NORFOLK, Va., Aug. 5, 2014 (GLOBE NEWSWIRE) -- PRA Group (Nasdaq:PRAA), a world leader in acquiring non-performing consumer debt, today reported its financial results for the second quarter 2014.
Second Quarter Highlights
- Cash collections of $319.3 million, up 8% from the second quarter of 2013.
- Revenues of $197.3 million, up 8%.
- Net income of $37.5 million, down 14%.
- $0.74 diluted earnings per share, compared with $0.85 in the year-ago quarter, down 13%. The Company incurred costs of $0.05 per diluted share in connection with the Aktiv Kapital acquisition and $0.08 per diluted share in foreign exchange currency losses related to the Aktiv Kapital acquisition. Excluding these costs, earnings per diluted share would have been $0.87, up 2%. A reconciliation of this non-GAAP financial measure to GAAP is included at the end of this press release.
- 16.0% return on average equity, annualized. Excluding the costs related to the Aktiv Kapital acquisition and the foreign exchange currency loss, annualized return on average equity would have been 18.7%.
- $109.2 million in portfolio acquisitions.
"We are excited to have closed both the acquisition of Aktiv Kapital and Pamplona Capital Management's Individual Voluntary Arrangements (IVA) Master Servicing Platform. Geir Olsen and his team at Aktiv Kapital bring us entry into 13 new countries and expertise with the dynamics of the European markets," said Steve Fredrickson, chairman, president and chief executive officer, PRA Group.
"Andrew Berardi and his team that join us with the IVA Master Servicing Platform acquisition bring with them the ability for us to acquire consumer insolvencies from major retail banks, credit card providers and other specialty finance providers in the U.K. These acquisitions align with our strategy of product and geographic diversification allowing us flexibility when investing capital," Fredrickson said.
REVENUES
- Revenues of $197.3 million in the second quarter, largely driven by cash collections, included finance receivables income net of principal amortization and net allowance reversals. Net finance receivables income was $182.5 million, up 8% from $168.6 million in the year-ago quarter.
- Cash collections increased 8% in the second quarter from the year-ago quarter to $319.3 million, and included collections from these finance receivables sources:
| Cash Collection Source ($ in thousands) | Q22014 | Q12014 | Q42013 | Q32013 | Q22013 |
| Call Center and Other Collections | $ 95,072 | $ 97,736 | $ 84,375 | $ 89,512 | $ 90,229 |
| External Legal Collections | 55,011 | 50,990 | 46,066 | 48,274 | 50,131 |
| Internal Legal Collections | 45,090 | 43,939 | 34,101 | 33,288 | 30,365 |
| Bankruptcy Court Trustee Payments | 124,101 | 120,702 | 114,384 | 120,577 | 125,672 |
| Total Cash Collections | $ 319,274 | $ 313,367 | $ 278,926 | $ 291,651 | $ 296,397 |
- Principal amortization of finance receivables in the second quarter was $136.8 million or 42.8% of cash collections, compared with 43.1% in the year-ago quarter. Principal amortization included a net allowance reversal of $2.3 million recorded against certain pools of finance receivables in the quarter, compared with a net allowance reversal of $1.2 million recorded in the year-ago quarter.
- Revenues in the second quarter also included income from PRA's fee-based businesses of $14.8 million, compared with $14.4 million in the year-ago quarter.
EXPENSES AND OPERATING INCOME
- Operating expenses were $124.9 million in the second quarter of 2014, compared with $109.1 million a year ago, an increase of 14%. PRA incurred approximately $4.1 million of expenses during the quarter related to its acquisition of Aktiv Kapital. The increase in operating expenses was also impacted by an increase in legal collection expenses related to our legal collection strategy and by an increase in compensation and employee services expense due largely to an increase in headcount.
- The Company also incurred $6.2 million in foreign exchange currency losses in relation to the acquisition of Aktiv Kapital that is included on the income statement below the operating expense line.
- Operating income was $72.5 million, compared with $73.8 million in the year-ago quarter. The operating margin was 36.7% in the second quarter of 2014.
- The provision for income taxes was $23.7 million in the second quarter, down 14% from the year-ago quarter. PRA's provision for income taxes was 38.7% of income before taxes in the second quarter, compared with 38.8% in the year-ago quarter.
PORTFOLIO ACQUISITIONS
- PRA invested $109.2 million in new finance receivables from North American and U.K. creditors in the second quarter of 2014, compared with $200.5 million in the year-ago quarter. Receivables purchased were acquired in 85 portfolios from 14 different sellers.
|
Portfolio Purchase Source ($ in thousands) |
Q22014 |
Q12014 |
Q42013 |
Q32013 |
Q22013 |
| Core Customer Debt | $ 93,025 | $ 80,711 | $ 67,522 | $ 100,081 | $ 118,195 |
| Bankruptcy Court Claims | 16,187 | 72,003 | 31,987 | 41,794 | 82,273 |
| Total Portfolio Purchases | $ 109,212 | $ 152,714 | $ 99,509 | $ 141,875 | $ 200,468 |
- Core customer debt purchased in the second quarter included $91.9 million in North American accounts and $1.1 million in U.K. accounts.
BALANCE SHEET
- Borrowings totaled $448.8 million at June 30, 2014, and consisted of $258.8 million in convertible senior notes and $190.0 million in other long-term debt. Total borrowings were $413.8 million at June 30, 2013.
