 38%
Principal amortization w/ allowance charges
as % of cash collections:
Including fully amortized pools 42.4% 43.0% -1%
Excluding fully amortized pools 45.3% 47.1% -4%
Estimated remaining collections - core $1,040,140 $ 912,423 14%
Estimated remaining collections -
bankruptcy 753,130 623,706 21%
Estimated remaining collections - total 1,793,270 1,536,129 17%
---------- ---------- ------
ALLOWANCE FOR FINANCE RECEIVABLES
Balance at period-end $ 80,447 $ 58,125 38%
Balance at period-end to net finance
receivables 9.28% 7.83% 19%
Allowance charge $ 4,040 $ 6,870 -41%
Allowance charge to net finance receivable
income 4.21% 10.11% -58%
Allowance charge to cash collections 2.42% 5.76% -58%
---------- ---------- ------
PURCHASES OF FINANCE RECEIVABLES
Purchase price - core $ 61,294 $ 31,038 97%
Face value - core 1,008,758 593,139 70%
Purchase price - bankruptcy 46,607 71,582 -35%
Face value - bankruptcy 482,941 1,298,108 -63%
Purchase price - total 107,901 102,620 5%
Face value - total 1,491,699 1,891,247 -21%
Number of portfolios - total 79 84 -6%
---------- ---------- ------
PER SHARE DATA
Net income per common share - diluted $ 1.34 $ 0.91 47%
Weighted average number of shares
outstanding - diluted 17,199 16,203 6%
Closing market price $ 85.13 $ 54.87 55%
---------- ---------- ------
RATIOS AND OTHER DATA
Return on average equity (1) 18.25% 15.05% 21%
Return on revenue (2) 21.21% 17.76% 19%
Operating margin (3) 38.21% 31.71% 21%
Operating expense to cash receipts (4) 37.84% 42.30% -11%
Debt to equity (5) 56.64% 70.40% -20%
Cash collections per collector hour paid:
Total $ 241 $ 182 33%
Excluding bankruptcy collections $ 162 $ 135 20%
Excluding bankruptcy and external legal
collections $ 125 $ 106 18%
Number of collectors 1,486 1,379 8%
Number of employees 2,482 2,329 7%
Cash receipts (4) $ 182,520 $ 134,623 36%
Line of credit - unused portion at period
end 117,500 68,700 71%
---------- ---------- ------
Notes:
(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
------------------------------------------------------
(dollars in March 31 December September June 30 March 31
thousands) 2011 31 2010 30 2010 2010 2010
---------- --------- --------- --------- ---------
EARNINGS
Income recognized
on finance
receivables, net $ 95,974 $ 84,783 $ 80,026 $ 76,920 $ 67,951
Fee income 15,803 15,972 15,518 16,109 15,427
Total revenues 111,777 100,755 95,544 93,029 83,378
Operating expenses 69,072 64,480 62,721 58,700 56,943
Income from
operations 42,705 36,275 32,823 34,329 26,435
Net interest expense 2,867 2,488 2,178 2,177 2,144
Net income 23,709 20,631 18,757 19,678 14,805
Net income
attributable to
Portfolio Recovery
Associates, Inc. 23,121 20,645 18,481 19,528 14,800
---------- --------- --------- --------- ---------
PERIOD-END BALANCES
Cash and cash
equivalents $ 35,443 $ 41,094 $ 20,297 $ 18,250 $ 23,006
Finance
receivables, net 866,992 831,330 807,239 775,606 742,484
Goodwill and
intangible assets,
net 78,893 80,144 81,610 83,090 79,071
Total assets 1,020,099 995,908 947,737 915,021 882,450
Line of credit 290,000 300,000 288,500 289,500 296,300
