NORFOLK, Va., Oct. 30, 2013 (GLOBE NEWSWIRE) -- Portfolio Recovery Associates, Inc. (Nasdaq:PRAA), a financial and business services company operating in the U.S. and U.K, today reported its third quarter 2013 financial results. Third Quarter Highlights
- Cash collections of $291.7 million, up 27% from the third quarter of 2012.
- Record revenues of $197.8 million, up 31%.
- Record net income attributable to PRA of $47.3 million, up 42%.
- $0.93 diluted EPS, compared with $0.65 a year ago, up 43%, adjusted for a 3:1 stock split effective August 1, 2013.
- Fee income of $26.3 million, up 78%.
- $6.4 million goodwill impairment charge for Location Services business.
- 23.5% return on average equity, annualized.
- $141.9 million investment in new portfolio purchases.
- Revenues were $197.8 million in the third quarter 2013, up 31% from a year ago. Net finance receivables income increased 26% to $171.5 million in the quarter, from $135.8 million a year ago. And, fee income increased 78% from a year ago to $26.3 million.
- Cash collections increased 27% over the year-ago period to $291.7 million, including bankruptcy court trustee payments of $120.6 million; $89.5 million in call center and other collections; and $81.6 million in legal collections from customers with an ability to pay their debt, but who refuse attempts to collect.
|Cash Collection Source ($ in thousands)||Q32013||Q22013||Q12013||Q42012||Q32012|
|Call Center and Other Collections||$ 89,512||$ 90,229||$ 89,037||$ 72,624||$ 72,394|
|External Legal Collections||48,274||50,131||47,910||41,521||39,913|
|Internal Legal Collections||33,288||30,365||29,283||23,968||25,650|
|Bankruptcy Court Trustee Payments||120,577||125,672||109,233||91,098||91,095|
|Total Cash Collections||$ 291,651||$ 296,397||$ 275,463||$ 229,211||$ 229,052|
- Principal amortization was 41.2% of cash collections, compared with 40.7% in the year-ago quarter. Principal amortization included a net allowance reversal of $2.6 million recorded against certain pools of finance receivables in the quarter, compared with a net allowance charge of $1.6 million recorded a year ago.
- PRA's fee-based businesses generated $26.3 million in fee income in the quarter, compared with $14.8 million a year ago. The change was due primarily to a $10.5 million increase in fee income generated by Claims Compensation Bureau, largely attributable to a single case. Government Services fee income also increased, while fee income generated by the Company's Location Services unit declined.
- Operating expenses were $118.3 million in the third quarter of 2013, up $24.8 million or 27% from the year-ago quarter.
- PRA recorded a $6.4 million impairment of goodwill in the third quarter of 2013. This non-cash charge represents the full amount of goodwill previously recorded for the Company's Location Services subsidiary, and was taken primarily as a result of recent operating losses coupled with the loss of a significant client late in the quarter. Despite this charge, PRA is optimistic about the future of the Location Services business, and continues to invest in new technology, personnel, and facilities.
- Operating income was $79.5 million, compared with $57.1 million a year ago, an increase of 39%. The operating margin increased to 40.2% from 37.9% in the third quarter of last year.
- The provision for income taxes was $26.3 million in the third quarter of 2013, up 21% from the third quarter of 2012. The provision in the third quarter of 2013 was positively impacted by a reduction in the Company's blended domestic state tax rate due to the enactment of certain state tax apportionment and other changes. The Company's provision for income taxes was 34.8% of income before taxes in the third quarter of 2013, compared with 39.6% in the year-earlier quarter. While these changes are expected to have some future benefit, the majority of the impact was due to the changes described above, and is not expected to reoccur.
- PRA invested $141.9 million in new portfolio purchases from U.S and U.K. creditors in the third quarter of 2013, compared with $103.0 million a year ago. Receivables purchased were acquired in 79 portfolios from 19 different sellers. The company has invested $756.4 million in portfolio purchases over the trailing twelve months.
|Portfolio Purchase Source|
|($ in thousands)||Q32013||Q22013||Q12013||Q42012||Q32012|
|Core Customer Debt||$ 100,081||$ 118,195||$ 128,338||$ 88,107||$ 61,684|
|Bankruptcy Court Claims||41,794||82,273||86,595||111,001||41,277|
|Total Portfolio Purchases||$ 141,875||$ 200,468||$ 214,933||$ 199,108||$ 102,961|
- Core customer debt purchased in the third quarter of 2013 included $89.0 million in U.S. accounts and $11.0 million in U.K. accounts.
- Borrowings totaled $452.2 million at September 30, 2013, and consisted of $255.8 million in convertible senior notes and $196.4 million in other long-term debt. Total borrowings were $250.7 million at September 30, 2012.
- During the quarter, the Company issued $287.5 million aggregate principal amount of 3.00% convertible senior notes due 2020. Proceeds were used to temporarily repay debt outstanding under its revolving credit facility and to repurchase approximately $50 million of common stock. The remaining proceeds were held in cash equivalent balances at quarter-end. As a result, cash and cash equivalents increased from $43.5 million at June 30, 2013 to $108.7 million at September 30, 2013. Cash and cash equivalents were $31.5 million at September 30, 2012.
- In August, the Company expanded its credit facility from $597.5 million to $633.0 million, which includes a $415.5 million domestic revolving credit facility and a $20 million multi-currency revolving credit facility, neither of which were drawn at September 30, 2013.
- Net deferred tax liabilities were $200.1 million at September 30, 2013, compared with $186.5 million a year ago.
- Stockholders' equity increased in the quarter to $816.6 million from $670.5 million at September 30, 2013.