Debt Buyers Tout First Quarter Numbers For Investors

Top executives from Portfolio Recovery Associates (Nasdaq: PRAA) and Asset Acceptance Capital Corp. (Nasdaq: AACC) provided investors with overviews of their firms and first quarter results during this week’s William Blair & Co. 27th Annual Growth Stock Conference in Chicago.

Nathaniel Bradley, CEO, and Mark Redman, chief financial officer, of Asset Acceptance noted the firm paid $36.6 million for receivables with a face value of $772 million in the first quarter of 2007, compared with $26.3 million for face-value receivables of $723.9 million in the same period a year ago.

The 2007 numbers represent a 4.74 percent cost of debt, a rise of nearly 31 percent from the 3.63 percent cost of debt in the first quarter of 2006. “Overall, the average quality of our receivables purchased in the [first] quarter [of 2007] was better than that purchased in 2006,” Bradley said at the conference. He said that Asset Acceptance had paid from 1 cent to 9.3 cents on the dollar for debt in the first quarter this year.

Collections per account rep. rose to $54,000 in the first quarter this year, up more than 28 percent from $42,000 in the first quarter of 2006. The firm has nearly 900 call center account reps, according to the executives.

Asset Acceptance garnered 49.4 percent of its cash collections through its call centers, 37.4 percent through its legal collections division, and 13.2 percent through other sources. Asset Acceptance recorded adjusted net income of $10 million from revenues of $67 million in the first quarter.

Steve Fredrickson, CEO, and Kevin Stevenson, chief financial officer, of Portfolio Recovery told investors the Norfolk, Va.-based firm had 984 collection employees at the end of the first quarter, up from 937 in 2006. Collection employees were bringing in $156 for each hour paid in the first quarter this year up from $146 in 2006.

The Portfolio Recovery executives said that demand for debt appears “slightly more moderate than any time in the last 18 months” with “anecdotal evidence … some players are exiting or temporarily pulling back” from the market. Portfolio Recovery paid $39.6 million for receivables in the first quarter.

Portfolio Recovery recorded net income of $12.9 million in the first quarter of 2007 compared with $10.7 million in the same period a year ago.