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PRA Reports Record Third Quarter 2013 Results

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NORFOLK, Va., Oct. 30, 2013 (GLOBE NEWSWIRE) -- Portfolio Recovery Associates, Inc. (Nasdaq:PRAA), a financial and business services company operating in the U.S. and U.K, today reported its third quarter 2013 financial results.

Third Quarter Highlights

  • Cash collections of $291.7 million, up 27% from the third quarter of 2012.
  • Record revenues of $197.8 million, up 31%.
  • Record net income attributable to PRA of $47.3 million, up 42%.
  • $0.93 diluted EPS, compared with $0.65 a year ago, up 43%, adjusted for a 3:1 stock split effective August 1, 2013.
  • Fee income of $26.3 million, up 78%.
  • $6.4 million goodwill impairment charge for Location Services business.
  • 23.5% return on average equity, annualized.
  • $141.9 million investment in new portfolio purchases.

"In the third quarter, PRA continued the strong financial results of the first two quarters of 2013. Our employees again delivered record revenue and profitability for stockholders, as well as continued, significant investment in new portfolios of distressed debt," said Steve Fredrickson, chairman, president and chief executive officer, PRA.

"PRA's renewed focus on our fee-for-service businesses also contributed to our third quarter profitability. Fee income from these businesses substantially increased to $26.3 million during the quarter, aided by a single, large Claims Compensation Bureau case, helping to drive PRA's bottom-line results," Fredrickson said.

REVENUES

  • Revenues were $197.8 million in the third quarter 2013, up 31% from a year ago. Net finance receivables income increased 26% to $171.5 million in the quarter, from $135.8 million a year ago. And, fee income increased 78% from a year ago to $26.3 million.

Cash Collections from Finance Receivables

  • Cash collections increased 27% over the year-ago period to $291.7 million, including bankruptcy court trustee payments of $120.6 million; $89.5 million in call center and other collections; and $81.6 million in legal collections from customers with an ability to pay their debt, but who refuse attempts to collect.

Cash Collection Source ($ in thousands) Q32013 Q22013 Q12013 Q42012 Q32012
Call Center and Other Collections $ 89,512 $ 90,229 $ 89,037 $ 72,624 $ 72,394
External Legal Collections 48,274 50,131 47,910 41,521 39,913
Internal Legal Collections 33,288 30,365 29,283 23,968 25,650
Bankruptcy Court Trustee Payments 120,577 125,672 109,233 91,098 91,095
Total Cash Collections $ 291,651 $ 296,397 $ 275,463 $ 229,211 $ 229,052

  • Principal amortization was 41.2% of cash collections, compared with 40.7% in the year-ago quarter. Principal amortization included a net allowance reversal of $2.6 million recorded against certain pools of finance receivables in the quarter, compared with a net allowance charge of $1.6 million recorded a year ago.

Fee Income

  • PRA's fee-based businesses generated $26.3 million in fee income in the quarter, compared with $14.8 million a year ago. The change was due primarily to a $10.5 million increase in fee income generated by Claims Compensation Bureau, largely attributable to a single case. Government Services fee income also increased, while fee income generated by the Company's Location Services unit declined.

EXPENSES AND OPERATING INCOME

  • Operating expenses were $118.3 million in the third quarter of 2013, up $24.8 million or 27% from the year-ago quarter.
  • PRA recorded a $6.4 million impairment of goodwill in the third quarter of 2013. This non-cash charge represents the full amount of goodwill previously recorded for the Company's Location Services subsidiary, and was taken primarily as a result of recent operating losses coupled with the loss of a significant client late in the quarter. Despite this charge, PRA is optimistic about the future of the Location Services business, and continues to invest in new technology, personnel, and facilities.
  • Operating income was $79.5 million, compared with $57.1 million a year ago, an increase of 39%. The operating margin increased to 40.2% from 37.9% in the third quarter of last year.
  • The provision for income taxes was $26.3 million in the third quarter of 2013, up 21% from the third quarter of 2012. The provision in the third quarter of 2013 was positively impacted by a reduction in the Company's blended domestic state tax rate due to the enactment of certain state tax apportionment and other changes. The Company's provision for income taxes was 34.8% of income before taxes in the third quarter of 2013, compared with 39.6% in the year-earlier quarter. While these changes are expected to have some future benefit, the majority of the impact was due to the changes described above, and is not expected to reoccur.