- Cash and cash equivalents were $270.5 million at June 30, 2014, compared with $43.5 million at June 30, 2013.
- Net deferred tax liabilities were $226.0 million at June 30, 2014, compared with $187.7 million a year ago.
- Stockholders' equity increased to $952.3 million at June 30, 2014, from $791.9 million at June 30, 2013.
Conference Call Information
PRA will hold a conference call today at 5:30 p.m. ET to discuss results with institutional investors and stock analysts. To listen to a webcast of the call, visit http://ir.pragroup.com/events.cfm until November 5, 2014. To listen by phone, call 888-695-7639 in the U.S. or 970-315-0482 outside the U.S. The conference ID is 69453282. A question-and-answer session on the call will be open only to analysts or investors. To listen to a replay of the call until August 13, 2014, use the same conference ID when calling 855-859-2056 in the U.S. or 404-537-3406 outside the U.S.
About PRA Group
By acquiring non-performing consumer debt, Portfolio Recovery Associates, Inc., doing business as PRA Group, returns capital to global banks and other creditors to help expand financial services for consumers in North America and Europe. PRA Group companies collaborate with customers to create affordable, realistic debt repayment plans and provide a broad range of additional revenue and recovery services to business and government clients in the U.S. and the U.K.
In 2013 and 2012, PRA was named one of Fortune's 100 Fastest-Growing Companies and one of Forbes' Top 25 Best Small Companies in America. PRA has been annually ranked on the Forbes list since 2007. PRA employs more than 4,000 people and is headquartered in Norfolk, Virginia. For more information, please visit www.pragroup.com.
About Forward-Looking Statements
Statements made herein which are not historical, including PRA's or its management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, including, but not limited to, statements with respect to future revenue, earnings per share growth and return on equity, and statements with respect to future contributions of Aktiv Kapital; the ability of Aktiv Kapital, or of any of PRA's subsidiaries, to contribute to earnings and future portfolio-purchase opportunities, all of which, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
The forward-looking statements in this press release are based upon management's beliefs, assumptions and expectations of PRA's future operations and economic performance, taking into account currently available information. These statements are not statements of historical fact and there can be no assurance that we will achieve our targets. Forward-looking statements involve risks and uncertainties, some of which are not currently known to PRA.
Actual events or results may differ materially from those expressed or implied in any such forward-looking statements as a result of various factors, including our ability to successfully integrate the Aktiv Kapital business or fully realize the expected benefits of the acquisition of Aktiv Kapital; our ability to manage risks associated with our international operations, which risks will increase as a result of the Aktiv Kapital acquisition; our ability to realize the anticipated synergies and benefits of the Aktiv acquisition; a prolonged economic recovery or a deterioration in the economic or inflationary environment in the United States or Europe; changes in, or interpretations of, state or federal laws or the administrative practices of various bankruptcy courts, which may impact our ability to collect on our defaulted receivables; governmental investigations into or enforcement actions against our business practices; our ability to employ and retain qualified employees; the degree, nature, and resources of our competition; changes in interest or exchange rates; and the risk factors and other risks that are described from time to time in PRA's filings with the Securities and Exchange Commission including but not limited to PRA's annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, filed with the Securities and Exchange Commission and available through PRA's website, which contain detailed discussion of PRA's business, including risks and uncertainties that may affect future results.
Due to such uncertainties and risks, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of today. Information in this press release may be superseded by recent information or statements, which may be disclosed in later press releases, subsequent filings with the Securities and Exchange Commission or otherwise. Except as required by law, PRA assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA's expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part.
