NCO Group, Inc. (“NCO”)(NasdaqNM:NCOG), a leading provider of accounts receivable management and collection services, announced today that during the first quarter it achieved net income of $0.47 per share, on a diluted basis.
During the first quarter, net income was $12.3 million, or $0.47 per share, on a diluted basis, as compared to income from continuing operations of $11.4 million, or $0.44 per share, on a diluted basis, in the first quarter a year ago. Revenue in the first quarter of 2001 was $171.0 million, an increase of 18.8% or $27.0 million, from revenue of $144.0 million in the first quarter of the previous year.
The Company’s operations are currently organized into market specific divisions that include the U.S. Operations, Portfolio Management, and International Operations. These divisions represented $155.8 million, $12.6 million and $8.7 million of the revenue for the first quarter of 2001, respectively, before intercompany eliminations of $6.1 million. In the first quarter of 2000, these divisions represented $136.1 million, $890,000 and $7.5 million of the revenue, respectively, before intercompany eliminations of $516,000.
Income from operations climbed 15.6% to $28.0 million for the first quarter of 2001, up from $24.2 million for the same period a year ago.
NCO experienced a decrease in its payroll and related expenses as a percentage of revenue, and an increase in its selling, general and administrative expenses as a percentage of revenue for the first quarter as compared to the same period in the prior year. Compared to the first quarter of last year, the reduction in the Company’s payroll structure was primarily attributable to the expansion of the portfolio acquisition business. In the non-portfolio business, NCO experienced a slight increase in payroll and related expenses as a percentage of revenue. The increases in cost structure were primarily the result of a difficult economic and collection environment that necessitated higher payroll and collection costs to achieve revenue objectives.
Commenting on the quarter, Michael J. Barrist, Chairman and Chief Executive Officer, stated, “Despite macro economic turmoil, the first quarter represented a period of record earnings for NCO. Increased business opportunities and the completion of the merger between NCO Portfolio and Creditrust, combined with normal seasonality, drove our revenue and earnings per share to record levels. I am extremely pleased with the quarter; however, during the quarter we did feel the pressures of the current economic climate through an increase in our expense structure. Lower consumer confidence and discretionary spending by consumers forced us to increase our direct collection costs. As we move into the second quarter we will continue to focus on cost reduction opportunities and operating efficiencies. While our goal is to deliver profitability and EPS within the ranges we previously provided in our guidance, we will continue to have a strong focus on revenue stability and the additional client opportunities presented by our current economic climate.”
The Company also announced that it will host an investor conference call on Wednesday, May 2, 2001 at 11:30 a.m., ET, to address the items discussed in this press release in more detail and to allow the public an opportunity to ask questions. Interested parties can access the conference call by dialing (800) 218-0530 (domestic callers) or (303) 262-2127 (international callers). A taped replay of the conference call will be made available for seven days and can be accessed by interested parties by dialing (800) 405-2236 (domestic callers) or (303) 590-3000 (international callers) and providing the pass code 326377.
NCO Group, Inc. is the largest provider of accounts receivable collection services in the world. NCO provides services to clients in the financial services, healthcare, retail, commercial, education, telecommunications, utilities and government sectors.
Certain statements in this press release, including, without limitation, statements as to the effects of the economy on the Company’s business, statements as to the effects of potential business opportunities, statements as to initiatives to improve margins, statements concerning projections of earnings per share or the earnings per share growth rate, statements as to fluctuations in quarterly operating results, statements as to trends, statements as to the Company’s or management’s beliefs, expectations or opinions, and all other statements in this press release, other than historical facts, are forward-looking statements, as such term is defined in the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created thereby. Forward-looking statements are subject to risks and uncertainties, are subject to change at any time and may be affected by various factors that may cause actual results to differ materially from the expected or planned results. In addition to the factors discussed above, certain other factors, including without limitation, the risk that the Company will not be able to implement its five-year strategy as and when planned, the risk that the Company will not be able to improve margins, risks relating to growth and future acquisitions, risks related to fluctuations in quarterly operating results, risks related to the timing of contracts, risks related to strategic acquisitions and international operations, and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K, filed on March 16, 2001, can cause actual results and developments to be materially different from those expressed or implied by such forward-looking statements.
A copy of the Annual Report on Form 10-K can be obtained, without charge except for exhibits, by written request to Steven L. Winokur, Executive Vice President, Finance/CFO, NCO Group, Inc., 515 Pennsylvania Avenue, Ft. Washington, PA 19034.
For more information on NCO Group, Inc., via fax at no charge, dial 1-800-pro-info and enter ticker symbol NCOG.
