Portfolio Recovery Associates Throws Around Big Numbers in First Quarter

Debt buyer and ARM firm Portfolio Recovery Associates (NASDAQ: PRAA) late Tuesday reported financial results for the first quarter of 2013 with quarterly records in just about every measurable category.

PRA reported net income of $38.6 million ($2.26 per share) in the first three months of 2013, up 52 percent from the first quarter of 2012.

Revenues were $169.6 million for the quarter, up 21 percent from a year ago, and were comprised of $154.8 million in net finance receivable income and $14.8 million in fee income.

Finance receivables income increased 25 percent to $154.8 million in Q1 2013 from $124.2 million in the year-ago period. Cash collections from finance receivables increased 26 percent over Q1 2012 to $275.5 million, and were comprised of bankruptcy court trustee payments of $109.2 million, $89 million in call center and other collections, and $77.2 million in legal collections.

“PRA began 2013 the same way we ended 2012, reporting record, year-over-year results,” said Steve Fredrickson, chairman, president and CEO. “This quarter we produced across the board growth in cash collections, revenue and net income, which again drove return on average equity over our target of 20%. Our investment in new U.S. and U.K. portfolios of consumer debt surpassed even our extraordinary Q4 2012 level of acquisitions. PRA has now acquired $414 million in new accounts during the last six months that will drive revenue and income for years to come.”

The rapid growth the company has experienced over the past year has been noted on Wall Street. PRA’s stock price has more than doubled over the past 12 months and was up nearly 7 percent in midday trading Wednesday with shares priced around $131.

The company noted that it made $214.9 million in portfolio purchases in the quarter, including $126.9 million of U.S. core customer accounts and $1.4 million of U.K. core customer accounts, plus $86.6 million in U.S. bankruptcy court claims. Receivables purchased during the recently completed quarter were acquired in 91 portfolios from 13 different sellers.

Results from PRA’s fee-based businesses were in line with expectations, generating $14.8 million in fee income in Q1 2013. PRA now owns 81 percent of Claims Compensation Bureau (CCB), having closed on the purchase of an additional 19 percent interest during the first quarter. CCB continues to expect substantially higher fee income in 2013 compared to 2012, with a single large case anticipated to generate approximately $6 million or more in fees to PRA during the second or third quarter of the year.