Portfolio Recovery Associates Crosses into Mega-firm Territory with 2011 Results

Accounts receivable management firm Portfolio Recovery Associates, Inc. (Nasdaq: PRAA) reported record financial results for the fourth quarter and full year 2011 marked by more than $100 million in net income for the year and more than $450 million in annual revenue.

The Norfolk, Va.-based debt buyer said that fourth quarter 2011 net income totaled $26.6 million, up 29 percent from Q4 2010. On a per share basis, earnings were $1.54; Wall Street analysts had been expecting EPS of $1.52.

Total revenues in the fourth quarter of 2011 were $118.1 million, up 17 percent from the same period a year ago. Cash collections rose 25 percent to $180.3 million the quarter.

Net income for the full year 2011 totaled $100.8 million, or $5.85 per diluted share, up 37 percent from the full year 2010. Full year 2011 revenues were $458.9 million, a year-over-year increase of 23 percent.

“In 2011, PRA again experienced significant growth in revenues and net income, as well as improved operating efficiencies and a strengthened capital structure,” said Steven D. Fredrickson, chairman, president and chief executive officer. “Our steadfast adherence to our core principles, our ability to evaluate and purchase high-value portfolios and our unwavering commitment to best practices for our industry helped to drive net income crossing the $100 million threshold for the first time in our history. We believe PRA has never been better positioned for long-term growth, and we intend to continue investing in our future through organic growth and select merger and acquisition opportunities. This is best illustrated through our acquisition of Mackenzie Hall in January 2012.”

Portfolio Recovery Associates announced the $51 million acquisition of Mackenzie Hall in January. PRA expects the deal to be immediately accretive to earnings, and could push the firm over the $500 million revenue mark in 2012.

All of the company’s collection channels saw year-over-year increases in the fourth quarter, with the purchased bankruptcy collection channel providing the largest slice with $75.2 million. Call center and other collections accounted for $61.2 million, while internal legal collections saw the fastest growth, increasing 37.5 percent to $17.6 million.

PRA said it purchased $1.21 billion of face-value debt during the fourth quarter of 2011 for $88.9 million. These receivables were acquired in 83 portfolios from 12 different sellers.