PORTFOLIO PURCHASES

  • PRA invested $141.9 million in new portfolio purchases from U.S and U.K. creditors in the third quarter of 2013, compared with $103.0 million a year ago. Receivables purchased were acquired in 79 portfolios from 19 different sellers. The company has invested $756.4 million in portfolio purchases over the trailing twelve months.

Portfolio Purchase Source
($ in thousands) Q32013 Q22013 Q12013 Q42012 Q32012
Core Customer Debt $ 100,081 $ 118,195 $ 128,338 $ 88,107 $ 61,684
Bankruptcy Court Claims 41,794 82,273 86,595 111,001 41,277
Total Portfolio Purchases $ 141,875 $ 200,468 $ 214,933 $ 199,108 $ 102,961

  • Core customer debt purchased in the third quarter of 2013 included $89.0 million in U.S. accounts and $11.0 million in U.K. accounts.

BALANCE SHEET

  • Borrowings totaled $452.2 million at September 30, 2013, and consisted of $255.8 million in convertible senior notes and $196.4 million in other long-term debt. Total borrowings were $250.7 million at September 30, 2012.
  • During the quarter, the Company issued $287.5 million aggregate principal amount of 3.00% convertible senior notes due 2020. Proceeds were used to temporarily repay debt outstanding under its revolving credit facility and to repurchase approximately $50 million of common stock. The remaining proceeds were held in cash equivalent balances at quarter-end. As a result, cash and cash equivalents increased from $43.5 million at June 30, 2013 to $108.7 million at September 30, 2013. Cash and cash equivalents were $31.5 million at September 30, 2012.
  • In August, the Company expanded its credit facility from $597.5 million to $633.0 million, which includes a $415.5 million domestic revolving credit facility and a $20 million multi-currency revolving credit facility, neither of which were drawn at September 30, 2013.
  • Net deferred tax liabilities were $200.1 million at September 30, 2013, compared with $186.5 million a year ago.
  • Stockholders' equity increased in the quarter to $816.6 million from $670.5 million at September 30, 2013.

Conference Call Information

PRA will hold a conference call today with investors at 5:30 p.m. ET to discuss its third quarter 2013 results. Investors may access the call by calling 888-695-7639 in the U.S. or 970-315-0482 outside the U.S. The conference ID is 72546774. A replay will be available approximately one hour after the call ends and will remain available until November 6, 2013. Investors may access the replay of the call by calling 855-859-2056 in the U.S. or 404-537-3406 outside the U.S. To access the replay, use the conference ID 72546774. Investors also may listen to the conference call via webcast, both live and archived, at http://ir.PortfolioRecovery.com/events.cfm.

About PRA

As a leader in the U.S. debt buying industry, Portfolio Recovery Associates, Inc. (PRA) returns capital to banks and other creditors that helps expand financial services for consumers. PRA collaborates with its customers to create affordable, realistic debt repayment plans. The company also provides a broad range of fee-based services to local governments and law enforcement, U.S. businesses, institutional investors, global hedge funds, and U.K. banks and creditors.

PRA was named one of Fortune's 100 Fastest-Growing Companies for 2013 and 2012. The company also has been named to the Top 25 of Forbes' Best Small Companies in America for the past two years, and has been annually ranked on Forbes' list since 2007. For more information, please visit www.PortfolioRecovery.com.

