Debt buyer Asset Acceptance Capital Corp. on Monday reported net income of $1.5 million for the third quarter ended Sept. 30, down from $3.1 million for the year-ago quarter.
Cash collections rose 2 percent to $89.2 million, spurred by $5.8 million, or 14.8 percent, growth in the company’s legal collections. Revenues in the quarter fell 3.4 percent to $54.7 million, compared to a year ago.
In the third quarter, Warren, Mich.-based Asset Acceptance said it invested $23.9 million to purchase charged-off consumer debt portfolios with a face value of $766.2 million. In the third quarter of 2011 the company invested $38.3 million to purchase debt portfolios with a face value of $1.3 billion.
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 last year. Adjusted EBITDA was adversely impacted by the increased investment in legal costs compared to last year.
Rion Needs, president and CEO at Asset Acceptance, said the company is not content with the results for the third quarter but continues to work on measures aimed at helping the company grow, including various restructuring efforts and investments in the legal collections channel. As part of that expansion, the company will add to its India collection channel and reallocate the inventory from the Tempe collections office.
Asset Acceptance last month said it is expanding its legal collections operations in Riverview, Fla. and closing its Tempe, Ariz. collections call center. The company also launched Recovery Services, a fee for service legal collections business, and is transitioning its Florida call center collections staff to the legal collections channel. These reallocations are expected to boost "profitability by optimizing channel mix and inventory returns," according to company officials.
"Our investments in [the legal 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," according to Needs. "In addition, we maintained a focus on further streamlining our business operations by reducing our cost and geographic footprint."
Earlier this month, Rufus "Bud" Reitzel, Asset Acceptance's founder, longtime leader and a debt-buying industry pioneer, passed away.