Asta Funding Reports Increase in Income on Decline in Revenue

Debt buyer Asta Funding, Inc. (Nasdaq: ASFI) reported Thursday financial results for its fiscal first quarter of 2012 (ended December 31, 2011) marked by a rise in net income and declines in revenue and total cash collections.

Englewood Cliffs, N.J.-based Asta said that in the period from October 1 to December 31, 2011 – the first quarter of its fiscal 2012 – the company earned $3 million (or $0.20 per share), up 11.6 percent from the same period a year ago.

Revenue in the quarter fell 3.7 percent to $10.4 million. Total net cash collections fell by nearly 20 percent to $17 million.

Investments in new debt portfolios totaled $1.35 million in the first quarter of fiscal year 2012, compared to $2.9 million in the first quarter of fiscal year 2011. The portfolios acquired during the first quarter of fiscal years 2012 and 2011 were litigation-related medical accounts receivable portfolios.

Asta said it had no senior or subordinated debt as of December 31, 2011. The balance of the non-recourse debt to the Bank of Montreal was $69.2 million at December 31, 2011. In addition, on December 30, 2011, Asta obtained a $20 million Senior Secured Discretionary Credit Facility from Bank Leumi USA interest payable at Prime rate plus 50 basis points. The term of the Credit Facility is through February 23, 2013. The company has not drawn down on this facility.

“Our previous progress in strengthening our balance sheet, reducing overhead expenses, increasing our cash position and generating strong cash flow has continued well into fiscal year 2012. The current economic climate presents somewhat of a challenge to us in purchasing distressed consumer portfolios at economically viable pricing. Nevertheless, we remain steadfast in pursuing the purchase of distressed consumer portfolios, which remains the core of our business,” commented Gary Stern, Chairman and CEO of the Company. “Rather than sit still and wait for the portfolio market to return to a reasonable position, we are seriously exploring a variety of attractive financial asset classes which dovetail with our traditional business model. An example is the new joint venture into which we entered – Pegasus Funding, LLC. This entity purchases interests in personal injury claims from claimants who are a party to personal injury litigation with the expectation of a settlement in the future. As we closed on the transaction on December 28, 2011, the results of Pegasus Funding, LLC were not accretive to the first quarter of fiscal year 2012. As of December 31, 2011 Asta has invested approximately $4.4 million in this entity. We eagerly look forward to the fruits of our investment beginning in the second quarter of this fiscal year.”

Asta is holding a conference call Thursday at 4:00pm Eastern to discuss the results. Interested parties may participate by dialing USA/Canada (800) 668-4132, International (224) 357-2196 five minutes prior to 4:00PM EST on February 9, 2011. Please refer to the Asta Funding earnings teleconference ID # 50319492. A recording of the conference call will be available from 02/09/2012 7:00PM EST through 02/16/2012 11:59PM EST by dialing USA/Canada (855) 859-2056, International (404) 537-3406 conference ID # 50319492.