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TheStreet Open House

PRA Reports First Quarter 2013 Results

NORFOLK, Va., April 30, 2013 (GLOBE NEWSWIRE) -- Portfolio Recovery Associates, Inc. (PRA), a financial and business services company operating in the U.S. and U.K., today reported its first quarter 2013 financial results.

First Quarter Highlights

  • Cash collections of $275.5 million, up 26% from the first quarter of 2012
  • Revenues of $169.6 million, up 21%
  • Net income attributable to PRA of $38.6 million, up 52%
  • $2.26 diluted EPS, compared with $1.47 a year ago
  • 21.1% return on average equity, annualized
  • $214.9 million of portfolio purchases, including $126.9 million of U.S. core customer accounts and $1.4 million of U.K. core customer accounts, plus $86.6 million in U.S. bankruptcy court claims.

"PRA began 2013 the same way we ended 2012, reporting record, year-over-year results," said Steve Fredrickson, chairman, president and chief executive officer, PRA.

"This quarter we produced across the board growth in cash collections, revenue and net income, which again drove return on average equity over our target of 20%. Our investment in new U.S. and U.K. portfolios of consumer debt surpassed even our extraordinary Q4 2012 level of acquisitions. PRA has now acquired $414 million in new accounts during the last six months that will drive revenue and income for years to come," Fredrickson said.

REVENUES

  • Revenues were $169.6 million for the quarter, up 21% from a year ago, and were comprised of $154.8 million in net finance receivable income and $14.8 million in fee income.

Finance Receivables Income and Cash Collections

  • Finance receivables income increased 25% to $154.8 million in Q1 2013 from $124.2 million in the year-ago period. Cash collections from finance receivables increased 26% over Q1 2012 to $275.5 million, and were comprised of bankruptcy court trustee payments of $109.2 million, $89.0 million in call center and other collections, and $77.2 million in legal collections from customers with an ability to pay their debt, but who refuse attempts to collect.
Cash Collection Source ($ in thousands) Q12013 Q42012 Q32012 Q22012 Q12012
Call Center & Other Collections $ 89,037 $ 72,624 $ 72,394 $ 73,582 $ 79,805
External Legal Collections 47,910 41,521 39,913 41,464 34,852
Internal Legal Collections 29,283 23,968 25,650 25,361 23,345
Bankruptcy Court Trustee Collections 109,233 91,098 91,095 92,018 79,994
Total Cash Collections $ 275,463  $ 229,211  $ 229,052  $ 232,425  $ 217,996
  • In Q1 2013, principal amortization of finance receivables was $120.7 million, or 43.8% of cash collections. This compares with $93.8 million, or 43.0% of cash collections, recorded in the year-earlier quarter. Principal amortization includes net allowance charges of $2.2 million recorded against certain pools of finance receivables in the quarter, compared with $0.5 million recorded in Q1 2012.

Fee Income

  • Results from PRA's fee-based businesses were in line with expectations, generating $14.8 million in fee income in Q1 2013. PRA now owns 81% of Claims Compensation Bureau (CCB), having closed on the purchase of an additional 19% interest during the first quarter.  CCB continues to expect substantially higher fee income in 2013 compared to 2012, with a single large case anticipated to generate approximately $6 million or more in fees to PRA during the second or third quarter of the year.     

OPERATING EXPENSES AND OPERATING INCOME

  • Q1 2013 operating expenses were $103.7 million, up $7.9 million or 8% from the year-earlier quarter. The increase was due in large part to costs associated with business growth. PRA anticipates legal collection court fees and document expenses will be approximately $23 million in Q2 2013.  
  • Q1 2013 operating income was $65.9 million, compared with $44.4 million in Q1 2012, an increase of 48%. The operating margin increased from 31.7% to 38.9%.

PORTFOLIO PURCHASING

  • In Q1 2013, PRA invested $214.9 million in portfolio purchases from U.S and U.K. creditors, compared with $111.4 million in Q1 2012. Receivables purchased during the recently completed quarter were acquired in 91 portfolios from 13 different sellers.
           
Finance Receivables Portfolio Acquisitions ($ in thousands) Q12013 Q42012 Q32012 Q22012 Q12012
Core Customer Debt  $ 128,338  $ 88,107  $ 61,684  $ 71,599  $ 54,525
Bankruptcy Court Claims, U.S.  86,595  111,001  41,277  53,460  56,892
Total Portfolio Acquisitions  $ 214,933  $ 199,108  $ 102,961  $ 125,059  $ 111,417
           

BALANCE SHEET

  • Cash balances were $39.1 million at March 31, 2013, compared with $32.7 million at December 31, 2012 and $28.1 million at March 31, 2012.  
  • Borrowings totaled $371.2 million at March 31, 2013, and consisted of $199.2 million in long-term debt and $172.0 million in revolving credit. Total borrowings were $327.5 million at December 31, 2012 and $265.9 million at March 31, 2012.  
  • Net deferred tax liabilities were $185.8 million at March 31, 2013, compared with $185.3 million at December 31, 2012 and $194.3 million at March 31, 2012.  
  • Stockholders' equity increased from $708.4 million at year-end 2012 to $751.0 million at March 31, 2013. Stockholders' equity was $620.7 million at March 31, 2012.

Conference Call Information

PRA will hold a conference call today with investors at 5:30 p.m. ET to discuss its Q1 2013 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 35708302. A replay will be available approximately one hour after the call ends and will remain available until May 7, 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 35708302. Investors also may listen to the conference call via webcast, both live and archived, at http://ir.PortfolioRecovery.com/events.cfm .

About PRA

As a leader in the U.S. debt buying industry, Portfolio Recovery Associates, Inc. (Nasdaq:PRAA) 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. 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. 

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