SquareTwo Financial Announces First Quarter 2011 Results

SquareTwo Financial Corporation, a leader in the $100 billion asset recovery and management industry, today reported consolidated financial results for the first quarter ended March 31, 2011.

“We had an exceptionally strong first quarter, including the best collection month on our owned portfolios in the company’s history.  Also, we are seeing clear evidence that our major operational initiatives are producing sustainable financial results.  Most significantly, first quarter performance by our franchise partners exceeded our expectations,” explained President and CEO, Paul A. Larkins.

For the first quarter of 2011:

• Cash proceeds on purchased debt were $108.3 million, a 20% increase over the $89.9 million in the same period of the prior year.

• Investment in purchased debt was $63.6 million, to purchase $928.2 million in face value of debt, compared to $39.3 million, to purchase $933.6 million in face value of debt in the same period of the prior year.  The total investment in Purchased Debt was a 61.8% increase from the same period of the preceding year.

• Revenue recognized on purchased debt was $54.7 million, a 31.8% increase from the $41.5 million in the same period of the prior year.

• Total purchased debt operating expenses were $36.9 million, a 40.5% increase over the $26.2 million in the same period of the prior year.  Total purchased debt operating expenses per dollar of total purchased debt collections decreased to 35.5%, compared to 37.5% in the same period of the prior year.

• EBITDA was $8.7 million in the first quarter of 2011, an 11.9% increase when compared to $7.8 million in the same period of the prior year.

• Net loss was $5.2 million, compared to net loss of $2.5 million in the same period of the prior year, due to non-cash allowance charges for certain 2007 and 2008 pools of owned debt.

• Adjusted EBITDA, defined as net income before interest, taxes, depreciation and amortization, valuation allowances and amortization of purchased debt, and certain adjustments, was $63.4 million, a 12.7% increase over the $56.3 million in the same period of the prior year.