NORFOLK, VA ? Portfolio Recovery Associates, Inc. (Nasdaq: PRAA), a company that purchases, collects and manages portfolios of defaulted consumer receivables, today reported pro forma net income of $3.3 million, or $0.24 per fully-diluted share, for the quarter ended December 31, 2002. The pro forma adjustments reflect the company’s conversion from a limited liability company to a corporation in connection with the company’s November 2002 initial public offering and the impact of corporate income tax on the pre-IPO period.
The company’s fourth-quarter 2002 earnings compare with pro forma net income of $805,000, or $0.07 per fully-diluted share, for the quarter ended December 31, 2001. Total revenue rose to $15.7 million in the fourth quarter of 2002 from $9.4 million in the year-ago period.
For full-year 2002, the company reported pro forma net income of $11.4 million, or $0.94 per fully-diluted share, compared with pro forma earnings of $3.5 million, or $0.31 per fully-diluted share, in 2001. Total revenue rose to $55.8 million in 2002 from $32.3 million in 2001.
“Portfolio Recovery Associates’ fourth quarter and full-year results demonstrate solid growth, strong profitability and continued high levels of collection efficiency, even in the face of difficult economic conditions,” said Steven D. Fredrickson, Chairman, President and Chief Executive Officer. “The fourth quarter also represented a good buying environment for debt portfolios, allowing the company to continue developing its revenue stream for 2003 and beyond.”
Financial and Operating Highlights
- Pro forma net income of $3.3 million in the fourth quarter of 2002 represents an increase of more than 300% from the year-ago period. This reflects the continued efficiency gains of the company’s collection operations, as well as its ability to consistently acquire debt portfolios that can be collected profitably over time.
- Fourth quarter 2002 total revenue of $15.7 million represents growth of more than 65% from the year-ago period. It also reflects an amortization rate of 29.4% to account for the carrying value of the owned debt portfolios that produced revenue in the period.
- Cash collections totaled $21.4 million in the fourth quarter of 2002, up from $15.2 million in the year-ago period.
- Cash collections per hour paid, which reflects the performance of the company’s owned portfolios as a function of each hour a collector works, increased to $96.37 for full-year 2002 from $77.20 in 2001.
- The company purchased $1 billion of face-value debt during the fourth quarter of 2002 for $16 million, a blended rate of 1.54%. This debt was purchased from 12 different sellers ? three of whom represent new relationships ? and reflects an abundance of high quality, well-priced debt available in the market. Full-year 2002 debt acquisitions totaled $2 billion, comprising 1.5 million accounts. Full-year 2002 investment was $42.4 million, a 27% increase over 2001 investment, which is consistent with the company’s disciplined growth strategy. The blended rate of 2.16% for full-year 2002 was virtually unchanged from the blended rate of 2.10% in 2001.
- Cash and cash equivalents were $17.9 million as of December 31, 2002, an increase from cash and cash equivalents of $4.8 million as of year-end 2001. This increase was due primarily to proceeds of the company’s IPO.
“Portfolio Recovery Associates ended full-year 2002 with a strong balance sheet, which included $17.9 million in cash and $65.5 million in finance receivables,” said Kevin P. Stevenson, Chief Financial Officer. “In addition, we paid down the company’s existing credit line with a portion of our IPO proceeds, allowing us to begin life as a public company with essentially no debt and enough cash to fund our operating and capital needs for the foreseeable future.”
During the fourth quarter, Portfolio Recovery Associates continued work on its third call-center facility in Hampton, Va., which will allow the company to increase collection capacity. The company signed a lease on the facility in November 2002 and expects it to be fully operational in the first quarter of 2003.
Conference Call Information
The company will hold a conference call with investors February 10, 2003, at 5:30 p.m. EST to discuss its results. Investors can access the call live by dialing 800-299-0148 for domestic callers or 617-801-9711 for international callers and using the pass code 9596195.
In addition, investors may listen to the call via a taped replay, which will be available through February 17, 2003, by dialing 888-286-8010 for domestic callers or 617-801-6888 for international callers and using the pass code 446225. The replay will be available about two hours after today’s conference call ends. Investors may also listen via Webcast, both live and archived, at the company’s Web site, www.portfoliorecovery.com.
About Portfolio Recovery Associates, Inc.
Portfolio Recovery Associates is a full-service provider of outsourced receivables management. Portfolio Recovery Associates purchases, collects and manages portfolios of defaulted consumer receivables. Defaulted consumer receivables are the unpaid obligations of individuals to credit originators, including banks, credit unions, consumer and auto finance companies, retail merchants and other service providers. The defaulted consumer receivables Portfolio Recovery Associates collects are either purchased from the credit originator or are collected on behalf of clients on a commission basis.
Except for the historical and financial information contained herein, some of the matters discussed in this news release include certain “forward-looking statements,” within the meaning of the federal securities laws, that relate to the Company’s future business, operating and capital needs and financial performance. Such statements are subject to a number of risks and uncertainties that may cause the actual events or future results to differ materially from those discussed herein. Such statements are based on the beliefs and assumptions of the Company’s management, as well as information currently available to them. Actual events or results may differ materially. Investors are advised to read the Company’s Prospectus and other reports on file with the Securities and Exchange Commission, particularly those sections entitled “Risk Factors,” for a more complete discussion of risks and uncertainties associated with the Company’s business.
For the full press release and financial data, please visit Portfolio Recovery Associates Reports Fourth Quarter And Full-Year 2002 Results.
