NCO Group Reports Wider Loss in Second Quarter

NCO Group, Inc., arguably the largest accounts receivable management firm in the world, late Thursday reported financial results for the second quarter of 2010 marked by a modest increase in total revenues and a sharp increase in net quarterly loss.

Horsham, Pa.-based NCO, also a major player in the BPO and customer relationship management industry, reported a net loss attributable to the company of $25.5 million for the quarter ended June 30, 2010. In the same period a year ago, NCO reported a net loss of $5.2 million.

Another measure of profitability used by NCO, Adjusted EBITDA (earnings before interest, taxes, deductions and amortization), also fell sharply. Adjusted EBITDA dropped 37.6 percent to $32.2 million in the second quarter.

NCO said that revenue was up for the period. The company reported total revenues of $386.2 million in the second quarter of 2010, up 2 percent from the same period in 2009.

“During the second quarter we continued to be challenged by the current economic cycle,” said NCO Chairman and CEO Michael Barrist. “The adverse impact of reduced volumes from our existing client relationships in the CRM business and in certain aspects of the ARM business that focus on active account management were partially offset by overall strong performance in the remainder of our ARM segment.”

Indeed, the company’s accounts receivable management division (ARM) was the best-performing unit, according to NCO’s regulatory filing. ARM accounted for revenues of $319.7 million, up 7.7 percent from a year ago. The ARM unit posted income from operations of $9.8 million.

NCO’s CRM unit saw its revenue decline 18 percent to $66.5 million. CRM posted an operational loss of $10.3 million in the quarter.

The company’s debt purchasing business, Portfolio Management, reported a 38.3 percent decline in revenue to $10.8 million in the second quarter of 2010.

Barrist noted that NCO was focusing on client satisfaction in the second quarter and that as a result, the company won several new clients, which should help NCO grow in the coming quarters.