Asset Acceptance Capital Corp., which buys defaulted consumer debt from credit card issuers and other lenders, on March 3 reported total revenue of $47.5 million for the fourth quarter ended Dec. 31, up 154% from $18.7 million a year earlier. The company’s net loss dropped 65.3%, to 7 million from $20.2 million.
The Warren, Mich.-based company during the quarter acquired $16.8 million in charged-off consumer receivables with a face value of $298.1 million, for a blended rate of 5.65% of face value That compares with $42.6 million in acquired debt with a face value of $1.4 billion, for a blended rate of 3.09% of face value, during the same period in 2009.
“Our fourth-quarter purchases were below our targeted levels. Part of this related to a $15 million purchase that was deferred into the first quarter of 2011 by just a couple of days,” Reid Simpson, Asset Acceptance senior vice president of finance, told analysts during a March 3 conference call to discuss earnings. “Despite this deferment, we were able to grow our full-year 2010 purchases by 12.7% to $136.3 million, compared to $120.9 million in 2009. If we added back that one purchase, our growth in purchases would have been a bit over 25% for the year.”
Cash collections during the quarter rose 2.3%, to $76.5 million from $74.8 million. Excluding the firm’s health care portfolios, which the company sold during the third quarter, cash collections increased by 4.3%, to $76.4 million from x?, the company noted in a press release announcing fourth-quarter earnings.
Among the company’s expenses during the quarter was $1.7 million in charges related to a settlement with the Federal Trade Commission, which last spring alleged Asset Acceptance’s debt-collection practices violated the Fair Debt Collection Practices Act, the Fair Credit Reporting Act and the Federal Trade Commission Act. The agency had been investigating the company since 2006 (
Expenses during the quarter also included $3 million in restructuring charges related to the closing of the company’s Chicago and Cleveland collection offices, and a $5.3 million charge resulting from the termination for performance of a relationship with a third-party service provider, Reid said during the call. “The charge related to a cash-settlement payment to reimburse this third- party for court costs incurred on the company’s behalf that the third party would have otherwise recovered through commissions in future periods,” he said.
Rion Needs, Asset Acceptance CEO, noted during the call that actions the company took last year to streamline operations “will result in significant annual savings for the company going forward and provide us with a much more competitive cost base.”
Those efforts include expanded collections capacity through productivity enhancements, improved call-center disciplines, third-party management, offshore expansion and the implementation of the company’s Cogent collection-platform software, he said.
Shares of the company stock were selling at $5.70 in mid-day trading March 4, down 2.56% from the previous day’s $5.85 closing price.