About Forward-Looking Statements

Statements 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 future revenue and earnings growth, statements with respect to future contributions of its subsidiaries to earnings and future portfolio-purchase opportunities, 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. Forward-looking statements include references to PRA's presentations and webcasts. 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. Forward-looking statements involve risks and uncertainties, some of which are not currently known to us. Actual events or results may differ from those expressed or implied in any such forward-looking statements as a result of various factors. Additional risk factors and other risks are described from time to time in PRA's filings with the Securities and Exchange Commission (SEC) including but not limited to its annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, filed with the SEC and available through PRA's website, which contain a more detailed discussion of PRA's business, including risks and uncertainties that may affect future results. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Information in this press release may be superseded by more recent information or statements, which may be disclosed in later press releases, subsequent filings with the SEC 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 Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2013 2012 2013 2012
Revenues:
Income recognized on finance receivables, net $ 171,456 $ 135,754 $ 494,818 $ 392,566
Fee income 26,306 14,765 55,464 45,983
Total revenues 197,762 150,519 550,282 438,549
Operating expenses:
Compensation and employee services 52,882 41,334 146,081 123,508
Legal collection fees 10,206 8,635 31,343 25,241
Legal collection costs 19,801 15,810 63,020 57,705
Agent fees 1,404 1,545 4,293 4,495
Outside fees and services 8,707 10,131 24,789 21,575
Communications 7,786 6,777 24,307 22,037
Rent and occupancy 1,950 1,786 5,462 5,053
Depreciation and amortization 3,753 3,623 10,653 10,833
Other operating expenses 5,408 3,820 14,756 12,027
Impairment of goodwill 6,397 -- 6,397 --
Total operating expenses 118,294 93,461 331,101 282,474
Income from operations 79,468 57,058 219,181 156,075
Other income and (expense):
Interest income -- -- -- 8
Interest expense (3,995) (2,189) (9,607) (7,223)
Income before income taxes 75,473 54,869 209,574 148,860
Provision for income taxes 26,262 21,742 78,432 58,493
Net income $ 49,211 $ 33,127 $ 131,142 $ 90,367
Adjustment for income/(loss) attributable to redeemable noncontrolling interest 1,873 (187) 1,605 (424)
Net income attributable to Portfolio Recovery Associates, Inc. $ 47,338 $ 33,314 $ 129,537 $ 90,791
Net income per common share attributable to Portfolio Recovery Associates, Inc.:
Basic $ 0.94 $ 0.66 $ 2.56 $ 1.78
Diluted $ 0.93 $ 0.65 $ 2.54 $ 1.77
Weighted average number of shares outstanding:
Basic 50,154 50,643 50,571 51,102
Diluted 50,660 51,066 51,039 51,420
Portfolio Recovery Associates, Inc.
Unaudited Consolidated Balance Sheets
(in thousands, except per share amounts)
September 30, December 31,
ASSETS 2013 2012
Cash and cash equivalents $ 108,705 $ 32,687
Finance receivables, net 1,256,822 1,078,951
Accounts receivable, net 12,047 10,486
Income taxes receivable 2,708 --
Property and equipment, net 28,059 25,312
Goodwill 102,891 109,488
Intangible assets, net 16,746 20,364
Other assets 20,007 11,668
Total assets $ 1,547,985 $ 1,288,956
LIABILITIES AND EQUITY
Liabilities:
Accounts payable $ 14,446 $ 12,155
Accrued expenses and other liabilities 33,023 18,953
Income taxes payable 740 3,125
Accrued payroll and bonuses 20,454 12,804
Net deferred tax liability 200,109 185,277
