NCO Group Announces Fourth Quarter and Full Year 2010 Results

NCO Group, Inc., one of the largest accounts receivable management companies in the world and a leading provider of business process outsourcing services, announced late Thursday results for the fourth quarter and full year 2010.

Horsham, Pa.-based NCO repored a net loss attributable to the company of $155 million for the full year 2010, compared to a net loss of $84.2 million in 2009. Adjusted EBITDA in the year was $140.1 million, down from $200.2 million in 2009. The Adjusted EBITDA excludes the impact of $18.3 million of restructuring charges and a $14.3 million non-cash allowance for impairment of purchased accounts receivable portfolios.

Total revenues for 2010 were $1.6 billion, up slightly from $1.58 billion in 2009.

For the fourth quarter of 2010, NCO reported revenues of $390.3 million, a net loss attributable to NCO of $80.7 million and Adjusted EBITDA of $35.6 million. This compares to revenues of $423.4 million, a net loss attributable to NCO of $52.3 million, and Adjusted EBITDA of $47.8 million for the fourth quarter of 2009.

Commenting on the results, Ronald A. Rittenmeyer, newly-named President and Chief Executive Officer, stated, “Although the results for 2010 did not meet our expectations, we have deployed a business plan for 2011 that we believe will stabilize revenue and earnings. As we execute on our plan in 2011, we will focus on leveraging our client relationships, business platform and workforce to rejuvenate the company’s growth.”

NCO is organized into three operating divisions: Accounts Receivable Management (ARM), Customer Relationship Management (CRM) and Portfolio Management (PM). During the fourth quarter of 2010, the ARM and CRM divisions operated below their respective revenue and profitability targets. This shortfall was primarily attributable to volume reductions due to the impact of the challenging economic environment on our clients’ businesses. The PM division operated below its revenue target, primarily due to lower than expected collection results on certain portfolios, but was in line with its profitability target.

NCO noted in a filing with the Securities and Exchange Commission that the share of total revenue attributable to its ARM division increased to 83.1 percent in 2010 from 79.9 percent in 2009. The share of revenue from the other divisions fell in 2010.

The company has been winding down its debt purchasing operations, reporting just $12.7 million spent on portfolio acquisitions in 2010, compared to $56.6 million in 2009 and $126.5 million in 2008.

NCO also said that it will host an investor conference call on Tuesday, April 5, 2011, at 4:00 p.m., ET, to address the items discussed above in more detail and to allow the investment community an opportunity to ask questions. Interested parties can access the conference call by dialing (866) 388-2676 (domestic callers) or (706) 679-3487 (international callers) and providing the pass code 56949002. A taped replay of the conference call will be made available for seven days and can be accessed by interested parties by dialing (800) 642-1687 (domestic callers) or (706) 645-9291 (international callers) and providing the pass code 56949002.

NCO Group, Inc. is a leading global provider of business process outsourcing services, primarily focused on accounts receivable management and customer relationship management. NCO provides services through over 100 offices throughout North America, Asia, Europe and Australia.