Asta Funding, Inc. Announces Financial Results For Second Quarter And First Six Months Of Fiscal 2013

  • Net Income of $3.5 million, or $0.26 Per Diluted Share for Six Months
  • Net Income of $882 thousand, or $0.07 Per Diluted Share for 2nd Quarter
  • Strong Balance Sheet, Strong Liquidity Position Continues
  • $107.1 Million Cash & Securities as of March 31, 2013
  • $28.2 Million Investment in Personal Injury Claims

ENGLEWOOD CLIFFS, N.J., May 9, 2013 (GLOBE NEWSWIRE) -- Asta Funding, Inc. (Nasdaq:ASFI) (the "Company"), a consumer receivable asset management and liquidation company, today announced results for the second quarter and first six months of its 2013 fiscal year.

The Company reported net income attributable to Asta Funding, Inc. of $882,000 for the three month period ended March 31, 2013, or $0.07 per diluted share, as compared to net income attributable to Asta Funding, Inc. of $2,460,000 for the three month period ended March 31, 2012, or $0.17 per diluted share. Net income attributable to Asta Funding, Inc. for the six months ended March 31, 2013 was $3,470,000, or $0.26 per diluted share, as compared to net income attributable to Asta Funding, Inc. of $5,437,000, or $0.37 per diluted share for the six months ended March 31, 2012. The primary reason for the reduction in net income was a second quarter impairment charge of $2,203,000 on three consumer debt portfolios. Total revenues for the three months ended March 31, 2013 were $10,085,000 as compared to $11,470,000 for the same period in the prior year. Total revenues in the three month period included approximately $1,392,000 from Pegasus Funding, LLC, the joint venture in the personal injury finance industry, as compared to $492,000 from the same period of the prior year. Total revenues for the six month period ended March 31, 2013 were $20,637,000 as compared to $21,909,000 for the six month period ended March 31, 2012. Total revenues in the six month period ended March 31, 2013 included approximately $2,634,000 from Pegasus Funding, LLC, as compared to $492,000 in the same period of the prior year, as the joint venture was consummated December 28, 2011.

Net cash collections of consumer receivables acquired for liquidation, including net cash collections represented by account sales, were $13,004,000 for the second quarter of fiscal year 2013, as compared to $18,713,000 in the second quarter of fiscal year 2012. Net cash collections of consumer receivables acquired for liquidation, including net cash collections represented by account sales, were $26,613,000 for the six months ended March 31, 2013, compared to $35,683,000 in the six months ended March 31, 2012.

Income from fully amortized portfolios (zero basis revenue) was $7,926,000 for the three month period ended March 31, 2013, compared to $9,247,000 for the three month period ended March 31, 2012. Income from fully amortized portfolios was $16,072,000 for the six month period ended March 31, 2013, compared to $17,830,000 for the six month period ended March 31, 2012. Net cash collections on the Great Seneca portfolio were $2,988,000 in the second quarter of fiscal year 2013, as compared to $3,394,000 in the second quarter of fiscal year 2012. Net collections on the Great Seneca portfolio were $5,641,000 during the six months ended March 31, 2013 as compared to $6,114,000 for the six months ended March 31, 2012. The carrying value of the Great Seneca portfolio at March 31, 2013 was $59,792,000, as compared to $72,196,000 at March 31, 2012.

The Company invested approximately $8,357,000 and $15,954,000, respectively, in personal injury cases through the joint venture Pegasus Funding, LLC during the three and six month periods ended March 31, 2013. As of March 31, 2012, the Company had invested $7,721,000 in personal injury cases.

General and administrative expenses were $5,788,000 for the three month period ended March 31, 2013 as compared to $6,032,000 for the three month period ended March 31, 2012. The decrease was attributable to reduced collection expense related to salaries and benefits, and lower postage expenses as we reduced in house collection activities during the second quarter of fiscal year 2013 to rely on our established outsourced services. The savings was somewhat offset by the increased activity of the Pegasus Funding, LLC personal injury unit. General and administrative expenses were $11,381,000 during the six month period ended March 31, 2013 as compared to $10,798,000 for the six month period ended March 31, 2012. The increase was primarily attributable to the Pegasus Funding, LLC unit. Interest expense was $534,000 for the three month period ended March 31, 2013 as compared to $646,000 for the three month period ended March 31, 2012. Impairments of $2,203,000 were recorded in both the three and six month periods ended March 31, 2013, as compared to impairments of $611,000 recorded in both the three and six month periods ended March 31, 2012.

The Company had no senior debt as of March 31, 2013 and September 30, 2012. The balance of the non recourse debt to the Bank of Montreal was $56,823,000 at March 31, 2013 down from $61,463,000 at September 30, 2012. Also, during the six month period ended March 31, 2013, the Company re-purchased approximately 172,000 shares of its common stock at a cost of $1,579,000.

"We are pleased with the results of the second quarter and six month period ended March 31, 2013 as we continue to generate strong cash flow and improve our liquidity position," commented Gary Stern, Chairman and CEO of the Company. Mr. Stern continued, "We continue to invest in personal injury cases through the Pegasus Funding, LLC joint venture in which we invested approximately $16.0 million in personal injury claims in the first six months of fiscal year 2013. Pegasus has contributed approximately $500,000 to our pre-tax results in the first six months of fiscal year 2013. As we continue our work in the debt collection business, we believe the quality of the legacy portfolio continues. Although there was a decrease in zero basis revenue from the prior year, such revenue remained at historically consistent levels reporting in at $8.0 million and $16.1 million in the three and six month period ended March 31, 2013, respectively. In addition, we continue to seek additional investments in, or acquisitions of, companies in the financial services industry."