Line of credit -- 127,000
Long-term debt 452,229 200,542
Total liabilities 721,001 559,856
Redeemable noncontrolling Interest 10,336 20,673
Stockholders' equity:
Preferred stock, par value $0.01, authorized shares, 2,000,
issued and outstanding shares - 0 -- --
Common stock, par value $0.01, 60,000 authorized shares,
49,747 issued and outstanding shares at September 30, 2013,
and 50,727 issued and outstanding shares at December 31, 2012 498 507
Additional paid-in capital 129,570 150,878
Retained earnings 683,728 554,191
Accumulated other comprehensive income 2,852 2,851
Total stockholders' equity 816,648 708,427
Total liabilities and equity $ 1,547,985 $ 1,288,956
Portfolio Recovery Associates, Inc.
Unaudited Consolidated Statements of Cash Flows
(in thousands)
Nine Months Nine Months
Ended Ended
September 30, September 30,
2013 2012
Cash flows from operating activities:
Net income $ 131,142 $ 90,367
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of share-based compensation 10,209 8,361
Depreciation and amortization 10,653 10,833
Impairment of goodwill 6,397 --
Deferred tax expense/(benefit) 2,359 (7,377)
Changes in operating assets and liabilities:
Other assets (1,147) (353)
Accounts receivable (1,497) 1,579
Accounts payable 2,237 (856)
Income taxes (5,062) (7,024)
Accrued expenses 9,129 931
Accrued payroll and bonuses 7,660 (2,799)
Net cash provided by operating activities 172,080 93,662
Cash flows from investing activities:
Purchases of property and equipment (9,913) (5,362)
Acquisition of finance receivables, net of buybacks (546,201) (329,444)
Collections applied to principal on finance receivables 368,693 286,907
Business acquisition, net of cash acquired -- (48,653)
Net cash used in investing activities (187,421) (96,552)
Cash flows from financing activities:
Income tax benefit from share-based compensation 2,742 1,484
Proceeds from line of credit 217,000 160,000
Principal payments on line of credit (344,000) (130,000)
Repurchases of common stock (58,511) (22,726)
Cash paid for purchase of portion of noncontrolling interest (1,150) --
Distributions paid to noncontrolling interest (51) --
Principal payments on long-term debt (4,109) (572)
Gross proceeds from convertible debt 287,500 --
Issuance costs relating to convertible debt (8,215) --
Net cash provided by financing activities 91,206 8,186
Effect of exchange rate on cash 153 (505)
Net increase in cash and cash equivalents 76,018 4,791
Cash and cash equivalents, beginning of year 32,687 26,697
Cash and cash equivalents, end of period $ 108,705 $ 31,488
Supplemental disclosure of cash flow information:
Cash paid for interest $ 9,333 $ 7,577
Cash paid for income taxes 78,434 71,521
Noncash investing and financing activities:
Adjustment of the noncontrolling interest measurement amount $ 393 $ (2,852)
Purchase of noncontrolling interest 9,162 --
Distributions payable relating to noncontrolling interest 1,237 261
Employee stock relinquished for payment of taxes (4,103) (2,170)
Summary Portfolio Data at September 30, 2013, Entire Domestic Portfolio
($ in thousands)
Actual Cash
Total Net Finance Collections Estimated Total Estimated
Purchase Purchase Estimated Receivables Including Cash Remaining Collections to
Period Price Collections Balance Sales Collections Purchase Price
1996 $ 3,080 $ 10,219 $ -- $ 10,198 $ 21 332%
1997 7,685 25,598 -- 25,483 115 333%
1998 11,089 37,633 -- 37,317 316 339%
1999 18,898 69,888 -- 69,257 631 370%
2000 25,020 118,026 -- 116,394 1,632 472%
2001 33,481 178,250 -- 175,420 2,830 532%
2002 42,325 202,312 -- 197,745 4,567 478%
2003 61,447 272,864 -- 264,086 8,778 444%
2004 59,176 205,837 -- 197,371 8,466 348%
2005 143,166 321,502 6,300 309,176 12,326 225%
