Asset Acceptance Capital Corp. (NASDAQ:
), a leading purchaser and collector of charged-off consumer debt, today reported results for the quarter ended September 30, 2012.
Third Quarter 2012 Financial Highlights:
Cash collections for the third quarter of 2012 were $89.2 million, an increase of 2.0% compared to the prior year period. Results included 14.8%, or $5.8 million, cash collection growth from the Company’s legal channel.
Third quarter revenues were $54.7 million, down 3.4% compared to the prior year period. The Company reported net impairment reversals of $0.5 million compared to net impairment reversals of $2.7 million in the prior year period. Results in the current quarter included a non-cash impairment of $1.7 million, or $0.06 per fully diluted share, pre-tax, on one pool.
Operating expenses were $48.6 million representing a slight increase of $0.1 million, or 0.1% from the prior year. Results reflected a continued investment in the Company’s legal channel and an increase in the associated up-front costs. Legal investments increased to $10.2 million, or $0.33 per fully diluted share, pre-tax, during the quarter compared to $8.3 million, or $0.27 per fully diluted share, pre-tax, in the prior year period. Operating expenses also included $0.3 million, or $0.01 per fully diluted share, pre-tax, of restructuring costs related to actions taken to close the Tempe, Arizona collections office. Cost to collect for the quarter was 54.5%, an improvement of 100 basis points from the third quarter 2011, notwithstanding the unfavorable comparative impacts of the increased legal investment and restructuring charges.
Income tax expense was a net benefit of $0.5 million which was due to tax credits, state tax refund claims from prior years, and additional benefits achieved through a state sourcing strategy. As a result of these benefits, the year-to-date effective tax rate was lowered to 24.5%.
The Company reported net income of $1.5 million, or $0.05 per fully diluted share, net of tax, during the third quarter of 2012, compared to a net income of $3.1 million, or $0.10 per fully diluted share, net of tax, in the third quarter of 2011.