Portfolio Recovery Associates Throws Around Huge Numbers in Q2 Earnings Report

Debt buyer and diversified ARM firm Portfolio Recovery Associates, Inc. (NASDAQ: PRAA) Wednesday reported record results for the second quarter of 2012, punctuated by an eye-popping $232 million in cash collections during the three months.

Norfolk, Va.-based PRA reported net income of $32 million, or $1.87 per share, in the second quarter of 2012, an increase of 25 percent from the same period in 2011. Income from operations increased 20 percent to $54.6 million.

Investors cheered the news, sending the company’s stock up more than 16 percent in mid-morning trading Thursday on a day when stocks are broadly lower.

PRA reported total revenues of $148 million in Q2 2012, up 29 percent from Q2 2011. Cash collections soared 32 percent to $232.4 million.

By collection channel, PRA continued to expand its purchased bankruptcy channel which accounted for $92 million in the quarter. Call center & “other” collections brought in $73.5 million. The table below, provided by PRA, shows cash collections by source, by quarter for the past five quarters:

“Today, PRA reported a record quarter for cash collections, revenue and net income, in addition to a record quarter of portfolio acquisitions,” said Steve Fredrickson, chairman, president and chief executive officer. “It is important to note that we achieved these record results while making planned increases in court costs for legal collections from those who can, but won’t pay back their debt. This renewed focus resulted in legal cash collections increasing 54 percent over second quarter 2011, exceeding our expectations,” said Fredrickson.

The company said it purchased $1.48 billion of domestic portfolio face-value finance receivables during the second quarter of 2012 for $123 million. These receivables were acquired in 105 defaulted debt portfolios from 12 different sellers. Debt buying activity was up 5 percent from the second quarter of 2011 on a face value basis.

PRA counted 3,032 total employees during Q2 2012, up slightly from the first quarter of this year, but representing a 21 percent increase from the same period in 2011.