2006 107,670 216,746 5,860 206,698 10,048 201%
2007 258,383 524,973 22,366 473,083 51,890 203%
2008 275,148 522,300 30,887 466,251 56,049 190%
2009 281,428 889,032 40,630 713,843 175,189 316%
2010 358,082 1,007,929 91,068 698,978 308,951 281%
2011 394,029 951,207 179,344 500,565 450,642 241%
2012 511,638 962,940 367,792 287,187 675,753 188%
2013 535,377 967,173 490,761 95,288 871,885 181%
Total $ 3,127,122 $ 7,484,429 $ 1,235,008 $ 4,844,340 $ 2,640,089 239%
Summary Portfolio Data at September 30, 2013, Purchased Bankruptcy Portfolio - Domestic
($ in thousands)
Actual Cash
Total Net Finance Collections Estimated Total Estimated
Purchase Purchase Estimated Receivables Including Cash Remaining Collections to
Period Price Collections Balance Sales Collections Purchase Price
1996-2003 $ -- $ -- $ -- $ -- $ -- 0%
2004 7,468 14,533 -- 14,477 56 195%
2005 29,301 43,673 29 43,610 63 149%
2006 17,630 31,733 32 31,484 249 180%
2007 78,541 104,787 162 103,907 880 133%
2008 108,600 167,698 3,874 162,961 4,737 154%
2009 156,039 463,887 20,871 382,913 80,974 297%
2010 209,197 509,373 55,021 363,019 146,354 243%
2011 182,085 300,929 102,783 143,351 157,578 165%
2012 253,067 346,533 192,229 96,030 250,503 137%
2013 206,219 271,613 182,079 35,286 236,327 132%
Total $ 1,248,147 $ 2,254,759 $ 557,080 $ 1,377,038 $ 877,721 181%
Summary Portfolio Data at September 30, 2013, Core Portfolio - Domestic
($ in thousands)
Actual Cash
Total Net Finance Collections Estimated Total Estimated
Purchase Purchase Estimated Receivables Including Cash Remaining Collections to
Period Price Collections Balance Sales Collections Purchase Price
1996 $ 3,080 $ 10,219 $ -- $ 10,198 $ 21 332%
1997 7,685 25,598 -- 25,483 115 333%
1998 11,089 37,633 -- 37,317 316 339%
1999 18,898 69,888 -- 69,257 631 370%
2000 25,020 118,026 -- 116,394 1,632 472%
2001 33,481 178,250 -- 175,420 2,830 532%
2002 42,325 202,312 -- 197,745 4,567 478%
2003 61,447 272,864 -- 264,086 8,778 444%
2004 51,708 191,304 -- 182,894 8,410 370%
2005 113,865 277,829 6,271 265,566 12,263 244%
2006 90,040 185,013 5,828 175,214 9,799 205%
2007 179,842 420,186 22,204 369,176 51,010 234%
2008 166,548 354,602 27,013 303,290 51,312 213%
2009 125,389 425,145 19,759 330,930 94,215 339%
2010 148,885 498,556 36,047 335,959 162,597 335%
2011 211,944 650,278 76,561 357,214 293,064 307%
2012 258,571 616,407 175,563 191,157 425,250 238%
2013 329,158 695,560 308,682 60,002 635,558 211%
Total $ 1,878,975 $ 5,229,670 $ 677,928 $ 3,467,302 $ 1,762,368 278%
FINANCIAL HIGHLIGHTS
Three Months Ended Nine Months Ended
September 30, % September 30, %
2013 2012 Change 2013 2012 Change
EARNINGS (in thousands)
Income recognized on finance receivables, net $ 171,456 $ 135,754 26% $ 494,818 $ 392,566 26%
Fee income 26,306 14,765 78% 55,464 45,983 21%
Total revenues 197,762 150,519 31% 550,282 438,549 25%
Operating expenses 118,294 93,461 27% 331,101 282,474 17%
Income from operations 79,468 57,058 39% 219,181 156,075 40%
Net interest expense 3,995 2,189 83% 9,607 7,215 33%
Net income 49,211 33,127 49% 131,142 90,367 45%
Net income attributable to Portfolio Recovery Associates, Inc. 47,338 33,314 42% 129,537 90,791 43%
PERIOD-END BALANCES (in thousands)
Cash and cash equivalents $ 108,705 $ 31,488 245% $ 108,705 $ 31,488 245%
Finance receivables, net 1,256,822 973,594 29% 1,256,822 973,594 29%
Goodwill and intangible assets, net 119,636 121,623 -2% 119,636 121,623 -2%
Total assets 1,547,985 1,169,698 32% 1,547,985 1,169,698 32%
Line of credit and long-term debt 452,229 250,674 80% 452,229 250,674 80%
Total liabilities 721,001 479,211 50% 721,001 479,211 50%
Total equity 816,647 670,489 22% 816,647 670,489 22%
FINANCE RECEIVABLE COLLECTIONS (dollars in thousands)
