Debt Buyer Asset Acceptance Reports Decline in Income, Revenue for Q3

Asset Acceptance Capital Corp. (NASDAQ: AACC), a purchaser and collector of charged-off consumer debt, Monday reported results for the quarter ended September 30, 2012 marked by declines in total revenues and net income.

Warren, Mich.-based Asset Acceptance reported net income of $1.5 million, or $0.05 per share, net of tax, during the third quarter of 2012, compared to a net income of $3.1 million, or $0.10 per share, net of tax, in the third quarter of 2011.

Revenues fell 3.4 percent to $54.7 million. Cash collections increased 2 percent to $89.2 million. Collection results included 14.8 percent, or $5.8 million, growth from the company’s legal collection channel.

Adjusted Earnings Before Interest Taxes Depreciation and Amortization (Adjusted EBITDA) was $42.5 million, a 1.8 percent increase from $41.7 million in the third quarter of 2011. Adjusted EBITDA was adversely impacted by the increased investment in legal costs compared to prior year.

Rion Needs, President and CEO of Asset Acceptance Capital Corp., commented, “While we are not content with the reported results for the quarter, we are executing on initiatives and investments that we expect will position the Company for accelerated growth going forward. These include the restructuring actions we took during the quarter and the continued investments in our legal channel. Our investments in this channel are beginning to pay dividends as evidenced by the continued momentum in this business, specifically the sequential growth rate in this channel during the quarter. In addition, we maintained a focus on further streamlining our business operations by reducing our cost and geographic footprint. We expect the closure of our Tempe, Arizona collections call center and expansion of our legal collections operations in our Riverview, Florida office to drive improved results in 2013 and beyond.”

Last month, Asset Acceptance announced that it will be expanding its legal collections operations in Riverview, Fla. and closing its Tempe, Ariz. collections call center. The closing of the Tempe collections office, along with related inventory reallocations is expected to increase earnings on an annual basis by approximately $4.0 million or $0.10 per share, net of tax.

During the third quarter of 2012, the company said it invested $23.9 million to purchase charged-off consumer debt portfolios with a face value of $766.2 million. This compares to the prior-year third quarter, when the company invested $38.3 million to purchase consumer debt portfolios with a face value of $1.3 billion.