| Portfolio Recovery Associates, Inc. | ||||
| Unaudited Consolidated Income Statements | ||||
| (in thousands, except per share amounts) | ||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Revenues: | ||||
| Income recognized on finance receivables, net | $ 182,518 | $ 168,570 | $ 360,488 | $ 323,362 |
| Fee income | 14,825 | 14,391 | 30,777 | 29,158 |
| Total revenues | 197,343 | 182,961 | 391,265 | 352,520 |
| Operating expenses: | ||||
| Compensation and employee services | 52,461 | 48,202 | 103,846 | 93,199 |
| Legal collection fees | 11,371 | 10,609 | 22,204 | 21,138 |
| Legal collection costs | 25,429 | 22,717 | 51,962 | 43,218 |
| Agent fees | 1,464 | 1,280 | 2,914 | 2,889 |
| Outside fees and services | 12,113 | 8,634 | 22,904 | 16,081 |
| Communications | 7,958 | 6,675 | 17,112 | 14,754 |
| Rent and occupancy | 2,219 | 1,824 | 4,366 | 3,511 |
| Depreciation and amortization | 4,211 | 3,534 | 8,158 | 6,900 |
| Other operating expenses | 7,653 | 5,660 | 13,745 | 11,117 |
| Total operating expenses | 124,879 | 109,135 | 247,211 | 212,807 |
| Income from operations | 72,464 | 73,826 | 144,054 | 139,713 |
| Other income and (expense): | ||||
| Interest income | 1 | -- | 2 | -- |
| Interest expense | (5,068) | (2,923) | (9,928) | (5,612) |
| Other expense | (6,224) | -- | (6,224) | -- |
| Income before income taxes | 61,173 | 70,903 | 127,904 | 134,101 |
| Provision for income taxes | 23,666 | 27,489 | 49,557 | 52,170 |
| Net income | $ 37,507 | $ 43,414 | $ 78,347 | $ 81,931 |
| Adjustment for loss attributable to redeemable noncontrolling interest | -- | 185 | -- | 268 |
| Net income attributable to Portfolio Recovery Associates, Inc. | $ 37,507 | $ 43,599 | $ 78,347 | $ 82,199 |
| Net income per common share attributable to Portfolio Recovery Associates, Inc.: | ||||
| Basic | $ 0.75 | $ 0.86 | $ 1.57 | $ 1.62 |
| Diluted | $ 0.74 | $ 0.85 | $ 1.55 | $ 1.60 |
| Weighted average number of shares outstanding: | ||||
| Basic | 50,065 | 50,751 | 49,997 | 50,781 |
| Diluted | 50,437 | 51,183 | 50,400 | 51,228 |
| Portfolio Recovery Associates, Inc. | ||
| Unaudited Consolidated Balance Sheets | ||
| (in thousands, except per share amounts) | ||
| ASSETS |
June 30, 2014 |
December 31, 2013 |
| Cash and cash equivalents | $ 270,526 | $ 162,004 |
| Finance receivables, net | 1,219,595 | 1,239,191 |
| Accounts receivable, net | 12,458 | 12,359 |
| Income taxes receivable | 6,072 | 11,710 |
| Property and equipment, net | 38,902 | 31,541 |
| Net deferred tax asset | 1,404 | 1,361 |
| Goodwill | 105,122 | 103,843 |
| Intangible assets, net | 13,805 | 15,767 |
| Other assets | 27,478 | 23,456 |
| Total assets | $ 1,695,362 | $ 1,601,232 |
| LIABILITIES AND EQUITY | ||
| Liabilities: | ||
| Accounts payable | $ 20,396 | $ 14,819 |
| Accrued expenses and other liabilities | 33,594 | 27,655 |
| Accrued compensation | 14,320 | 27,431 |
| Net deferred tax liability | 226,011 | 210,071 |
| Borrowings | 448,785 | 451,780 |
| Total liabilities | 743,106 | 731,756 |
| Stockholders' equity: | ||
| Preferred stock, par value $0.01, authorized shares, 2,000, issued and outstanding shares - 0 | -- | -- |
| Common stock, par value $0.01, 100,000 authorized shares, 50,073 issued and outstanding shares at June 30, 2014, and 49,840 issued and outstanding shares at December 31, 2013 | 501 | 498 |
| Additional paid-in capital | 137,512 | 135,441 |
| Retained earnings | 807,852 | 729,505 |
| Accumulated other comprehensive income | 6,391 | 4,032 |
| Total stockholders' equity | 952,256 | 869,476 |
| Total liabilities and equity | $ 1,695,362 | $ 1,601,232 |
| Portfolio Recovery Associates, Inc. | ||
| Unaudited Consolidated Statements of Cash Flows | ||
| (in thousands) | ||
| Six Months Ended June 30, | ||
| 2014 | 2013 | |
| Cash flows from operating activities: | ||
| Net income | $ 78,347 | $ 81,931 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Amortization of share-based compensation | 5,437 | 6,651 |
| Depreciation and amortization | 8,158 | 6,900 |
| Amortization of debt discount | 2,005 | -- |
| Deferred tax expense | 15,940 | 2,488 |
| Changes in operating assets and liabilities: | ||
| Other assets | (3,874) | (1,284) |
| Accounts receivable | (34) | (46) |
| Accounts payable | 5,480 | (2,633) |
| Income tax payable/receivable, net | 5,665 | (5,748) |
| Accrued expenses | 5,886 | 7,313 |
