Portfolio Recovery Sees Increase in Revenue and Income in Q2

Published on:
 25 July 2007 at 07:41 a.m. ET

July 25, 2007, 7:41 a.m. insideARM.com The iA Institute
Written by: Unknown Author –

http://www.insidearm.com/news/00038830-portfolio-recovery-sees-increase-in-reven/

Debt purchaser and ARM provider Portfolio Recovery Associates announced late yesterday operating results for the second quarter of 2007, reporting increases in collections, revenue, and income. But investors sent the stock into a tail spin today, with trading down as much as 12 percent.

For the quarter, Portfolio Recovery (NASDAQ: PRAA) reported net income of $13 million, or $0.80 per share, up 17 percent from the $11.1 million reported in the second quarter of 2006, and up slightly from the $12.9 million in income reported for the first quarter of this year.

Total revenue for the second quarter this year was $54.8 million, a 19 percent increase over $46.2 million a year ago, and up slightly from the $54 million reported in the first quarter of 2007. Cash collections rose 9 percent to $64.6 million in the second quarter of 2007, up from $59.4 million in the year-ago period.  However, cash collections were down 4 percent from the $67.3 million reported in the first quarter of this year.

John Neff, an analyst with William Blair & Assoc. in Chicago, told investors today in a research note that he sees a deceleration in cash collections growth for the firm, putting pressure on revenues.

Shares of the Norfolk, Va.-based company were down about 12 percent in midday trading today to $54.16. The earnings and revenue figures reported by Portfolio Recovery were in line with analysts’ expectations.

Portfolio Recovery also said it spent in the quarter $63.4 million on $2.5 billion in face-value debt, acquiring it in 58 pools from 27 different sellers. The company said it is the second-largest amount it has spent in a quarter on portfolio purchases.
 
Kevin P. Stevenson, chief financial and administrative officer, said in a statement that the purchases were the result of an “opportune buying environment” and could provide “returns we feel should be greater than we have seen over the past 12 to 18 months.”
 
Portfolio Recovery updated the progress of previously announced plans to pay a special $1 per share dividend and initiate a 1 million share buyback program. The company said that it paid the dividend in the quarter; the payout was scheduled for June 8. Also, Portfolio Recovery bought 100,000 of the 1 million shares in the buyback program during the quarter.

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