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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Item 9.01. Financial Statements and Exhibits
99.1 Press Release of Portfolio Recovery Associates, Inc. dated February 14, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
By: /s/ Kevin P. Stevenson Net Income Up 22% to $9.4 Million, or $0.58 Per Share, in Quarter ; Total Revenue Rises to $39.3 Million in Quarter, $148.5 Million for Full Year; Debt Purchases Total $92.3 Million in Fourth Quarter NORFOLK, VA -- 02/14/2006 -- Portfolio Recovery Associates, Inc. (NASDAQ: PRAA), a company that purchases and manages portfolios of defaulted
consumer receivables and provides a broad range of accounts receivable
management services, today reported net income of $9.4 million, or $0.58
per diluted share, for the quarter ended December 31, 2005.
The Company's fourth-quarter 2005 earnings represent growth of 22% from net
income of $7.7 million, or $0.48 per diluted share, in the same period a
year earlier.
Total revenue increased 24% to $39.3 million in the fourth quarter of 2005
from $31.7 million in the year-earlier period. Total revenue consists of
cash collections reduced by amounts applied to the Company's owned debt
portfolios plus commissions from its fee-for-service businesses. During
the fourth quarter of 2005, the Company applied 26.7% of cash collections
to reduce the carrying basis of its owned debt portfolios. This included a
$200,000 allowance charge against a portfolio of accounts acquired in 2001.
This particular portfolio has greatly exceeded the Company's expectations
to date, but performed under our expectations during the fourth quarter of
2005.
"Portfolio Recovery Associates performed well in the fourth quarter,
completing a noteworthy year in which we continued to grow earnings,
revenue and cash collections, purchased RDS -- our second corporate
acquisition in two years -- and enjoyed the benefits of our disciplined
approach to growth and portfolio acquisition. We did in fact make an
extraordinary level of debt purchases during the quarter. At $92.3
million, we spent more in the fourth quarter of 2005 than in any prior
full-year period. This was due, at least in part, to the recent changes in
bankruptcy law that triggered a surge in bankruptcy filings and resulting
charge offs. Although still competitive, pricing was better than we have
seen in some time. On the operating front, collector-force productivity
remained solid, even in the face of the seasonally slow fourth quarter and
significant hiring," said Steven D. Fredrickson, Chairman, President and
Chief Executive Officer.
For full-year 2005, net income grew 34% to $36.8 million, or $2.28 per
diluted share, from $27.5 million, or $1.73 per diluted share, in 2004.
Total revenue increased 31% to $148.5 million in 2005 from $113.4 million
in 2004. During 2005, the Company applied 29.6% of its cash collections to
reduce the carrying basis of its owned debt portfolios, compared with 30.7%
in 2004.
Financial and Operating Highlights
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Securities Exchange Act of 1934.
Date of Report: February 14, 2006
(Date of earliest event reported)
Portfolio Recovery Associates, Inc.
(Exact name of registrant as specified in its charter)
DE
(State or other jurisdiction
of incorporation)
000-50058
(Commission File Number)
75-3078675
(IRS Employer
Identification Number)
120 Corporate Boulevard, Norfolk, Virginia
(Address of principal executive offices)
23502
(Zip Code)
888-772-7326
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Item 2.02. Results of Operations and Financial Condition
On February 14, 2006, the Company issued a press release announcing its unaudited financial results for the fourth quarter and year ended December 31, 2005. A copy of the press release is attached to this current report on Form 8-K as Exhibit 99.1 and is incorporated herein solely for purposes of Item 2.02.
The information in this current report on Form 8-K, including the exhibit, shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
(a) Financial statements:
None
(b) Pro forma financial information:
None
(c) Shell company transactions:
None
(d) Exhibits
Dated: February 14, 2006
PORTFOLIO RECOVERY ASSOCIATES, INC.
Kevin P. Stevenson
EVP/CFO
Exhibit No.
Description
99.1
Press Release of Portfolio Recovery Associates, Inc. dated February 14, 2006
- -- Cash collections rose 16% to $47.2 million in the fourth quarter of
2005, up from $40.7 million in the year-ago period.
- -- Productivity, as measured by cash collections per hour paid, the
Company's key measure of collector performance, stands at $133.39 for full-
year 2005, up 13% from $117.59 for all of 2004.
- -- The Company purchased $2.84 billion of face-value debt during the
fourth quarter of 2005 for $92.3 million. This debt was acquired in 58
pools from 19 different sellers. The Company purchased $5.31 billion of
face value debt for $149.6 million during full-year 2005.
- -- The Company's fee-for-service businesses generated revenue of $4.7
million in the fourth quarter of 2005, up from $3.3 million in the same
period a year ago.
- -- The Company's cash balances were $16.0 million as of December 31,
2005, down from $67.4 million as of September 30, 2005, reflecting the
strong fourth quarter debt purchases. During the 2005 fourth quarter, the
Company made a $15 million draw on its newly expanded $75 million line of
credit. The $15 million remained outstanding at year end.