Cash collections $ 291,651 $ 229,052 27% $ 863,511 $ 679,473 27%
Cash collections on fully amortized pools 8,762 6,762 30% 25,719 22,762 13%
Principal amortization without allowance charges 122,776 91,735 34% 370,286 282,645 31%
Principal amortization with allowance charges 120,195 93,298 29% 368,693 286,906 29%
Principal amortization w/ allowance charges as % of cash collections:
Including fully amortized pools 41.2% 40.7% 1% 42.7% 42.2% 1%
Excluding fully amortized pools 42.5% 42.0% 1% 44.0% 43.7% 1%
ALLOWANCE FOR FINANCE RECEIVABLES (dollars in thousands)
Allowance (reversal)/charge (2,581) 1,563 -265% (1,593) 4,261 -137%
Allowance (reversal)/charge to period-end net finance receivables -0.2% 0.2% -228% -0.1% 0.4% -129%
Allowance (reversal)/charge to net finance receivable income -1.5% 1.2% -231% -0.3% 1.1% -130%
Allowance (reversal)/charge to cash collections -0.9% 0.7% -230% -0.2% 0.6% -129%
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)
Purchase price - core $ 89,044 $ 52,703 69% $ 329,309 $ 174,319 89%
Face value - core 1,352,877 674,135 101% 3,930,066 2,679,734 47%
Purchase price - bankruptcy 41,794 41,277 1% 210,662 151,629 39%
Face value - bankruptcy 215,957 341,359 -37% 2,578,980 1,158,050 123%
Purchase price - UK 11,037 8,981 23% 17,305 13,489 28%
Face value - UK 218,528 248,667 -12% 318,950 408,797 -22%
Purchase price - total 141,875 102,961 38% 557,276 339,437 64%
Face value - total 1,787,362 1,264,161 41% 6,827,996 4,246,581 61%
Number of portfolios - total 79 107 -26% 264 312 -15%
ESTIMATED REMAINING COLLECTIONS (in thousands)
Estimated remaining collections - core $ 1,794,640 $ 1,346,562 33% $ 1,794,640 $ 1,346,562 33%
Estimated remaining collections - bankruptcy 877,721 791,018 11% 877,721 791,018 11%
Estimated remaining collections - total 2,672,361 2,137,580 25% 2,672,361 2,137,580 25%
SHARE DATA-ADJUSTED (7) (share amounts in thousands)
Net income per common share - diluted $ 0.93 $ 0.65 43% $ 2.54 $ 1.77 44%
Weighted average number of shares outstanding - diluted 50,660 51,066 -1% 51,039 51,420 -1%
Shares repurchased 989 -- 0% 1,203 994 21%
Average price paid per share repurchased (including acquisitions costs) $ 50.55 $ -- 0% $ 48.62 $ 22.85 113%
Closing market price $ 59.93 $ 34.81 72% $ 59.93 $ 34.81 72%
RATIOS AND OTHER DATA (dollars in thousands)
Return on average equity (1) 23.5% 20.3% 16% 22.4% 19.2% 17%
Return on revenue (2) 24.9% 22.0% 13% 23.8% 20.6% 16%
Return on average assets (3) 12.5% 11.4% 10% 12.0% 10.5% 14%
Operating margin (4) 40.2% 37.9% 6% 39.8% 35.6% 12%
Operating expense to cash receipts (5) 37.2% 38.3% -3% 36.0% 38.9% -7%
Debt to equity (6) 55.4% 37.4% 48% 55.4% 37.4% 48%
Number of collectors 2,054 1,992 3% 2,054 1,992 3%
Number of full-time equivalent employees 3,223 3,103 4% 3,223 3,103 4%
Cash receipts (5) $ 317,957 $ 243,817 30% $ 918,975 $ 725,456 27%
Line of credit - unused portion at period end 435,500 214,450 103% 435,500 214,450 103%
(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 the line of credit balance plus long-term debt
(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
September 30 June 30 March 31 December 31 September 30
2013 2013 2013 2012 2012
EARNINGS (in thousands)
Income recognized on finance receivables, net $ 171,456 $ 168,570 $ 154,792 $ 138,068 $ 135,754
Fee income 26,306 14,391 14,767 16,183 14,765
Total revenues 197,762 182,961 169,559 154,251 150,519
Operating expenses 118,294 109,135 103,672 94,262 93,461
Income from operations 79,468 73,826 65,887 59,989 57,058
Net interest expense 3,995 2,923 2,689 1,816 2,189
Net income 49,211 43,414 38,517 35,732 33,127
Net income attributable to Portfolio Recovery Associates, Inc. 47,338 43,599 38,600 35,802 33,314
