Portfolio Recovery Associates Reports Fourth Quarter and Full-Year 2004 ResultsEarns $0.48 per Share in Fourth Quarter on 42 Percent Increase in Net Income; Full-Year Net Income of $1.73 per Share on Revenues of $113.4 Million
NORFOLK, VA -- 02/22/2005 -- Portfolio Recovery Associates, Inc. (NASDAQ: PRAA), a company that purchases, collects and manages portfolios of defaulted consumer receivables, today reported net income of $7.7 million, or $0.48 per diluted share, for the quarter ended December 31, 2004.
The Company's fourth-quarter 2004 earnings represent growth of 42% from net income of $5.4 million, or $0.35 per diluted share, in the fourth quarter of 2003.
Total revenue increased 38% to $31.7 million in the fourth quarter of 2004 compared to $23.0 million in the 2003 fourth quarter. Total revenue consists of cash collections reduced by amounts applied to the Company's owned debt portfolios plus commissions from its fee-for-service businesses. During the quarter ended December 31, 2004, we applied 30.2% of our cash collections to reduce the carrying basis of our owned debt portfolios. This ratio was 28.2% for the quarter ended December 31, 2003.
"Portfolio Recovery Associates concluded its second full year as a public company with strong results on all fronts. In the fourth quarter, we achieved record cash collections and continued high productivity on the operating side, together with $22.5 million in portfolio acquisitions. Disciplined buying earlier in the year paid off nicely as we were able to identify substantial portfolio acquisitions that met our profitability criteria and had ample cash to fund those purchases," said Steven D. Fredrickson, Chairman, President and Chief Executive Officer.
The Company's full-year 2004 earnings increased by 33% to $27.5 million, or $1.73 per diluted share, compared to 2003 net income of $20.7 million, or $1.32 per diluted share. Total 2004 revenues increased by 34% to $113.4 million, compared to 2003 revenues of $84.9 million.
Financial and Operating Highlights
- -- Cash collections rose 32% to $40.7 million in the fourth quarter of
2004 from $30.9 million in the year-ago period.
- -- Productivity, as measured by cash collections per hour paid, the
Company's key measure of collector performance, stands at $117.59 for all
of 2004, compared with $108.27 for all of 2003.
- -- The Company purchased $674.0 million of face-value debt during the
fourth quarter of 2004 for $22.5 million, representing a blended rate of
3.33%. This debt was purchased in 26 pools from 12 different sellers. For
the full year, the Company purchased $3.34 billion of face-value debt for
$61.2 million, representing a blended rate of 1.83%.
- -- The Company's fee-for-service businesses generated revenue of $3.3
million during the fourth quarter of 2004, up from $864,000 in the same
period a year ago. For the year ended December 31, 2004, the Company's fee-
for-service businesses generated revenue of $7.1 million, up from $3.1
million for the year ended December 31, 2003.
- -- The Company's cash and investment balances were $48.5 million, down
from $56.8 million on September 30, 2004. This change was due in part to
the included $12 million in cash used to fund the IGS acquisition. The
Company continues to have no debt outstanding under its $25 million
revolving line of credit.
"Portfolio Recovery Associates produced strong financial results for full-year 2004, driven by continued strong collector productivity. Productivity rose to a year-end record, even as we increased our workforce 10% from a year ago. Finally, the company accomplished this without any use of its line of credit. We finished the year with $48.5 million in cash and investments in short duration Auction Rate Certificates, which is up 95% from the end of 2003, even after the acquisition of IGS," said Kevin P. Stevenson, Chief Financial Officer.
Conference Call Information
The Company will hold a conference call with investors today, February 22, 2005, at 5:30 p.m. EST to discuss its fourth quarter and full-year results. Investors can access the call live by dialing 800-659-2056 for domestic callers or 617-614-2714 for international callers using the pass code 34587568.
