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, 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.
- 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.
- 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.
- 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.