Debt buyer Asset Acceptance Capital Corp., based in Warren, Mich., reported better-than-expected quarterly results, led by a strong growth in cash collections.
For the fourth quarter ended Dec. 31, the company posted a profit of $4.2 million, or 14 cents per share, compared with a loss of $7 million or 23 cents, in the year-ago period.
The company reported full-year 2011 results that showed jumps in collections, net income and revenue and a drop in operating expenses as a result of restructuring in 2010. Earnings reached $12 million in 2011 compared to a net loss of $1.6 million in 2010. Revenue increased 9.9% to $218.1 million. Cash collections in 2011 were $350 million, up 6.4% over 2010.
Asset Acceptance reported a 6.2% decline in operating expenses in 2011, mostly driven by restructuring that occurred in 2010 when it exited the health care debt-buying market and sold its' medical debt portfolio. In 2010, the company also closed offices in Florida, Chicago and Cleveland, and ended a relationship with a third-party service provider.
Restructuring charges last year were limited to the closure of a call center in San Antonio, Texas in early 2012. The company took a $300,000 charge on the move in the fourth quarter of 2011 and expects another $400,000 related expenses this year.
The company purchased $160.9 million of charged-off consumer debt with a face value of $5,329.4 million in 2011. This compares to 2010 when it purchased $136 million in charged-off consumer receivables with a face value of $3,782.6 million.
Asset Acceptance has four U.S. locations, including headquarters and a call center in Warren, Mich., call centers in Riverview, Fla. and Tempe, Ariz., and a software support and development office in Sparks, Md. It counted 659 full-time collection employees, including supervisors, in 2011, down 25% from 2010. The number of representatives at a third-party agency in India working on the company’s behalf increased 10% to 250.
The company was penalized for $2.5 million in January by the Federal Trade Commission and Justice Department for using deceptive collective practices (see story).
The settlement, among several things, requires that when Asset Acceptance knows or should know debt may not be legally enforceable under state law – referred to as "time-barred" debt – it must disclose to the consumer that it will not sue and, if true, that it may report non-payment to the credit reporting agencies.
Last month, the U.S. Consumer Financial Protection Bureau proposed to regulate about 200 collectors including Asset Acceptance Capital Corp to keep a closer tab on the functioning of the industry (see story).