| Accrued compensation | (20,635) | 1,757 |
| Net cash provided by operating activities | 102,375 | 97,329 |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | (13,224) | (6,639) |
| Acquisition of finance receivables, net of buybacks | (252,168) | (407,347) |
| Collections applied to principal on finance receivables | 272,153 | 248,498 |
| Net cash provided by/(used in) investing activities | 6,761 | (165,488) |
| Cash flows from financing activities: | ||
| Income tax benefit from share-based compensation | 4,152 | 2,659 |
| Proceeds from line of credit | -- | 217,000 |
| Principal payments on line of credit | -- | (128,000) |
| Repurchases of common stock | -- | (8,506) |
| Cash paid for noncontrolling interest | -- | (1,150) |
| Distributions paid to noncontrolling interest | -- | (51) |
| Principal payments on long-term debt | (5,000) | (2,768) |
| Net cash (used in)/provided by financing activities | (848) | 79,184 |
| Effect of exchange rate on cash | 234 | (253) |
| Net increase in cash and cash equivalents | 108,522 | 10,772 |
| Cash and cash equivalents, beginning of period | 162,004 | 32,687 |
| Cash and cash equivalents, end of period | $ 270,526 | $ 43,459 |
| Supplemental disclosure of cash flow information: | ||
| Cash paid for interest | $ 7,634 | $ 5,581 |
| Cash paid for income taxes | 25,414 | 52,809 |
| Noncash investing and financing activities: | ||
| Adjustment of the redeemable noncontrolling interest measurement amount | $ -- | $ (245) |
| Purchase of noncontrolling interest | -- | 9,162 |
| Distributions payable relating to noncontrolling interest | -- | 2 |
| Employee stock relinquished for payment of taxes | (7,515) | (4,025) |
| FINANCIAL HIGHLIGHTS | ||||||
|
As of and for the Three Months Ended June 30, |
As of and for the Six Months Ended June 30, |
|||||
| 2014 | 2013 | Change | 2014 | 2013 | Change | |
| EARNINGS (in thousands) | ||||||
| Income recognized on finance receivables, net | $ 182,518 | $ 168,570 | 8% | $ 360,488 | $ 323,362 | 11% |
| Fee income | 14,825 | 14,391 | 3% | 30,777 | 29,158 | 6% |
| Total revenues | 197,343 | 182,961 | 8% | 391,265 | 352,520 | 11% |
| Operating expenses | 124,879 | 109,135 | 14% | 247,211 | 212,807 | 16% |
| Income from operations | 72,464 | 73,826 | -2% | 144,054 | 139,713 | 3% |
| Net interest expense | 5,067 | 2,923 | 73% | 9,926 | 5,612 | 77% |
| Net income | 37,507 | 43,414 | -14% | 78,347 | 81,931 | -4% |
| Net income attributable to Portfolio Recovery Associates, Inc. | 37,507 | 43,599 | -14% | 78,347 | 82,199 | -5% |
| PERIOD-END BALANCES (in thousands) | ||||||
| Cash and cash equivalents | $ 270,526 | $ 43,459 | 522% | $ 270,526 | $ 43,459 | 522% |
| Finance receivables, net | 1,219,595 | 1,236,859 | -1% | 1,219,595 | 1,236,859 | -1% |
| Goodwill and intangible assets, net | 118,927 | 124,349 | -4% | 118,927 | 124,349 | -4% |
| Total assets | 1,695,362 | 1,457,246 | 16% | 1,695,362 | 1,457,246 | 16% |
| Borrowings | 448,785 | 413,774 | 8% | 448,785 | 413,774 | 8% |
| Total liabilities | 743,106 | 655,012 | 13% | 743,106 | 655,012 | 13% |
| Total equity | 952,256 | 791,898 | 20% | 952,256 | 791,898 | 20% |
| FINANCE RECEIVABLE COLLECTIONS (dollars in thousands) | ||||||
| Cash collections | $ 319,274 | $ 296,397 | 8% | $ 632,641 | $ 571,860 | 11% |
| Cash collections on fully amortized pools | 16,943 | 10,612 | 60% | 33,459 | 16,957 | 97% |
| Principal amortization without allowance charges | 139,055 | 129,012 | 8% | 276,405 | 247,510 | 12% |
| Principal amortization with allowance charges | 136,756 | 127,827 | 7% | 272,153 | 248,498 | 10% |
| Principal amortization w/ allowance charges as % of cash collections: | ||||||
| Including fully amortized pools | 42.8% | 43.1% | -1% | 43.0% | 43.5% | -1% |
| Excluding fully amortized pools | 45.2% | 44.7% | 1% | 45.4% | 44.8% | 1% |
| ALLOWANCE FOR FINANCE RECEIVABLES (dollars in thousands) | ||||||
| Allowance (reversal)/charge | (2,299) | (1,185) | 94% | (4,252) | 988 | -530% |
| Allowance (reversal)/charge to period-end net finance receivables | -0.2% | -0.1% | 97% | -0.3% | 0.1% | -537% |
| Allowance (reversal)/charge to net finance receivable income | -1.3% | -0.7% | 79% | -1.2% | 0.3% | -486% |
| Allowance (reversal)/charge to cash collections | -0.7% | -0.4% | 80% | -0.7% | 0.2% | -489% |
| PURCHASES OF FINANCE RECEIVABLES (dollars in thousands) | ||||||
| Purchase price - core | $ 91,904 | $ 113,314 | -19% | $ 170,989 | $ 240,265 | -29% |
| Face value - core | 770,985 | 1,178,229 | -35% | 1,608,021 | 2,577,189 | -38% |
