Portfolio Recovery Associates Reports Second Quarter 2005 ResultsNet Income Increases 34% to $9.1 Million, or $0.56 per Share
Total Revenue Rises to $35.9 Million
NORFOLK, VA -- 07/26/2005 -- Portfolio Recovery Associates, Inc. (NASDAQ: PRAA), a company that purchases, collects and manages portfolios of defaulted consumer receivables, today reported net income of $9.1 million, or $0.56 per diluted share, for the quarter ended June 30, 2005.
The Company's second-quarter 2005 earnings represent growth of 34% from net income of $6.8 million, or $0.43 per diluted share, in the same period a year earlier.
Total revenue increased 28% to $35.9 million in the second quarter of 2005 from $28.1 million in the year-earlier period. 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 second quarter of 2005, the Company applied 30.7% of cash collections to reduce the carrying basis of its owned debt portfolios. This ratio was 29.9% for the quarter ended June 30, 2004.
"Portfolio Recovery Associates posted another strong performance in the second quarter, with continued improvement in collector-force productivity driving record cash collections. On the portfolio-acquisition side, we spent a sizable $23 million on paper despite a continued, competitive environment from a pricing perspective. PRA continues to focus on achieving steady, disciplined growth through all market conditions and the second quarter of 2005 is a fine example of that strategy in action," said Steven D. Fredrickson, Chairman, President and Chief Executive Officer.
The Company's first-half 2005 earnings totaled $18.0 million, or $1.12 per diluted share, compared with $12.8 million, or $0.81 per diluted share, for the first six months of 2004. First-half 2005 revenue was $71.7 million, compared with $53.4 million in the first half of 2004.
Financial and Operating Highlights
- -- Cash collections rose 27% to a record $48.8 million in the second
quarter of 2005 from $38.4 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 a record $137.02
for the first six months of 2005, compared with $117.59 for all of 2004 and
$135.62 for the first quarter of 2005.
- -- The Company purchased $1.36 billion of face-value debt during the
second quarter of 2005 for $23.1 million. This debt was purchased in 35
pools from 12 different sellers.
- -- The Company's fee-for-service businesses generated revenue of $2.1
million, up from $1.3 million in the same period a year ago.
- -- The Company's cash balances were $68.5 million as of June 30, 2005, up
from $61.1 million as of March 31, 2005. The Company continues to have no
debt outstanding under its $25 million revolving line of credit.
"In the second quarter, Portfolio Recovery Associates once again demonstrated its ability to generate strong results with a conservative capital structure, while laying the foundation for an ever more profitable future. We finished the quarter with $68.5 million in cash, which is up more than 10% from March 31, 2005, with no credit-line usage. This was accomplished even as we were able to increase spending on portfolio acquisitions to $23.1 million, up 30% from the first quarter of this year," said Kevin P. Stevenson, Chief Financial Officer.
Conference Call Information
The Company will hold a conference call with investors today, July 26, 2005, at 5:30 p.m. EDT to discuss its second quarter results. Investors can access the call live by dialing 866-700-7173 for domestic callers or 617-213-8838 for international callers using the pass code 58727442.
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 62200487. 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 web casts. 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, 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 Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
------- ------- ------- -------
Revenues:
Income recognized on
finance receivables $33,823 $26,891 $66,072 $50,798
Commissions 2,093 1,253 5,622 2,610
------- ------- ------- -------
Total revenue 35,916 28,144 71,694 53,408
Operating expenses:
Compensation and
employee services 10,415 9,211 21,276 17,748
Outside legal and other
fees and services 7,575 5,450 14,736 9,691
Communications 1,040 811 2,098 1,818
Rent and occupancy 512 433 988 862
Other operating expenses 729 689 1,482 1,380
Depreciation and
amortization 1,039 463 1,980 911
------- ------- ------- -------
Total operating
expenses 21,310 17,057 42,560 32,410
------- ------- ------- -------
Income from
operations 14,606 11,087 29,134 20,998
Other income and (expense):
Interest income 192 25 288 29
Interest expense (63) (68) (127) (137)
------- ------- ------- -------
Income before
income taxes 14,735 11,044 29,295 20,890
Provision for
income taxes 5,673 4,294 11,313 8,129
------- ------- ------- -------
Net income $ 9,062 $ 6,750 $17,982 $12,761
======= ======= ======= =======
Net income per common share
Basic $ 0.58 $ 0.44 $ 1.16 $ 0.83
Diluted $ 0.56 $ 0.43 $ 1.12 $ 0.81
Weighted average number
of shares outstanding
Basic 15,599 15,322 15,565 15,313
Diluted 16,074 15,776 16,113 15,775
Portfolio Recovery Associates, Inc.
Unaudited Consolidated Summary Balance Sheets
(in thousands, except share amounts)
June 30, December 31,
ASSETS 2005 2004
----------- ------------
Cash and cash equivalents $ 68,515 $ 24,513
Investments - 23,950
Finance receivables, net 114,838 105,189
Property and equipment, net 6,755 5,752
Goodwill 6,397 6,397
Intangible assets, net 5,429 6,319
Other assets 1,689 3,056
----------- ------------
Total assets $ 203,623 $ 175,176
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued liabilities 13,954 7,635
Deferred tax liability 15,408 13,651
Long-term debt & capital lease obligations 2,146 2,501
----------- ------------
Total liabilities 31,508 23,787
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 - 15,620,540 at June 30, 2005 and
15,498,210 at December 31, 2004 156 155
Additional paid in capital 103,648 100,905
Retained earnings 68,311 50,329
----------- ------------
Total stockholders' equity 172,115 151,389
----------- ------------
Total liabilities and stockholders' equity $ 203,623 $ 175,176
=========== ============
Contact:
Michelle Coulborn
Investor Relations
757-519-9300 ext. 13010
info@portfoliorecovery.com