"In the fourth quarter, Portfolio Recovery Associates demonstrated the
value of its long-term, disciplined approach to portfolio acquisitions --
building cash when profitable deals are scarce in order to take advantage
of significant market opportunities when they arise. Our record
fourth-quarter portfolio purchases of $92.3 million provide us with
substantial raw material to drive cash collections, revenue and earnings
for years to come. Despite this spending, our newly increased line of
credit and expanded network of lenders positions the Company well to be
able to continue aggressively purchasing new debt portfolios as attractive
opportunities arise," said Kevin P. Stevenson, Chief Financial and
Administrative Officer.
Conference Call Information
The Company will hold a conference call with investors today, February 14, 2006, at 5:30 p.m. EST to discuss its fourth quarter and full-year results. Investors can access the call live by dialing 866-356-4281 for domestic callers or 617-597-5395 for international callers using the pass code 42256959.
In addition, investors may listen to the call via a taped replay, which will be available for seven days, by dialing 888-286-8010 for domestic callers and 617-801-6888 for international callers using the pass code 20722563. The replay will be available approximately two hours after today's conference call ends. Investors may also listen via webcast, both live and archived, at the Company's website, www.portfoliorecovery.com.
About Portfolio Recovery Associates, Inc.
Portfolio Recovery Associates is a full-service provider of outsourced receivables management and related services. The company's primary business is the purchase, collection and management of portfolios of defaulted consumer receivables. These are the unpaid obligations of individuals to credit originators, which include banks, credit unions, consumer and auto finance companies, and retail merchants. Portfolio Recovery Associates also provides a broad range of collection services, including revenue administration for government entities through its RDS business, collateral-location services for credit originators via IGS Nevada, and fee-based collections through Anchor Receivables Management.
Statements herein which are not historical, including Portfolio Recovery Associates' or management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, including statements with respect to future contribution of IGS Nevada and RDS 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 Portfolio Recovery Associates' presentations and web casts. The forward-looking statements in this press release are based upon management's beliefs, assumptions and expectations of the Company'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, including the risk factors and other risks that are described from time to time in the Company's filings with the Securities and Exchange Commission 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 Securities and Exchange Commission and available through the Company's website, which contain a more detailed discussion of the Company'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 Securities and Exchange Commission or otherwise. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company'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 Year Year Ended Ended Ended Ended December December December December 31, 31, 31, 31, 2005 2004 2005 2004 Revenues: Income recognized on finance receivables $ 34,614 $ 28,387 $ 134,674 $ 106,254 Commissions 4,712 3,315 13,851 7,142 --------- --------- --------- --------- Total revenue 39,326 31,702 148,525 113,396 Operating expenses: Compensation and employee services 11,841 9,717 44,332 36,620 Outside legal and other fees and services 7,811 6,369 29,965 21,408 Communications 1,211 980 4,424 3,638 Rent and occupancy 558 448 2,101 1,745 Other operating expenses 1,108 684 3,424 2,712 Depreciation and amortization 1,410 985 4,679 2,383 --------- --------- --------- --------- Total operating expenses 23,939 19,183 88,925 68,506 --------- --------- --------- --------- Income from operations 15,387 12,519 59,600 44,890 Other income and (expense): Interest income 136 117 611 223 Interest expense (95) (67) (281) (273) --------- --------- --------- --------- Income before income taxes 15,428 12,569 59,930 44,840 Provision for income taxes 5,979 4,854 23,159 17,388 --------- --------- --------- --------- Net income $ 9,449 $ 7,715 $ 36,771 $ 27,452 ========= ========= ========= ========= Net income per common share Basic $ 0.60 $ 0.50 $ 2.35 $ 1.79 Diluted $ 0.58 $ 0.48 $ 2.28 $ 1.73 Weighted average number of shares outstanding Basic 15,745 15,462 15,642 15,357 Diluted 16,196 16,030 16,149 15,853 Portfolio Recovery Associates, Inc. Unaudited Consolidated Summary Balance Sheets (in thousands, except share amounts) December 31, December 31, ASSETS 2005 2004 Cash and cash equivalents $ 15,985 $ 24,513 Investments - 23,950 Finance receivables, net 193,645 105,189 Property and equipment, net 7,186 5,752 Goodwill 18,288 6,397 Intangible assets, net 9,023 6,319 Other assets 3,646 3,056 ---------- ---------- Total assets $ 247,773 $ 175,176 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable and accrued liabilities 13,569 7,635 Deferred tax liability 22,346 13,651 Revolving line of credit 15,000 - Long-term debt & capital lease obligations 1,535 2,501 ---------- ---------- Total liabilities 52,450 23,787 Stockholders' equity: Preferred stock, par value $0.01, authorized shares, 2,000,000, issued and outstanding shares - 0 - - Common stock, par value $0.01, authorized shares, 30,000,000, issued and outstanding shares - 15,767,443 at December 31, 2005 and 15,498,210 at December 31, 2004 158 155 Additional paid in capital 108,064 100,905 Retained earnings 87,101 50,329 ---------- ---------- Total stockholders' equity 195,323 151,389 ---------- ---------- Total liabilities and stockholders' equity $ 247,773 $ 175,176 ========== ==========
Contact: Investor Relations 757-519-9300 ext. 13010 info@portfoliorecovery.com-----END PRIVACY-ENHANCED MESSAGE-----