| Purchase price - bankruptcy | 16,187 | 82,273 | -80% | 81,688 | 168,868 | -52% |
| Face value - bankruptcy | 180,179 | 1,926,515 | -91% | 737,399 | 2,363,023 | -69% |
| Purchase price - other | 1,121 | 4,881 | -77% | 9,249 | 6,268 | 48% |
| Face value - other | 15,747 | 81,852 | -81% | 534,865 | 100,422 | 433% |
| Purchase price - total | 109,212 | 200,468 | -46% | 261,926 | 415,401 | -37% |
| Face value - total | 966,911 | 3,186,596 | -70% | 2,880,285 | 5,040,634 | -43% |
| Number of portfolios - total | 85 | 94 | -10% | 189 | 185 | 2% |
| ESTIMATED REMAINING COLLECTIONS (in thousands) | ||||||
| Estimated remaining collections - core | $ 1,948,414 | $ 1,694,262 | 15% | $ 1,948,414 | $ 1,694,262 | 15% |
| Estimated remaining collections - bankruptcy | 729,406 | 925,223 | -21% | 729,406 | 925,223 | -21% |
| Estimated remaining collections - other | 24,119 | 16,744 | 44% | 24,119 | 16,744 | 44% |
| Estimated remaining collections - total | 2,701,939 | 2,636,229 | 2% | 2,701,939 | 2,636,229 | 2% |
| SHARE DATA-ADJUSTED (7) (share amounts in thousands) | ||||||
| Net income per common share - diluted | $ 0.74 | $ 0.85 | -13% | $ 1.55 | $ 1.60 | -3% |
| Weighted average number of shares outstanding - diluted | 50,437 | 51,183 | -1% | 50,400 | 51,228 | -2% |
| Shares repurchased | -- | 166 | -100% | -- | 214 | -100% |
| Average price paid per share repurchased (including acquisitions costs) | $ -- | $ 39.82 | -100% | $ -- | $ 39.71 | -100% |
| Closing market price | $ 59.53 | $ 51.21 | 16% | $ 59.53 | $ 51.21 | 16% |
| RATIOS AND OTHER DATA (dollars in thousands) | ||||||
| Return on average equity (1) | 16.0% | 22.5% | -29% | 17.1% | 21.8% | -22% |
| Return on revenue (2) | 19.0% | 23.7% | -20% | 20.0% | 23.2% | -14% |
| Return on average assets (3) | 9.0% | 12.1% | -26% | 9.5% | 11.7% | -19% |
| Operating margin (4) | 36.7% | 40.4% | -9% | 36.8% | 39.6% | -7% |
| Operating expense to cash receipts (5) | 37.4% | 35.1% | 6% | 37.3% | 35.4% | 5% |
| Debt to equity (6) | 47.1% | 52.3% | -10% | 47.1% | 52.3% | -10% |
| Number of collectors | 2,258 | 2,190 | 3% | 2,258 | 2,190 | 3% |
| Number of full-time equivalent employees | 3,567 | 3,362 | 6% | 3,567 | 3,362 | 6% |
| Cash receipts (5) | $ 334,099 | $ 310,788 | 8% | $ 663,418 | $ 601,018 | 10% |
| Line of credit - unused portion at period end | 650,000 | 184,000 | 253% | 650,000 | 184,000 | 253% |
| (1) Calculated as annualized net income divided by average equity for the period | ||||||
| (2) Calculated as net income divided by total revenues | ||||||
| (3) Calculated as annualized net income divided by average assets for the period | ||||||
| (4) Calculated as income from operations divided by total revenues | ||||||
| (5) "Cash receipts" is defined as cash collections plus fee income | ||||||
| (6) For purposes of this ratio, "debt" equals borrowings | ||||||
| (7) All per share data has been adjusted for a 3 for 1 stock split by means of a stock dividend which was declared on June 10, 2013 and payable August 1, 2013 to holders of record as of July 1, 2013 | ||||||
| FINANCIAL HIGHLIGHTS | |||||
| For the Quarter Ended | |||||
|
June 30 2014 |
March 31 2014 |
December 31 2013 |
September 30 2013 |
June 30 2013 |
|
| EARNINGS (in thousands) | |||||
| Income recognized on finance receivables, net | $ 182,518 | $ 177,970 | $ 168,728 | $ 171,456 | $ 168,570 |
| Fee income | 14,825 | 15,952 | 16,125 | 26,306 | 14,391 |
| Total revenues | 197,343 | 193,922 | 184,853 | 197,762 | 182,961 |
| Operating expenses | 124,879 | 122,332 | 106,503 | 118,294 | 109,135 |
| Income from operations | 72,464 | 71,590 | 78,350 | 79,468 | 73,826 |
| Net interest expense | 5,067 | 4,859 | 4,860 | 3,995 | 2,923 |
| Net income | 37,507 | 40,840 | 45,777 | 49,211 | 43,414 |
| Net income attributable to Portfolio Recovery Associates, Inc. | 37,507 | 40,840 | 45,777 | 47,338 | 43,599 |
| PERIOD-END BALANCES (in thousands) | |||||
| Cash and cash equivalents | $ 270,526 | $ 191,819 | $ 162,004 | $ 108,705 | $ 43,459 |
| Finance receivables, net | 1,219,595 | 1,253,961 | 1,239,191 | 1,256,822 | 1,236,859 |
| Goodwill and intangible assets, net | 118,927 | 118,800 | 119,610 | 119,636 | 124,349 |
| Total assets | 1,695,362 | 1,642,613 | 1,601,232 | 1,547,985 | 1,457,246 |
| Borrowings | 448,785 | 450,278 | 451,780 | 452,229 | 413,774 |
| Total liabilities | 743,106 | 732,395 | 731,756 | 721,001 | 655,012 |
| Total equity | 952,256 | 910,218 | 869,476 | 816,647 | 791,898 |
| FINANCE RECEIVABLE COLLECTIONS (dollars in thousands) | |||||
| Cash collections | $ 319,274 | $ 313,367 | $ 278,926 | $ 291,651 | $ 296,397 |