In addition, 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 or 617-801-6888 for international callers using the pass code 35370196. The replay will be available approximately two hours after today's conference call ends. Investors may also listen via webcast, both live and archived, at the Company's website, www.portfoliorecovery.com.
About Portfolio Recovery Associates, Inc.
Portfolio Recovery Associates is a full-service provider of outsourced receivables management and related services. Portfolio Recovery Associates purchases, collects and manages portfolios of defaulted consumer receivables and provides collateral location services for credit originators. Defaulted consumer receivables are the unpaid obligations of individuals to credit originators, including banks, credit unions, consumer and auto finance companies, retail merchants and other providers of goods and services. The defaulted consumer receivables Portfolio Recovery Associates collects are generally either purchased from sellers of defaulted consumer debt or are collected on behalf of debt owners on a commission basis.
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 statements with respect to future contribution of the IGS Nevada business 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 webcasts. 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 Registration Statements on Form S-3 and S-8, 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 Three
Months Months Year Year
Ended Ended Ended Ended
Dec 31, Dec 31, Dec 31, Dec 31,
2004 2003 2004 2003
Revenues:
Income recognized on finance
receivables $ 28,387 $ 22,172 $106,254 $ 81,796
Commissions 3,315 864 7,142 3,131
-------- -------- -------- --------
Total revenue 31,702 23,036 113,396 84,927
Operating expenses:
Compensation and employee
services 9,717 7,545 36,620 28,987
Outside legal and other
fees and services 6,369 4,168 21,408 14,147
Communications 980 769 3,638 2,772
Rent and occupancy 448 317 1,745 1,189
Other operating expenses 684 610 2,712 1,932
Depreciation and amortization 985 391 2,383 1,445
-------- -------- -------- --------
Total operating expenses 19,183 13,800 68,506 50,472
-------- -------- -------- --------
Income from operations 12,519 9,236 44,890 34,455
Other income and (expense):
Interest income 117 31 223 60
Interest expense (67) (359) (273) (602)
-------- -------- -------- --------
Income before income taxes 12,569 8,908 44,840 33,913
Provision for income taxes 4,854 3,467 17,388 13,199
-------- -------- -------- --------
Net income $ 7,715 $ 5,441 $ 27,452 $ 20,714
======== ======== ======== ========
Net income per common share
Basic $ 0.50 $ 0.36 $ 1.79 $ 1.42
Diluted $ 0.48 $ 0.35 $ 1.73 $ 1.32
Weighted average number of
shares outstanding
Basic 15,462 15,249 15,357 14,546
Diluted 16,030 15,756 15,853 15,712
Portfolio Recovery Associates, Inc.
Unaudited Consolidated Summary Balance Sheets
(in thousands, except share amounts)
December 31, December 31,
ASSETS 2004 2003
Cash and cash equivalents $ 24,513 $ 24,912
Investments 23,950 -
Finance receivables, net 105,189 92,569
Property and equipment, net 5,752 5,166
Deferred tax asset - 2,009
Income tax receivable - 352
Goodwill 6,397 -
Intangible assets, net 6,319 -
Other assets 3,056 1,386
--------- ---------
Total assets $ 175,176 $ 126,394
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities 7,635 5,038
Deferred tax liability 13,650 -
Long-term debt & capital lease obligations 2,501 2,208
--------- ---------
Total liabilities 23,786 7,246
Stockholders' equity:
Preferred stock, par value $0.01, authorized
shares, 2,000,000, issued and outstanding
shares - 0 - -
Common stock, par value $0.01, authorized
shares, 30,000,000, issued and outstanding
shares - 15,498,210 at December 31, 2004
and 15,294,676 at December 31, 2003 155 153
Additional paid-in capital 100,906 96,118
Retained earnings 50,329 22,877
--------- ---------
Total stockholders' equity 151,390 119,148
--------- ---------
Total liabilities and stockholders' equity $ 175,176 $ 126,394
========= =========
Contact:
Michelle Coulborn
Investor Relations
757-519-9300 ext. 13010
info@portfoliorecovery.com
