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Asset Acceptance Capital Corp. (NASDAQ:
AACC), a leading purchaser and collector of charged-off consumer debt, today reported results for the quarter and fiscal year ended December 31, 2011.
Fourth Quarter 2011 Financial Highlights
Cash collections for the fourth quarter of 2011 increased 7.3% compared to the prior year period, to $82.1 million.
Fourth quarter revenues were $56.4 million, an increase of 18.8% from the same period of the prior year. The Company reported net impairment reversals, which increased revenues for the quarter, of $2.6 million on purchased receivables versus net impairment reversals of $0.7 million in the prior year period. The Company reported a $0.4 million gain on sale of its healthcare portfolios in the fourth quarter of 2010. There were no gains on sale of receivables in the fourth quarter of 2011.
Rion Needs, President and CEO of Asset Acceptance Capital Corp, commented: “Our fourth quarter results marked a year of significant progress and a turning point for our business. During the year, we executed on a number of key initiatives aimed at positioning our company for long-term growth, including enhancing our cost structure, refinancing our credit facilities, eliminating underperforming assets, improving our analytics and streamlining our overall business model. Mr. Needs continued, “Although industry dynamics remained challenging, we saw positive momentum each quarter of 2011 in nearly every aspect of our business, but none more evident than in collection growth, cost to collect improvement and earnings growth. We believe the strategic initiatives implemented in 2011, along with the significant increase in purchases during the year, position us well for improved performance in 2012 and beyond.”
Operating expenses were $45.2 million, or 55.1% of cash collections, for the fourth quarter of 2011, a decrease of $9.0 million compared to the year earlier period when operating expenses were 70.8% of cash collections. Operating expenses for the fourth quarter of both years included several items that impact comparability. During the fourth quarter 2010, the Company incurred a charge of $5.3 million resulting from the termination for performance of a relationship with a third party provider. The charge related to a cash payment to reimburse the third party for court costs incurred on the Company’s behalf that the third party would otherwise have recovered through commissions in future periods and was recorded as a component of “Collections expense”. In addition, the Company incurred restructuring charges in the fourth quarter of 2011 and 2010 of $0.1 million and $3.0 million, respectively. The restructuring charges were related to actions taken to close the San Antonio, TX collection office in early 2012 and the closing of the Chicago, IL and Cleveland, OH offices in 2010. The Company also recorded $0.1 million for charges related to the FTC matter in the fourth quarter of 2011 compared to $1.7 million in the fourth quarter of 2010. FTC charges were included as a component of “Administrative expense.”