| Cash collections on fully amortized pools | 16,943 | 16,516 | 9,801 | 8,762 | 10,612 |
| Principal amortization without allowance charges | 139,055 | 137,350 | 110,626 | 122,776 | 129,012 |
| Principal amortization with allowance charges | 136,756 | 135,397 | 110,197 | 120,195 | 127,827 |
| Principal amortization w/ allowance charges as % of cash collections: | |||||
| Including fully amortized pools | 42.8% | 43.2% | 39.5% | 41.2% | 43.1% |
| Excluding fully amortized pools | 45.2% | 45.6% | 40.9% | 42.5% | 44.7% |
| ALLOWANCE FOR FINANCE RECEIVABLES (dollars in thousands) | |||||
| Allowance (reversal)/charge | (2,299) | (1,953) | (429) | (2,581) | (1,185) |
| Allowance (reversal)/charge to period-end net finance receivables | -0.2% | -0.2% | 0.0% | -0.2% | -0.1% |
| Allowance (reversal)/charge to net finance receivable income | -1.3% | -1.1% | -0.3% | -1.5% | -0.7% |
| Allowance (reversal)/charge to cash collections | -0.7% | -0.6% | -0.2% | -0.9% | -0.4% |
| PURCHASES OF FINANCE RECEIVABLES (dollars in thousands) | |||||
| Purchase price - core | $ 91,904 | $ 79,085 | $ 65,759 | $ 89,044 | $ 113,314 |
| Face value - core | 770,985 | 837,036 | 774,543 | 1,352,877 | 1,178,229 |
| Purchase price - bankruptcy | 16,187 | 65,501 | 31,987 | 41,794 | 82,273 |
| Face value - bankruptcy | 180,179 | 557,220 | 235,064 | 215,957 | 1,926,515 |
| Purchase price - other | 1,121 | 8,128 | 1,763 | 11,037 | 4,881 |
| Face value - other | 15,747 | 519,118 | 22,493 | 218,528 | 81,852 |
| Purchase price - total | 109,212 | 152,714 | 99,509 | 141,875 | 200,468 |
| Face value - total | 966,911 | 1,913,374 | 1,032,100 | 1,787,362 | 3,186,596 |
| Number of portfolios - total | 85 | 104 | 83 | 79 | 94 |
| ESTIMATED REMAINING COLLECTIONS (in thousands) | |||||
| Estimated remaining collections - core | $ 1,948,414 | $ 1,891,511 | $ 1,824,132 | $ 1,762,369 | $ 1,694,262 |
| Estimated remaining collections - bankruptcy | 729,406 | 788,774 | 822,988 | 877,722 | 925,223 |
| Estimated remaining collections - other | 24,119 | 24,439 | 22,150 | 32,272 | 16,744 |
| Estimated remaining collections - total | 2,701,939 | 2,704,724 | 2,669,270 | 2,672,363 | 2,636,229 |
| SHARE DATA-ADJUSTED (7) (share amounts in thousands) | |||||
| Net income per common share - diluted | $ 0.74 | $ 0.81 | $ 0.91 | $ 0.93 | $ 0.85 |
| Weighted average number of shares outstanding - diluted | 50,437 | 50,363 | 50,375 | 50,660 | 51,183 |
| Shares repurchased | -- | -- | -- | 989 | 166 |
| Average price paid per share repurchased (including acquisitions costs) | $ -- | $ -- | $ -- | $ 50.55 | $ 39.82 |
| Closing market price | $ 59.53 | $ 57.86 | $ 52.84 | $ 59.93 | $ 51.21 |
| RATIOS AND OTHER DATA (dollars in thousands) | |||||
| Return on average equity (1) | 16.0% | 18.2% | 21.5% | 23.5% | 22.5% |
| Return on revenue (2) | 19.0% | 21.1% | 24.8% | 24.9% | 23.7% |
| Return on average assets (3) | 9.0% | 10.0% | 11.5% | 12.5% | 12.1% |
| Operating margin (4) | 36.7% | 36.9% | 42.4% | 40.2% | 40.4% |
| Operating expense to cash receipts (5) | 37.4% | 37.1% | 36.1% | 37.2% | 35.1% |
| Debt to equity (6) | 47.1% | 49.5% | 52.0% | 55.4% | 52.3% |
| Number of collectors | 2,258 | 2,379 | 2,313 | 2,054 | 2,190 |
| Number of full-time equivalent employees | 3,567 | 3,621 | 3,543 | 3,223 | 3,362 |
| Cash receipts (5) | $ 334,099 | $ 329,319 | $ 295,051 | $ 317,957 | $ 310,788 |
| Line of credit - unused portion at period end | 650,000 | 435,500 | 435,500 | 435,500 | 184,000 |
| (1) Calculated as annualized net income divided by average equity for the period | |||||
| (2) Calculated as net income divided by total revenues | |||||
| (3) Calculated as annualized net income divided by average assets for the period | |||||
| (4) Calculated as income from operations divided by total revenues | |||||
| (5) "Cash receipts" is defined as cash collections plus fee income | |||||
| (6) For purposes of this ratio, "debt" equals borrowings | |||||
| (7) All per share data has been adjusted to reflect the 3-for-1 stock split by means of a stock dividend which was declared on June 10, 2013 and payable August 1, 2013 to holders of record as of July 1, 2013 | |||||
| Summary Portfolio Data at June 30, 2014, Entire Domestic Portfolio | ||||||
| ($ in thousands) | ||||||
|
Purchase Period |
Purchase Price |
Total Estimated Collections |
Net Finance Receivables Balance |
Actual Cash Collections Including Cash Sales |
Estimated Remaining Collections |
Total Estimated Collections to Purchase Price |
