NORFOLK, VA – Portfolio Recovery Associates, Inc. (NasdaqNM: PRAA), a company that purchases, collects and manages portfolios of defaulted consumer receivables, today reported net income of $7.7 million, or $0.48 per diluted share, for the quarter ended December 31, 2004.
The Company’s fourth-quarter 2004 earnings represent growth of 42% from net income of $5.4 million, or $0.35 per diluted share, in the fourth quarter of 2003.
Total revenue increased 38% to $31.7 million in the fourth quarter of 2004 compared to $23.0 million in the 2003 fourth quarter. Total revenue consists of cash collections reduced by amounts applied to the Company’s owned debt portfolios plus commissions from its fee-for-service businesses. During the quarter ended December 31, 2004, we applied 30.2% of our cash collections to reduce the carrying basis of our owned debt portfolios. This ratio was 28.2% for the quarter ended December 31, 2003.
“Portfolio Recovery Associates concluded its second full year as a public company with strong results on all fronts. In the fourth quarter, we achieved record cash collections and continued high productivity on the operating side, together with $22.5 million in portfolio acquisitions. Disciplined buying earlier in the year paid off nicely as we were able to identify substantial portfolio acquisitions that met our profitability criteria and had ample cash to fund those purchases,” said Steven D. Fredrickson, Chairman, President and Chief Executive Officer.
The Company’s full-year 2004 earnings increased by 33% to $27.5 million, or $1.73 per diluted share, compared to 2003 net income of $20.7 million, or $1.32 per diluted share. Total 2004 revenues increased by 34% to $113.4 million, compared to 2003 revenues of $84.9 million.
Financial and Operating Highlights
- Cash collections rose 32% to $40.7 million in the fourth quarter of 2004 from $30.9 million in the year-ago period.
- Productivity, as measured by cash collections per hour paid, the Company’s key measure of collector performance, stands at $117.59 for all of 2004, compared with $108.27 for all of 2003.
- The Company purchased $674.0 million of face-value debt during the fourth quarter of 2004 for $22.5 million, representing a blended rate of 3.33%. This debt was purchased in 26 pools from 12 different sellers. For the full year, the Company purchased $3.34 billion of face-value debt for $61.2 million, representing a blended rate of 1.83%.
- The Company’s fee-for-service businesses generated revenue of $3.3 million during the fourth quarter of 2004, up from $864,000 in the same period a year ago. For the year ended December 31, 2004, the Company’s fee- for-service businesses generated revenue of $7.1 million, up from $3.1 million for the year ended December 31, 2003.
- The Company’s cash and investment balances were $48.5 million, down from $56.8 million on September 30, 2004. This change was due in part to the included $12 million in cash used to fund the IGS acquisition. The Company continues to have no debt outstanding under its $25 million revolving line of credit.
“Portfolio Recovery Associates produced strong financial results for full-year 2004, driven by continued strong collector productivity. Productivity rose to a year-end record, even as we increased our workforce 10% from a year ago. Finally, the company accomplished this without any use of its line of credit. We finished the year with $48.5 million in cash and investments in short duration Auction Rate Certificates, which is up 95% from the end of 2003, even after the acquisition of IGS,” said Kevin P. Stevenson, Chief Financial Officer.