A conference call to discuss the results of the second quarter and first six months of fiscal year 2013 will be held on Thursday, May 9, 2013 at 4:00PM, EDT.
Toll-free dial-in number (U.S. and Canada):
(800) 668-4132
 
International dial-in number:
(224) 357-2196
 
Replay:
U.S. and Canada: (855) 859-2056 
International: (404) 537-3406
Conference ID: 64976582

Based in Englewood Cliffs, NJ, Asta Funding, Inc., is a leading consumer receivable asset management company that specializes in the purchase, management and liquidation of performing and non-performing consumer receivables. For additional information, please visit our website at http://www.astafunding.com.

This document contains "forward-looking statements" – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," or "will." These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: our ability to purchase defaulted consumer receivables at appropriate prices, changes in government regulations that affect our ability to collect sufficient amounts on our defaulted consumer receivables, our ability to employ and retain qualified employees, changes in the credit or capital markets, changes in interest rates, deterioration in economic conditions, negative press regarding the debt collection industry which may have a negative impact on a debtor's willingness to pay the debt we acquire, potential regulation or limitation of interest rates and other fees advanced by Pegasus under federal and/or state regulation, a change in statutory or case law which limits or restricts the ability of Pegasus to charge or collect fees and interest at anticipated levels, plaintiff 's being unsuccessful in whole or in part in the litigation upon which our funds are provided, the continued services of the senior management of Pegasus to source and analyze cases in accordance with the underwriting guidelines of Pegasus, and such other factors that may be identified from time to time in our Securities and Exchange Commission ("SEC") filings and other public announcements including those set forth under the caption "Risk Factors" in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended September30, 2012. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the foregoing. Readers are cautioned not to place undue reliance on our forward-looking statements, as they speak only as of the date made. Except as required by law, we assume no duty to update or revise our forward-looking statements.

- Financial Tables Follow
ASTA FUNDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
  Three Months Three Months Six Months Six Months
  Ended Ended Ended Ended
  March 31, 2013 March 31, 2012 March 31, 2013 March 31, 2012
Revenues:        
Finance income, net  $ 8,263,000  $ 10,470,000  $ 16,753,000  $ 20,260,000
Other income  1,822,000  1,000,000  3,884,000  1,649,000
         
         
   10,085,000  11,470,000  20,637,000  21,909,000
         
Expenses:        
General and administrative  5,788,000  6,032,000  11,381,000  10,798,000
Interest  534,000  646,000  1,103,000  1,320,000
Impairments of consumer receivables acquired for liquidation  2,203,000  611,000  2,203,000  611,000
         
         
   8,525,000  7,289,000  14,687,000  12,729,000
         
         
Income before income tax  1,560,000  4,181,000  5,950,000  9,180,000
         
Income tax expense  600,000  1,672,000  2,357,000  3,694,000
         
Net income   960,000  2,509,000  3,593,000  5,486,000
         
Less: net income attributable to non-controlling interest  78,000  49,000  123,000  49,000
         
Net income attributable to Asta Funding, Inc.  $ 882,000  $ 2,460,000  $ 3,470,000  $ 5,437,000
         
         
Net income per share attributable to Asta Funding, Inc.:        
         
Basic  $ 0.07  $ 0.17  $ 0.27  $ 0.37
Diluted  $ 0.07  $ 0.17  $ 0.26  $ 0.37
         
Weighted average number of common shares outstanding:        
Basic  12,943,896  14,642,174  12,942,554  14,640,800
         
Diluted  13,226,351  14,879,480  13,203,929  14,880,213
         
ASTA FUNDING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
  March 31, September 30,
  2013 2012
  (Unaudited)  
ASSETS    
Cash and cash equivalents  $ 28,039,000  $ 4,953,000
Investments:    
Available-for-sale  59,125,000  58,712,000
Certificates of deposit  19,956,000  42,682,000
Restricted cash  925,000  1,088,000
Consumer receivables acquired for liquidation (at net realizable value)  74,824,000  86,887,000
Other investments, net  28,187,000  18,596,000
Due from third party collection agencies and attorneys  1,197,000  2,042,000
Prepaid and income taxes receivable  248,000  2,057,000
Furniture and equipment, net  1,246,000  821,000
Deferred income taxes, net  10,091,000  10,410,000
Other assets  5,384,000  4,916,000
     
     
Total assets  $ 229,222,000  $ 233,164,000
     
     
LIABILITIES    
Non recourse debt  $ 56,823,000  $ 61,463,000
Other liabilities  2,280,000  2,920,000
Dividends payable  —   260,000
     
     
Total liabilities  59,103,000  64,643,000
     
     
Commitments and contingencies    
STOCKHOLDERS' EQUITY    
Preferred stock, $.01 par value; authorized 5,000,000 shares; issued and outstanding — none  —   — 
Common stock, $.01 par value; authorized 30,000,000 shares; issued and outstanding — 12,941,139 at March 31, 2013 and 13,006,918 at September 30, 2012  149,000  148,000
Additional paid-in capital  77,932,000  77,024,000
Retained earnings  109,743,000  107,303,000
Accumulated other comprehensive (loss) income, net of tax   (54,000)  241,000
Treasury stock (at cost) 1,943,738 shares at March 31, 2013 and 1,772,038 shares at September 30, 2012.  (17,805,000)  (16,226,000)
Non-controlling interest  154,000  31,000
Total stockholders' equity  170,119,000  168,521,000
     
Total liabilities and stockholders' equity  $ 229,222,000  $ 233,164,000
CONTACT: Robert J. Michel, CFO         Asta Funding, Inc.         (201) 567-5648

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