| 1996 | $ 3,080 | $ 10,227 | $ -- | $ 10,214 | $ 13 | 332% |
| 1997 | 7,685 | 25,592 | -- | 25,534 | 58 | 333% |
| 1998 | 11,089 | 37,634 | -- | 37,426 | 208 | 339% |
| 1999 | 18,898 | 69,766 | -- | 69,495 | 271 | 369% |
| 2000 | 25,020 | 118,549 | -- | 117,130 | 1,419 | 474% |
| 2001 | 33,481 | 178,921 | -- | 176,789 | 2,132 | 534% |
| 2002 | 42,325 | 204,216 | -- | 199,971 | 4,245 | 482% |
| 2003 | 61,447 | 273,734 | -- | 267,451 | 6,283 | 445% |
| 2004 | 59,176 | 206,543 | -- | 200,122 | 6,421 | 349% |
| 2005 | 143,167 | 331,551 | 5,826 | 314,819 | 16,732 | 232% |
| 2006 | 107,666 | 228,180 | 6,013 | 211,770 | 16,410 | 212% |
| 2007 | 258,364 | 541,739 | 18,192 | 489,963 | 51,776 | 210% |
| 2008 | 275,114 | 537,362 | 22,193 | 486,888 | 50,474 | 195% |
| 2009 | 281,313 | 921,889 | 15,940 | 803,271 | 118,618 | 328% |
| 2010 | 357,767 | 1,061,805 | 56,506 | 829,401 | 232,404 | 297% |
| 2011 | 392,778 | 1,039,572 | 124,237 | 658,407 | 381,165 | 265% |
| 2012 | 508,426 | 1,036,009 | 268,072 | 483,553 | 552,456 | 204% |
| 2013 | 621,545 | 1,159,021 | 453,419 | 324,169 | 834,852 | 186% |
| 2014 | 253,011 | 434,437 | 234,218 | 32,552 | 401,885 | 172% |
| Total | $ 3,461,352 | $ 8,416,747 | $ 1,204,616 | $ 5,738,925 | $ 2,677,822 | 243% |
| Summary Portfolio Data at June 30, 2014, Purchased Bankruptcy Portfolio - Domestic | ||||||
| ($ in thousands) | ||||||
|
Purchase Period |
Purchase Price |
Total Estimated Collections |
Net Finance Receivables Balance |
Actual Cash Collections Including Cash Sales |
Estimated Remaining Collections |
Total Estimated Collections to Purchase Price |
| 1996-2003 | $ -- | $ -- | $ -- | $ -- | $ -- | 0% |
| 2004 | 7,468 | 14,598 | -- | 14,538 | 60 | 195% |
| 2005 | 29,301 | 43,794 | 26 | 43,699 | 95 | 149% |
| 2006 | 17,627 | 31,913 | 52 | 31,716 | 197 | 181% |
| 2007 | 78,526 | 106,108 | 319 | 104,523 | 1,585 | 135% |
| 2008 | 108,584 | 169,098 | 1,525 | 165,351 | 3,747 | 156% |
| 2009 | 156,027 | 480,855 | 1,771 | 442,339 | 38,516 | 308% |
| 2010 | 209,160 | 536,047 | 29,442 | 445,475 | 90,572 | 256% |
| 2011 | 181,784 | 326,398 | 64,713 | 208,701 | 117,697 | 180% |
| 2012 | 252,363 | 348,010 | 137,798 | 170,889 | 177,121 | 138% |
| 2013 | 229,189 | 303,806 | 164,703 | 93,104 | 210,702 | 133% |
| 2014 | 81,587 | 103,526 | 69,938 | 14,412 | 89,114 | 127% |
| Total | $ 1,351,616 | $ 2,464,153 | $ 470,287 | $ 1,734,747 | $ 729,406 | 182% |
| Summary Portfolio Data at June 30, 2014, Core Portfolio - Domestic | ||||||
| ($ in thousands) | ||||||
|
Purchase Period |
Purchase Price |
Total Estimated Collections |
Net Finance Receivables Balance |
Actual Cash Collections Including Cash Sales |
Estimated Remaining Collections |
Total Estimated Collections to Purchase Price |
| 1996 | $ 3,080 | $ 10,227 | $ -- | $ 10,214 | $ 13 | 332% |
| 1997 | 7,685 | 25,592 | -- | 25,534 | 58 | 333% |
| 1998 | 11,089 | 37,634 | -- | 37,426 | 208 | 339% |
| 1999 | 18,898 | 69,766 | -- | 69,495 | 271 | 369% |
| 2000 | 25,020 | 118,549 | -- | 117,130 | 1,419 | 474% |
| 2001 | 33,481 | 178,921 | -- | 176,789 | 2,132 | 534% |
| 2002 | 42,325 | 204,216 | -- | 199,971 | 4,245 | 482% |
| 2003 | 61,447 | 273,734 | -- | 267,451 | 6,283 | 445% |
| 2004 | 51,708 | 191,945 | -- | 185,584 | 6,361 | 371% |
| 2005 | 113,866 | 287,757 | 5,800 | 271,120 | 16,637 | 253% |
| 2006 | 90,039 | 196,267 | 5,961 | 180,054 | 16,213 | 218% |
| 2007 | 179,838 | 435,631 | 17,873 | 385,440 | 50,191 | 242% |
| 2008 | 166,530 | 368,264 | 20,668 | 321,537 | 46,727 | 221% |
| 2009 | 125,286 | 441,034 | 14,169 | 360,932 | 80,102 | 352% |
| 2010 | 148,607 | 525,758 | 27,064 | 383,926 | 141,832 | 354% |
| 2011 | 210,994 | 713,174 | 59,524 | 449,706 | 263,468 | 338% |
| 2012 | 256,063 | 687,999 | 130,274 | 312,664 | 375,335 | 269% |
| 2013 | 392,356 | 855,215 | 288,716 | 231,065 | 624,150 | 218% |
| 2014 | 171,424 | 330,911 | 164,280 | 18,140 | 312,771 | 193% |
| Total | $ 2,109,736 | $ 5,952,594 | $ 734,329 | $ 4,004,178 | $ 1,948,416 | 282% |
Use of Non-GAAP Financial Measures
Management believes that the presentation of certain financial information in this press release, excluding the costs associated with the Aktiv Kapital acquisition and foreign exchange losses that were recorded during the three and six months ended June 30, 2014, which is non-GAAP financial information, is useful to investors and improves the comparability of the Company's ongoing operational results between periods. The non-GAAP information should be considered in addition to, not as a substitute for, financial information prepared in accordance with GAAP.
