Asset Acceptance Capital Corp. (AACC, Financial) filed Quarterly Report for the period ended 2009-09-30.
Asset Acceptance provides credit originators such as credit card issuers consumer finance companies retail merchants utilities and others -- an efficient alternative in recovering defaulted consumer debt. Asset Acceptance Capital Corp. has a market cap of $163.2 million; its shares were traded at around $5.34 with a P/E ratio of 13.3 and P/S ratio of 0.7.
Cash collections declined for the nine months ended September 30, 2009 when compared to the same period in 2008, reflecting a more difficult collections environment due to the macro-economic factors, particularly on our older vintages of paper. Cash collections decreased by $27.0 million or 9.4% to $259.2 million for the nine months ended September 30, 2009 compared to $286.2 million for the nine months ended September 30, 2008. Traditional call center collections declined by $18.4 million or 14.3% as account representative productivity fell by 18.9% for the nine months ended September 30, 2009 when compared to the nine months ended September 30, 2008. We continue to balance our volume of paper outsourced to our agency network with our capacity-constrained in-house collection staff. We believe that our agency network is experiencing productivity declines similar to, or greater than, our in-house traditional call center collections associates. In June of 2009 we began to aggressively increase the number of in-house account representatives. By the end of 2009, we expect to have increased our in-house traditional call center staffing levels by approximately 20% from mid-second quarter levels. This initiative may include recalling some of our accounts that are currently placed with our agency forwarding channel.
Net income for the nine months ended September 30, 2009 was $3.8 million, a decline of 68.2% from $11.9 million for the nine months ended September 30, 2008. Purchased receivable revenues declined by $25.0 million primarily because of an increase in amortization as a percentage of collections, which increased to 41.0% for the nine months ended September 30, 2009 from 37.8% for the nine months ended September 30, 2008. Included in the amortization are net impairments on purchased receivables that increased to $17.1 million for the nine months ended September 30, 2009 compared to $8.4 million for the nine months ended September 30, 2008. Impairments are generated when currently assigned yields are too high in relation to the timing and/or amount of current or future collections, which have changed because of macro-economic factors affecting the consumers ability to repay their obligations or for other reasons. The amount of revenue recognized is a function of the yields assigned, and when collections decline a larger portion of collections are allocated to revenue and less towards amortization of portfolio balances. Portfolio balances that amortize too slowly in relation to expected collections also contribute to an increase in impairments.
We reduced our operating expenses in absolute dollars for the nine months ended September 30, 2009 compared to the same period in 2008. Total operating expenses were $140.2 million for the nine months ended September 30, 2009 a decrease of $9.7 million from $149.9 million for the nine months ended September 30, 2008. As a percentage of cash collections, operating expenses were 54.1% for the nine months ended September 30, 2009 compared with 52.4% for the nine months ended September 30, 2008. Salaries and benefits declined in the nine months ended September 30, 2009 by $6.7 million, compared to the nine months ended September 30, 2008. In the first nine months of 2009, collections expense decreased by $2.0 million versus the first nine months of 2008. Administrative expenses decreased by $1.5 million in the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008. The reduced salaries and benefits costs reflect our managing staffing levels for non-revenue generating positions and incentive compensation programs to the current level of collections. Our collections from third party relationships (attorneys and collection agencies) have increased to 32.5% of total cash collections for the nine months ended September 30, 2009 from 30.1% for the nine months ended September 30, 2008. Total forwarding fees on cash collections from these third party relationships have increased to $28.9 million for the nine months ended September 30, 2009 from $25.8 million for the nine months ended September 30, 2008. The remaining expenses included in collections expense declined by $5.1 million during the same period as a result of volume driven charges for data provider, lettering campaigns, telephone, process server and court costs.
We recorded a net loss for the three months ended September 30, 2009 of $1.6 million, or $0.05 per share, compared to net income of $3.0 million or $0.10 per share for the three months ended September 30, 2008. Purchased receivable revenues declined by $10.6 million primarily because of an increase in amortization as a percentage of cash collections, which increased to 39.0% for the three months ended September 30, 2009 compared to 36.0% for the three months ended September 30, 2008. Net impairments on purchased receivables increased to $6.8 million for the three months ended September 30, 2009 compared to $3.1 million for the three months ended September 30, 2008.
Total operating expenses were $48.1 million for the three months ended September 30, 2009, a decrease of $2.0 million, or 4.0%, compared to total operating expenses of $50.1 million for the three months ended September 30, 2008. Total operating expenses were 61.8% of cash collections for the three months ended September 30, 2009, compared with 55.2% for the same period in 2008. While the dollar amount of operating expenses declined, operating expenses increased as a percentage of collections because the decline in cash collections was greater than the decline in operating expenses.
Read the The complete Report
Asset Acceptance provides credit originators such as credit card issuers consumer finance companies retail merchants utilities and others -- an efficient alternative in recovering defaulted consumer debt. Asset Acceptance Capital Corp. has a market cap of $163.2 million; its shares were traded at around $5.34 with a P/E ratio of 13.3 and P/S ratio of 0.7.
