Portfolio Recovery Associates Inc. (PRAA, Financial) filed Quarterly Report for the period ended 2010-06-30.
Portfolio Recovery Associates Inc. has a market cap of $1.16 billion; its shares were traded at around $68.5 with a P/E ratio of 19.57 and P/S ratio of 4.14. Portfolio Recovery Associates Inc. had an annual average earning growth of 20.5% over the past 10 years.PRAA is in the portfolios of RS Investment Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Legal and agency fees and costs expenses were $13.5 million for the three months ended June 30, 2010, an increase of $2.5 million or 22.7% compared to legal and agency fees and costs of $11.0 million for the three months ended June 30, 2009. Of the $2.5 million increase, $3.0 million was attributable to an increase in legal fees and costs incurred resulting from accounts referred to both our in-house attorneys and outside independent contingent fee attorneys. This was offset by a $0.5 million decrease mainly attributable to a decrease in agency fees incurred by our IGS subsidiary. Total outside legal expenses paid to independent contingent fee attorneys for the three months ended June 30, 2010 were 47.8% of legal cash collections generated by independent contingent fee attorneys compared to 38.3% for the three months ended June 30, 2009. Outside legal fees and costs paid to independent contingent fee attorneys increased from $6.3 million for the three months ended June 30, 2009 to $9.0 million, an increase of $2.7 million or 42.9%, for the three months ended June 30, 2010. Additionally, as disclosed previously, we also effectuate legal collections using our own in-house attorneys. Total legal expenses incurred by our in-house attorneys for the three months ended June 30, 2010 were 13.86% of legal cash collections generated by our in-house attorneys compared to 28.2% for the three months ended June 30, 2009. Legal fees and costs incurred by our in-house attorneys increased from $1.2 million for the three months ended June 30, 2009 to $1.6 million for the three months ended June 30, 2010, an increase of $0.4 million or 33.3%.
Outside fees and services expenses were $3.2 million for the three months ended June 30, 2010, an increase of $0.7 million or 28.0% compared to outside fees and services expenses of $2.5 million for the three months ended June 30, 2009. The $0.7 million increase was attributable to an increase in other outside fees and services and corporate legal expense.
Income recognized on finance receivables, net was $144.9 million for the six months ended June 30, 2010, an increase of $39.6 million or 37.6% compared to income recognized on finance receivables, net of $105.3 million for the six months ended June 30, 2009. The increase was primarily due to an increase in our cash collections on our owned defaulted consumer receivables to $247.6 million for the six months ended June 30, 2010 compared to $180.4 million for the six months June 30, 2009, an increase of $67.2 million or 37.3%. During the six months ended June 30, 2010, we acquired defaulted consumer receivables portfolios with an aggregate face value amount of $3.56 billion at a cost of $189.4 million. During the six months ended June 30, 2009, we acquired defaulted consumer receivable portfolios with an aggregate face value of $4.35 billion at a cost of $137.1 million. In any period, we acquire defaulted consumer receivables that can vary dramatically in their age, type and ultimate collectability. We may pay significantly different purchase rates for purchased receivables within any period as a result of this quality fluctuation. In addition, market forces can drive pricing rates up or down in any period, irrespective of other quality fluctuations. As a result, the average purchase rate paid for any given period can fluctuate dramatically based on our particular buying activity in that period. However, regardless of the average purchase price and for similar time frames, we intend to target a similar internal rate of return, after direct expenses, in pricing our portfolio acquisitions; therefore, the absolute rate paid is not necessarily relevant to estimated profitability of a periods buying.
