NCO Reports Earnings Increase in Q1 But Misses Analysts' Estimates

NCO Group (Nasdaq: NCOG) last night reported net income of $15.3 million on revenues of $260.3 million for the first quarter of 2005. The revenue reflects a 29.4% increase from the first quarter last year. The net income comes out to $0.45 per diluted share compared with $0.43 per diluted share a year ago. The $0.45 per diluted share fell just under Reuter?s Estimates analysts? consensus of $0.47 per share for the first quarter.

In the earnings statement, Michael J. Barrist, Chairman and Chief Executive Officer, commented, “As we entered 2005, we continued to execute strategic initiatives launched in 2004 that were designed to expand our overall growth opportunities. These initiatives were key to allowing each of our business units either to meet or exceed their operational goals during the first quarter. More important than our near-term accomplishments are several key new client opportunities that are currently being deployed and are expected to begin producing revenue during the latter part of 2005.”

The NCO earnings release also laid out the new organizational structure for the firm on the heels of its acquisition of RMH Teleservices last year. The company created a new CRM division as a result of the purchase, which accounted for $47.6 million in revenue for the first quarter. The ARM North America division brought in $198.5 million in revenue, with the Portfolio Management unit tallying $27.8 million in revenue in the first quarter. The ARM International division saw revenues of $3.1 million. Some intercompany revenue was eliminated when consolidating the revenues from the separate units.

In the release, NCO also announced that it continues to expect earnings per share to be approximately $1.70 to $1.80 per diluted share for 2005.