Highlight of Business Operations:
During the nine months ended September 30, 2009, we invested $79.1 million (net of buybacks) in charged-off consumer receivable portfolios, with an aggregate face value of $3.1 billion, or 2.57% of face value. In the nine months ended September 30, 2008, we invested $122.3 million (net of buybacks through September 30, 2009) in paper, with an aggregate face amount of $3.2 billion, or 3.85% of face value. We reduced our level of investment in paper during the first half of 2009 to save capacity to invest in paper in the second half of the year and into 2010, in anticipation of additional declines in pricing. Purchasing in the third quarter of 2009 was over 80% higher than the second quarter of 2009.Cash collections declined for the nine months ended September 30, 2009 when compared to the same period in 2008, reflecting a more difficult collections environment due to the macro-economic factors, particularly on our older vintages of paper. Cash collections decreased by $27.0 million or 9.4% to $259.2 million for the nine months ended September 30, 2009 compared to $286.2 million for the nine months ended September 30, 2008. Traditional call center collections declined by $18.4 million or 14.3% as account representative productivity fell by 18.9% for the nine months ended September 30, 2009 when compared to the nine months ended September 30, 2008. We continue to balance our volume of paper outsourced to our agency network with our capacity-constrained in-house collection staff. We believe that our agency network is experiencing productivity declines similar to, or greater than, our in-house traditional call center collections associates. In June of 2009 we began to aggressively increase the number of in-house account representatives. By the end of 2009, we expect to have increased our in-house traditional call center staffing levels by approximately 20% from mid-second quarter levels. This initiative may include recalling some of our accounts that are currently placed with our agency forwarding channel.
Net income for the nine months ended September 30, 2009 was $3.8 million, a decline of 68.2% from $11.9 million for the nine months ended September 30, 2008. Purchased receivable revenues declined by $25.0 million primarily because of an increase in amortization as a percentage of collections, which increased to 41.0% for the nine months ended September 30, 2009 from 37.8% for the nine months ended September 30, 2008. Included in the amortization are net impairments on purchased receivables that increased to $17.1 million for the nine months ended September 30, 2009 compared to $8.4 million for the nine months ended September 30, 2008. Impairments are generated when currently assigned yields are too high in relation to the timing and/or amount of current or future collections, which have changed because of macro-economic factors affecting the consumers ability to repay their obligations or for other reasons. The amount of revenue recognized is a function of the yields assigned, and when collections decline a larger portion of collections are allocated to revenue and less towards amortization of portfolio balances. Portfolio balances that amortize too slowly in relation to expected collections also contribute to an increase in impairments.
We reduced our operating expenses in absolute dollars for the nine months ended September 30, 2009 compared to the same period in 2008. Total operating expenses were $140.2 million for the nine months ended September 30, 2009 a decrease of $9.7 million from $149.9 million for the nine months ended September 30, 2008. As a percentage of cash collections, operating expenses were 54.1% for the nine months ended September 30, 2009 compared with 52.4% for the nine months ended September 30, 2008. Salaries and benefits declined in the nine months ended September 30, 2009 by $6.7 million, compared to the nine months ended September 30, 2008. In the first nine months of 2009, collections expense decreased by $2.0 million versus the first nine months of 2008. Administrative expenses decreased by $1.5 million in the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008. The reduced salaries and benefits costs reflect our managing staffing levels for non-revenue generating positions and incentive compensation programs to the current level of collections. Our collections from third party relationships (attorneys and collection agencies) have increased to 32.5% of total cash collections for the nine months ended September 30, 2009 from 30.1% for the nine months ended September 30, 2008. Total forwarding fees on cash collections from these third party relationships have increased to $28.9 million for the nine months ended September 30, 2009 from $25.8 million for the nine months ended September 30, 2008. The remaining expenses included in collections expense declined by $5.1 million during the same period as a result of volume driven charges for data provider, lettering campaigns, telephone, process server and court costs.
We recorded a net loss for the three months ended September 30, 2009 of $1.6 million, or $0.05 per share, compared to net income of $3.0 million or $0.10 per share for the three months ended September 30, 2008. Purchased receivable revenues declined by $10.6 million primarily because of an increase in amortization as a percentage of cash collections, which increased to 39.0% for the three months ended September 30, 2009 compared to 36.0% for the three months ended September 30, 2008. Net impairments on purchased receivables increased to $6.8 million for the three months ended September 30, 2009 compared to $3.1 million for the three months ended September 30, 2008.
Total operating expenses were $48.1 million for the three months ended September 30, 2009, a decrease of $2.0 million, or 4.0%, compared to total operating expenses of $50.1 million for the three months ended September 30, 2008. Total operating expenses were 61.8% of cash collections for the three months ended September 30, 2009, compared with 55.2% for the same period in 2008. While the dollar amount of operating expenses declined, operating expenses increased as a percentage of collections because the decline in cash collections was greater than the decline in operating expenses.
Read the The complete Report