Legal and agency fees and costs expenses were $26.8 million for the six months ended June 30, 2010, an increase of $3.6 million or 15.5% compared to legal and agency fees and costs of $23.2 million for the six months ended June 30, 2009. Of the $3.6 million increase, $5.1 million was attributable to an increase in legal fees and costs incurred resulting from accounts referred to both our in-house attorneys and outside independent contingent fee attorneys. This was offset by a $1.5 million decrease mainly attributable to a decrease in agency fees incurred by our IGS subsidiary. Total outside legal expenses paid to independent contingent fee attorneys for the six months ended June 30, 2010 were 48.0% of legal cash collections generated by independent contingent fee attorneys compared to 38.0% for the six months ended June 30, 2009. Outside legal fees and costs paid to independent contingent fee attorneys increased from $13.0 million for the six months ended June 30, 2009 to $17.8 million for the six months ended June 30, 2010, an increase of $4.8 million or 36.9%. Additionally, as disclosed previously, we also effectuate legal collections using our own in-house attorneys. Total legal expenses incurred by our in-house attorneys for the six months ended June 30, 2010 were 11.1% of legal cash collections generated by our in-house attorneys compared to 27.5% for the six months ended June 30, 2009. Legal fees and costs incurred by our in-house attorneys increased from $2.1 million for the six months ended June 30, 2009 to $2.5 million for the six months ended June 30, 2010, an increase of $0.4 million or 19.0%.
Communications expenses were $9.2 million for the six months ended June 30, 2010, an increase of $1.5 million or 19.5% compared to communications expenses of $7.7 million for the six months ended June 30, 2009. The increase was mainly due to a growth in mailings due to an increase in special letter campaigns which increased by $1.4 million for the six months ended June 30, 2010 when compared to the year ago period.
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Portfolio Recovery Associates Inc. has a market cap of $1.16 billion; its shares were traded at around $68.5 with a P/E ratio of 19.57 and P/S ratio of 4.14. Portfolio Recovery Associates Inc. had an annual average earning growth of 20.5% over the past 10 years.PRAA is in the portfolios of RS Investment Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
Income recognized on finance receivables, net was $76.9 million for the three months ended June 30, 2010, an increase of $22.9 million or 42.4% compared to income recognized on finance receivables, net of $54.0 million for the three months ended June 30, 2009. The increase was primarily due to an increase in our cash collections on our owned defaulted consumer receivables to $128.4 million for the three months ended June 30, 2010 compared to $90.5 million for the three months ended June 30 2009, an increase of $37.9 million or 41.9%. During the three months ended June 30, 2010, we acquired defaulted consumer receivables portfolios with an aggregate face value amount of $1.67 billion at a cost of $86.8 million. During the three months ended June 30, 2009, we acquired defaulted consumer receivable portfolios with an aggregate face value of $3.39 billion at a cost of $84.7 million. In any period, we acquire defaulted consumer receivables that can vary dramatically in their age, type and ultimate collectability. We may pay significantly different purchase rates for purchased receivables within any period as a result of this quality fluctuation. In addition, market forces can drive pricing rates up or down in any period, irrespective of other quality fluctuations. As a result, the average purchase rate paid for any given period can fluctuate dramatically based on our particular buying activity in that period. However, regardless of the average purchase price and for similar time frames, we intend to target a similar internal rate of return, after direct expenses, in pricing our portfolio acquisitions; therefore, the absolute rate paid is not necessarily relevant to estimated profitability of a periods buying.Legal and agency fees and costs expenses were $13.5 million for the three months ended June 30, 2010, an increase of $2.5 million or 22.7% compared to legal and agency fees and costs of $11.0 million for the three months ended June 30, 2009. Of the $2.5 million increase, $3.0 million was attributable to an increase in legal fees and costs incurred resulting from accounts referred to both our in-house attorneys and outside independent contingent fee attorneys. This was offset by a $0.5 million decrease mainly attributable to a decrease in agency fees incurred by our IGS subsidiary. Total outside legal expenses paid to independent contingent fee attorneys for the three months ended June 30, 2010 were 47.8% of legal cash collections generated by independent contingent fee attorneys compared to 38.3% for the three months ended June 30, 2009. Outside legal fees and costs paid to independent contingent fee attorneys increased from $6.3 million for the three months ended June 30, 2009 to $9.0 million, an increase of $2.7 million or 42.9%, for the three months ended June 30, 2010. Additionally, as disclosed previously, we also effectuate legal collections using our own in-house attorneys. Total legal expenses incurred by our in-house attorneys for the three months ended June 30, 2010 were 13.86% of legal cash collections generated by our in-house attorneys compared to 28.2% for the three months ended June 30, 2009. Legal fees and costs incurred by our in-house attorneys increased from $1.2 million for the three months ended June 30, 2009 to $1.6 million for the three months ended June 30, 2010, an increase of $0.4 million or 33.3%.