| Portfolio Recovery Associates, Inc. | ||||||
| Reconciliation of Net Income, Earnings Per Share and Financial Ratios to GAAP Net Income, Earnings Per Share and Financial Ratios | ||||||
| (in thousands, except per share amounts) | ||||||
|
GAAP Three Months Ended June 30, 2014 |
Less: Adjustments Related to Aktiv Kapital Acquisition |
Adjusted Three Months Ended June 30, 2014 |
GAAP Six Months Ended June 30, 2014 |
Less: Adjustments Related to Aktiv Kapital Acquisition |
Adjusted Six Months Ended June 30, 2014 |
|
| Revenues: | ||||||
| Income recognized on finance receivables, net | $ 182,518 | $ 182,518 | $ 360,488 | $ 360,488 | ||
| Fee income | 14,825 | 14,825 | 30,777 | 30,777 | ||
| Total revenues | 197,343 | 197,343 | 391,265 | 391,265 | ||
| Operating expenses: | ||||||
| Compensation and employee services | 52,461 | 52,461 | 103,846 | 103,846 | ||
| Legal collection fees | 11,371 | 11,371 | 22,204 | 22,204 | ||
| Legal collection costs | 25,429 | 25,429 | 51,962 | 51,962 | ||
| Agent fees | 1,464 | 1,464 | 2,914 | 2,914 | ||
| Outside fees and services | 12,113 | (4,052) | 8,061 | 22,904 | (8,413) | 14,491 |
| Communications | 7,958 | 7,958 | 17,112 | 17,112 | ||
| Rent and occupancy | 2,219 | 2,219 | 4,366 | 4,366 | ||
| Depreciation and amortization | 4,211 | 4,211 | 8,158 | 8,158 | ||
| Other operating expenses | 7,653 | 7,653 | 13,745 | 13,745 | ||
| Total operating expenses | 124,879 | (4,052) | 120,827 | 247,211 | (8,413) | 238,798 |
| Income from operations | 72,464 | 4,052 | 76,516 | 144,054 | 8,413 | 152,467 |
| Other income and (expense): | ||||||
| Interest income | 1 | 1 | 2 | 2 | ||
| Interest expense | (5,068) | (5,068) | (9,928) | (9,928) | ||
| Other expense | (6,224) | 6,224 | -- | (6,224) | 6,224 | -- |
| Income before income taxes | 61,173 | 10,276 | 71,449 | 127,904 | 14,637 | 142,541 |
| Provision for income taxes | 23,666 | 3,976 | 27,642 | 49,557 | 5,671 | 55,228 |
| Net income | $ 37,507 | $ 6,300 | $ 43,807 | $ 78,347 | $ 8,966 | $ 87,313 |
| Adjustment for loss attributable to redeemable noncontrolling interest | -- | -- | -- | -- | ||
| Net income attributable to Portfolio Recovery Associates, Inc. | $ 37,507 | $ 6,300 | $ 43,807 | $ 78,347 | $ 8,966 | $ 87,313 |
| Net income per common share attributable to Portfolio Recovery Associates, Inc.: | ||||||
| Basic | $ 0.75 | $ 0.13 | $ 0.88 | $ 1.57 | $ 0.18 | $ 1.75 |
| Diluted | $ 0.74 | $ 0.13 | $ 0.87 | $ 1.55 | $ 0.18 | $ 1.73 |
| Weighted average number of shares outstanding: | ||||||
| Basic | 50,065 | 50,065 | 49,997 | 49,997 | ||
| Diluted | 50,437 | 50,437 | 50,400 | 50,400 | ||
| Operating margin: | 36.7% | 38.8% | 36.8% | 39.0% | ||
| Net income margin: | 19.0% | 22.2% | 20.0% | 22.3% | ||
| Return on average equity: | 16.0% | 18.7% | 17.1% | 19.0% | ||