Debt buyer Asset Acceptance Capital Corp., based in Warren, Mich., reported better-than-expected quarterly results, led by a strong growth in cash collections.
For the fourth quarter ended Dec. 31, the company posted a profit of $4.2 million, or 14 cents per share, compared with a loss of $7 million or 23 cents, in the year-ago period.
The company reported full-year 2011 results that showed jumps in collections, net income and revenue and a drop in operating expenses as a result of restructuring in 2010. Earnings reached $12 million in 2011 compared to a net loss of $1.6 million in 2010. Revenue increased 9.9% to $218.1 million. Cash collections in 2011 were $350 million, up 6.4% over 2010.
Asset Acceptance reported a 6.2% decline in operating expenses in 2011, mostly driven by restructuring that occurred in 2010 when it exited the health care debt-buying market and sold its' medical debt portfolio. In 2010, the company also closed offices in Florida, Chicago and Cleveland, and ended a relationship with a third-party service provider.
Restructuring charges last year were limited to the closure of a call center in San Antonio, Texas in early 2012. The company took a $300,000 charge on the move in the fourth quarter of 2011 and expects another $400,000 related expenses this year.
The company purchased $160.9 million of charged-off consumer debt with a face value of $5,329.4 million in 2011. This compares to 2010 when it purchased $136 million in charged-off consumer receivables with a face value of $3,782.6 million.
Asset Acceptance has four U.S. locations, including headquarters and a call center in Warren, Mich., call centers in Riverview, Fla. and Tempe, Ariz., and a software support and development office in Sparks, Md. It counted 659 full-time collection employees, including supervisors, in 2011, down 25% from 2010. The number of representatives at a third-party agency in India working on the company’s behalf increased 10% to 250.
The company was penalized for $2.5 million in January by the Federal Trade Commission and Justice Department for using deceptive collective practices (
The settlement, among several things, requires that when Asset Acceptance knows or should know debt may not be legally enforceable under state law – referred to as "time-barred" debt – it must disclose to the consumer that it will not sue and, if true, that it may report non-payment to the credit reporting agencies.
Last month, the U.S. Consumer Financial Protection Bureau proposed to regulate about 200 collectors including Asset Acceptance Capital Corp to keep a closer tab on the functioning of the industry (