Outside fees and services expenses were $3.2 million for the three months ended June 30, 2010, an increase of $0.7 million or 28.0% compared to outside fees and services expenses of $2.5 million for the three months ended June 30, 2009. The $0.7 million increase was attributable to an increase in other outside fees and services and corporate legal expense.
Income recognized on finance receivables, net was $144.9 million for the six months ended June 30, 2010, an increase of $39.6 million or 37.6% compared to income recognized on finance receivables, net of $105.3 million for the six months ended June 30, 2009. The increase was primarily due to an increase in our cash collections on our owned defaulted consumer receivables to $247.6 million for the six months ended June 30, 2010 compared to $180.4 million for the six months June 30, 2009, an increase of $67.2 million or 37.3%. During the six months ended June 30, 2010, we acquired defaulted consumer receivables portfolios with an aggregate face value amount of $3.56 billion at a cost of $189.4 million. During the six months ended June 30, 2009, we acquired defaulted consumer receivable portfolios with an aggregate face value of $4.35 billion at a cost of $137.1 million. In any period, we acquire defaulted consumer receivables that can vary dramatically in their age, type and ultimate collectability. We may pay significantly different purchase rates for purchased receivables within any period as a result of this quality fluctuation. In addition, market forces can drive pricing rates up or down in any period, irrespective of other quality fluctuations. As a result, the average purchase rate paid for any given period can fluctuate dramatically based on our particular buying activity in that period. However, regardless of the average purchase price and for similar time frames, we intend to target a similar internal rate of return, after direct expenses, in pricing our portfolio acquisitions; therefore, the absolute rate paid is not necessarily relevant to estimated profitability of a periods buying.
Legal and agency fees and costs expenses were $26.8 million for the six months ended June 30, 2010, an increase of $3.6 million or 15.5% compared to legal and agency fees and costs of $23.2 million for the six months ended June 30, 2009. Of the $3.6 million increase, $5.1 million was attributable to an increase in legal fees and costs incurred resulting from accounts referred to both our in-house attorneys and outside independent contingent fee attorneys. This was offset by a $1.5 million decrease mainly attributable to a decrease in agency fees incurred by our IGS subsidiary. Total outside legal expenses paid to independent contingent fee attorneys for the six months ended June 30, 2010 were 48.0% of legal cash collections generated by independent contingent fee attorneys compared to 38.0% for the six months ended June 30, 2009. Outside legal fees and costs paid to independent contingent fee attorneys increased from $13.0 million for the six months ended June 30, 2009 to $17.8 million for the six months ended June 30, 2010, an increase of $4.8 million or 36.9%. Additionally, as disclosed previously, we also effectuate legal collections using our own in-house attorneys. Total legal expenses incurred by our in-house attorneys for the six months ended June 30, 2010 were 11.1% of legal cash collections generated by our in-house attorneys compared to 27.5% for the six months ended June 30, 2009. Legal fees and costs incurred by our in-house attorneys increased from $2.1 million for the six months ended June 30, 2009 to $2.5 million for the six months ended June 30, 2010, an increase of $0.4 million or 19.0%.
Communications expenses were $9.2 million for the six months ended June 30, 2010, an increase of $1.5 million or 19.5% compared to communications expenses of $7.7 million for the six months ended June 30, 2009. The increase was mainly due to a growth in mailings due to an increase in special letter campaigns which increased by $1.4 million for the six months ended June 30, 2010 when compared to the year ago period.
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