PERIOD-END BALANCES (in thousands)
Cash and cash equivalents $ 108,705 $ 43,459 $ 39,111 $ 32,687 $ 31,488
Finance receivables, net 1,256,822 1,236,859 1,169,747 1,078,951 973,594
Goodwill and intangible assets, net 119,636 124,349 125,462 129,852 121,623
Total assets 1,547,985 1,457,246 1,382,739 1,288,956 1,169,698
Line of credit and long-term debt 452,229 413,774 371,159 327,542 250,674
Total liabilities 721,001 655,012 621,413 559,856 479,211
Total equity 816,647 791,898 750,990 708,427 670,489
FINANCE RECEIVABLE COLLECTIONS (dollars in thousands)
Cash collections $ 291,651 $ 296,397 $ 275,463 $ 229,211 $ 229,052
Cash collections on fully amortized pools 8,762 10,612 6,345 6,211 6,762
Principal amortization without allowance charges 122,776 129,012 118,498 88,851 91,735
Principal amortization with allowance charges 120,195 127,827 120,671 91,142 93,298
Principal amortization w/ allowance charges as % of cash collections:
Including fully amortized pools 41.2% 43.1% 43.8% 39.8% 40.7%
Excluding fully amortized pools 42.5% 44.7% 44.8% 40.9% 42.0%
ALLOWANCE FOR FINANCE RECEIVABLES (dollars in thousands)
Allowance (reversal)/charge (2,581) (1,185) 2,173 2,291 1,563
Allowance (reversal)/charge to period-end net finance receivables -0.2% -0.1% 0.2% 0.2% 0.2%
Allowance (reversal)/charge to net finance receivable income -1.5% -0.7% 1.4% 1.7% 1.2%
Allowance (reversal)/charge to cash collections -0.9% -0.4% 0.8% 1.0% 0.7%
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)
Purchase price - core $ 89,044 $ 113,314 $ 126,951 $ 85,476 $ 52,703
Face value - core 1,352,877 1,178,229 1,398,960 901,512 674,135
Purchase price - bankruptcy 41,794 82,273 86,595 111,001 41,277
Face value - bankruptcy 215,957 1,926,515 436,508 946,927 341,359
Purchase price - UK 11,037 4,881 1,387 2,631 8,981
Face value - UK 218,528 81,852 18,570 59,953 248,667
Purchase price - total 141,875 200,468 214,933 199,108 102,961
Face value - total 1,787,362 3,186,596 1,854,038 1,908,392 1,264,161
Number of portfolios - total 79 94 91 104 107
ESTIMATED REMAINING COLLECTIONS (in thousands)
Estimated remaining collections - core $ 1,794,640 $ 1,711,006 $ 1,562,383 $ 1,410,053 $ 1,346,562
Estimated remaining collections - bankruptcy 877,721 925,223 924,520 905,136 791,018
Estimated remaining collections - total 2,672,361 2,636,229 2,486,903 2,315,189 2,137,580
SHARE DATA-ADJUSTED (7) (share amounts in thousands)
Net income per common share - diluted $ 0.93 $ 0.85 $ 0.75 $ 0.70 $ 0.65
Weighted average number of shares outstanding - diluted 50,660 51,183 51,273 51,217 51,066
Shares repurchased 989 166 48 -- --
Average price paid per share repurchased (including acquisitions costs) $ 50.55 $ 39.82 $ 39.34 $ 31.01 $ --
Closing market price $ 59.93 $ 51.21 $ 42.31 $ 35.62 $ 34.81
RATIOS AND OTHER DATA (dollars in thousands)
Return on average equity (1) 23.5% 22.5% 21.1% 20.6% 20.3%
Return on revenue (2) 24.9% 23.7% 22.7% 23.2% 22.0%
Return on average assets (3) 12.5% 12.1% 11.3% 11.8% 11.4%
Operating margin (4) 40.2% 40.4% 38.9% 38.9% 37.9%
Operating expense to cash receipts (5) 37.2% 35.1% 35.7% 38.4% 38.3%
Debt to equity (6) 55.4% 52.3% 49.4% 46.2% 37.4%
Number of collectors 2,054 2,190 2,159 2,153 1,992
Number of full-time equivalent employees 3,223 3,362 3,250 3,221 3,103
Cash receipts (5) $ 317,957 $ 310,788 $ 290,230 $ 245,394 $ 243,817
Line of credit - unused portion at period end 435,500 184,000 228,000 273,000 214,450
(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 the line of credit balance plus long-term debt
(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

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Source:Portfolio Recovery Associates