Portfolio Recovery Breaks All Kinds of Records with Q2 Results

Debt buyer Portfolio Recovery Associates, Inc. (Nasdaq: PRAA) late Thursday reported financial results for the second quarter of 2011 marked by record-high net income, cash collections, and revenue.

The Norfolk, Va.-based accounts receivable management firm reported net income of $25.6 million for the second quarter of 2011, up 31 percent from the same period a year ago. Earnings per share were $1.48 in the second quarter, up 30 percent from Q2 2010. Analysts polled by Thomson Reuters expected the company to report earnings of $1.41 per share in the quarter.

Portfolio Recovery said that cash collections rose 37 percent to a record $176.3 million in the second quarter of 2011. By collection channel, the company’s call center and other collections increased 19 percent, external legal collections increased 45 percent, internal legal collections grew 41 percent, and purchased bankruptcy collections gained 56 percent when compared with the year-earlier period.

The jump in cash collections drove total revenues for the quarter up 23 percent to a record $114.8 million. PRA’s fee-for-service businesses generated revenues of $14.5 million in the second quarter of 2011, a decline of 10 percent from the same period a year ago due largely to a decrease in revenues generated by PRA Location Services. Together, the fee-for-service businesses accounted for 12.6 percent of the company’s overall revenues in Q2 2011, down from 17.3 percent a year ago.

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“This outstanding performance reflects the efforts of our entire PRA staff, including the Company’s more than 1,500 call-center collectors,” said Steven D. Fredrickson, chairman, president and CEO. “I’m proud of the hard work and dedication of our very talented team and look forward to our future successes.”

PRA purchased $1.41 billion of face-value debt during the second quarter of 2011 for $89.5 million. The debt was acquired in 76 portfolios from 10 different sellers.

“The company purchased $89.5 million of charged-off debt in the second quarter, bringing our total purchases for the first half of the year to $197.4 million,” said Kevin P. Stevenson, chief financial and administrative officer. “Importantly, we were able to accomplish this while paying down $40 million in principal on our line of credit during the quarter, strengthening our ability to continue making smart investments in the future.”

For the second quarter, Portfolio Recovery reported a total employee headcount of 2,504, up very slightly from the first quarter of 2011 but representing a 5.5 percent increase from the second quarter of 2010.