Total liabilities 489,136 490,943 464,781 451,214 444,318
Total equity 515,710 490,516 468,425 448,727 422,804
---------- --------- --------- --------- ---------
FINANCE RECEIVABLE
COLLECTIONS
Cash collections $ 166,717 $ 144,363 $ 137,377 $ 128,406 $ 119,196
Principal
amortization
without allowance 66,703 54,139 50,830 45,166 44,374
Principal
amortization with
allowance 70,743 59,580 57,351 51,486 51,245
Principal
amortization w/
allowance as % of
cash collections:
Including fully
amortized pools 42.4% 41.3% 41.7% 40.1% 43.0%
Excluding fully
amortized pools 45.3% 44.3% 44.7% 43.5% 47.1%
Estimated remaining
collections - core $1,040,140 $ 974,108 $ 934,942 $ 929,144 $ 912,423
Estimated remaining
collections -
bankruptcy 753,130 749,410 734,632 682,365 623,706
Estimated remaining
collections - total 1,793,270 1,723,518 1,669,574 1,611,509 1,536,129
---------- --------- --------- --------- ---------
ALLOWANCE FOR FINANCE
RECEIVABLES
Balance at
period-end $ 80,447 $ 76,407 $ 70,965 $ 64,445 $ 58,125
Balance at
period-end to net
finance
receivables 9.28% 9.19% 8.79% 8.31% 7.83%
Allowance charge $ 4,040 $ 5,442 $ 6,520 $ 6,320 $ 6,870
Allowance charge to
net finance
receivable income 4.21% 6.42% 8.15% 8.22% 10.11%
Allowance charge to
cash collections 2.42% 3.77% 4.75% 4.92% 5.76%
---------- --------- --------- --------- ---------
PURCHASES OF FINANCE
RECEIVABLES
Purchase price -
core $ 61,294 $ 44,852 $ 31,831 $ 42,277 $ 31,038
Face value - core 1,008,758 1,357,301 588,551 885,321 593,139
Purchase price -
bankruptcy 46,607 40,671 60,687 44,505 71,582
Face value -
bankruptcy 482,941 511,588 788,967 781,976 1,298,108
Purchase price -
total 107,901 85,523 92,518 86,782 102,620
Face value - total 1,491,699 1,868,889 1,377,518 1,667,297 1,891,247
Number of
portfolios - total 79 75 68 78 84
---------- --------- --------- --------- ---------
PER SHARE DATA
Net income per
common share -
diluted $ 1.34 $ 1.20 $ 1.08 $ 1.14 $ 0.91
Weighted average
number of shares
outstanding -
diluted 17,199 17,165 17,093 17,080 16,203
Closing market
price $ 85.13 $ 75.20 $ 64.66 $ 66.78 $ 54.87
---------- --------- --------- --------- ---------
RATIOS AND OTHER
DATA
Return on average
equity(1) 18.25% 17.09% 16.04% 17.86% 15.05%
Return on revenue(2) 21.21% 20.48% 19.63% 21.15% 17.76%
Operating margin(3) 38.21% 36.00% 34.35% 36.90% 31.71%
Operating expense to
cash receipts(4) 37.84% 40.22% 41.02% 40.62% 42.30%
Debt to equity(5) 56.64% 61.65% 61.80% 64.78% 70.40%
Cash collections
per hour paid:
Total $ 241 $ 204 $ 200 $ 188 $ 182
Excluding
bankruptcy
collections $ 162 $ 129 $ 127 $ 127 $ 135
Excluding
bankruptcy and
external legal
collections $ 125 $ 98 $ 97 $ 100 $ 106
Number of
collectors 1,486 1,472 1,422 1,384 1,379
Number of employees 2,482 2,473 2,421 2,377 2,329
Cash receipts(4) $ 182,520 $ 160,335 $ 152,895 $ 144,515 $ 134,623
Line of credit -
unused portion at
period end 117,500 107,500 76,500 75,500 68,700
---------- --------- --------- --------- ---------
Notes:
(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
SOURCE: Portfolio Recovery Associates, Inc.