This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

PRA Reports Fourth Quarter And Full Year 2012 Results

Stocks in this article: PRAA

NORFOLK, Va., Feb. 13, 2013 (GLOBE NEWSWIRE) -- Portfolio Recovery Associates, Inc. (PRA), a financial and business services company, today reported its fourth quarter and full year 2012 results.

Fourth Quarter Highlights

  • Cash collections of $229.2 million, up 27% from the fourth quarter of 2011.
  • Revenues of $154.3 million, up 31%.
  • Net income of $35.8 million, up 35%.
  • Diluted EPS of $2.10, compared with $1.54 a year ago.
  • Annualized return on average equity of 20.6%.
  • $199.1 million of portfolio purchases, up from $88.9 million in the fourth quarter of 2011.

For the full year 2012, net income was $126.6 million, compared with $100.8 million in 2011, an increase of 26%. Diluted earnings per share increased from $5.85 in 2011 to $7.39 in 2012. Revenues increased from $458.9 million in 2011 to $592.8 million in 2012.

"PRA again reported record operating results in the fourth quarter and for full year 2012, continuing a trend of strong year-over-year growth," said Steve Fredrickson, chairman, president and chief executive officer, PRA.

"Our financial results were led by increases in cash collections from our receivables portfolios. Cash collections were $908.7 million in 2012, up 29% over 2011. In 2012, we received a record 8 million payments on our debt portfolios. This includes growth in the number of recurring payment plans from customers to eliminate their debt, which provides a low-cost, recurring revenue stream for PRA.  This record level of payments places PRA in an excellent position to continue to prosper in 2013 and beyond," Fredrickson said.

FINANCIAL AND OPERATING REVIEW – FOURTH QUARTER 2012

Revenues

  • Revenues were $154.3 million for the quarter, up 31% from a year ago. This was driven by cash receipts of $245.4 million, up 25% from $195.7 million in Q4 2011. PRA defines cash receipts as the total of cash collections and fee income. 

Finance Receivables Income and Cash Collections

  • Finance receivables income, driven by cash collections from finance receivables, increased 34% to $138.1 million in Q4 2012 from $102.7 million in the year-ago period. Cash collections from finance receivables advanced 27% over Q4 2011, led by increases in core portfolio legal collections. These legal collections increased 49% in Q4 2012 from a year ago, due in part to PRA's expanded focus on collections from customers with an ability to pay back their debt, but who refuse attempts to collect. Bankruptcy portfolio collections and call center collections increased 21% and 19%, respectively.
 
Cash Collection Source ($ in thousands) Q42012 Q32012 Q22012 Q12012 Q42011
Call Center & Other Collections  $ 72,624  $ 72,394  $ 73,582  $ 79,805  $ 61,227
External Legal Collections  41,521  39,913  41,464  34,852  26,316
Internal Legal Collections  23,968  25,650  25,361  23,345  17,615
Purchased Bankruptcy Collections  91,098  91,095  92,018  79,994  75,166
Total Cash Collections  $ 229,211  $ 229,052  $ 232,425  $ 217,996  $ 180,324
 
           
  • In Q4 2012, principal amortization of finance receivables was $91.1 million, or 39.8% of cash collections. This compares with $77.6 million, or 43.0% of cash collections, recorded in the year-earlier quarter. Principal amortization includes net allowance charges of $2.3 million against certain pools of finance receivables accounts recorded in the quarter, compared with $3.1 million recorded in Q4 2011. 

Fee Income

  • PRA's fee-based businesses generated Q4 2012 fee income of $16.2 million, compared with $15.3 million in the same period a year ago, which accounted for 10% of PRA's total revenues in Q4 2012 compared with 13% a year ago.  Fee income from PRA's UK business acquired in January 2012 more than offset a decrease in fee income from PRA's US fee-based businesses, which continued to be impacted by the economic downturn.  The company anticipates that its U.S. subsidiary, Claims Compensation Bureau, may generate substantially higher fee income during 2013, with a single, large case expected to provide $4 million to $6 million in fees during the first half of the year.

Operating Expenses and Income

  • Q4 2012 operating expenses were $94.3 million, up $22.1 million or 31% from the year-earlier quarter. The increase was due in large part to costs associated with business growth, including a $9.1 million increase in personnel-related expenses, an $8.1 million increase in legal costs and fees related to PRA's expanded focus on legal collections, and the inclusion of operating expenses of PRA's U.K. business acquired in January 2012.   
  • Q4 2012 operating income was $60.0 million, compared with $46.0 million in Q4 2011, an increase of 31%. The operating margin was 38.9% in both quarterly periods. 

Balance Sheet and Purchasing

  • During the fourth quarter of 2012, PRA invested $199.1 million in portfolio purchases, compared with $88.9 million in the fourth quarter of 2011. Fourth quarter 2012 domestic purchasing volume was $196.5 million, and was comprised of $111.0 million in bankruptcy portfolio purchases and $85.5 million in core portfolio purchases. Fourth quarter 2012 bankruptcy portfolio investment included the acquisition of portfolios from National Capital Management, LLC announced on December 21, 2012. Domestic receivables purchased during the quarter were acquired in 94 portfolios from 15 different sellers.  
  • Cash balances were $32.7 million as of December 31, 2012.  
  • As of December 31, 2012, long-term debt was $200.5 million and revolving debt was $127.0 million. Remaining borrowing availability, subject to normal borrowing and collateral provisions, under PRA's credit facility was $273.0 million.

Conference Call Information

PRA will hold a conference call today with investors at 6:15 p.m. ET to discuss its Q4 2012 results. Investors may access the call by calling 888-695-7639 in the U.S. or 970-315-0482 outside the U.S. The conference ID is 92957383. A replay will be available approximately one hour after the call ends and will remain available until February 20, 2013.  Investors may access the replay of the call by calling 855-859-2056 in the U.S. or 404-537-3406 outside the U.S. To access the replay, use the conference ID 92957383. Investors also may listen to the conference call via webcast, both live and archived, at http://ir.PortfolioRecovery.com/events.cfm .

About PRA

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

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,131.01 +156.70 0.92%
S&P 500 0.00 -2.75 -0.14%
NASDAQ 4,553.4720 +4.2460 0.09%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs