GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Asta Funding Inc. Reports Operating Results (10-Q)

May 14, 2010 | About:
gurufocus

10qk

18 followers
Asta Funding Inc. (ASFI) filed Quarterly Report for the period ended 2010-03-31.

Asta Funding Inc. has a market cap of $121.6 million; its shares were traded at around $8.52 with a P/E ratio of 6.6 and P/S ratio of 1.7. The dividend yield of Asta Funding Inc. stocks is 1%. Asta Funding Inc. had an annual average earning growth of 15.5% over the past 10 years. GuruFocus rated Asta Funding Inc. the business predictability rank of 2.5-star.ASFI is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Finance income. For the six month period ended March 31, 2010, finance income decreased $14.4 million or 39.3% to $22.1 million from $36.5 million for the six month period ended March 31, 2009. Finance income has decreased primarily due to the lower level of portfolio purchases over the last seven quarters and, as a result, the increased percentage of our portfolio balances are in the later stages of their yield curves. Finance income also decreased as the average balance of consumer receivables acquired for liquidation decreased from $408.7 million for the six month period ended March 31, 2009 to $192.4 million for the six month period ended March 31, 2010. The decrease in the average balance was attributable to reduced level of portfolio purchases and the impairments recorded in the second half of fiscal year 2009 in the amount of $143.7 million. The Company purchased $149.4 million in face value of new portfolios at a cost of $3.3 million in the first six months of fiscal year 2010 as compared to $91.5 million and $2.7 million, respectively, in the same prior year period.

During the first six months of fiscal year 2010, gross collections decreased 32.0% to $83.8 million from $123.2 million for the six months ended March 31, 2009, reflecting the lower level of purchases, the age of our portfolios and the slow down in the economy. Commissions and fees associated with gross collections from our third party collection agencies and attorneys decreased $15.6 million, or 35.2% for the six months ended March 31, 2010 as compared to the same period in the prior year and averaged 34.2% of collections for the six months ended March 31, 2010 as compared to 35.9% in the same prior year period. Net collections decreased 30.2% to $55.1 million from $79.0 million for the six months ended March 31, 2009. Income recognized from fully amortized portfolios (zero based revenue) was $16.4 million and $20.6 million for the six months ended March 31, 2010 and 2009, respectively.

General and administrative expenses. During the six months ended March 31, 2010, general and administrative expenses decreased $2.5 million, or 18.5% to $10.9 million from $13.4 million for the six months ended March 31, 2009. The decrease in general and administrative expenses is attributable to the closure of the Pennsylvania call center in February 2009, lower collection expenses, primarily the discontinuation of the $275,000 monthly management fee in May 2009, paid to a significant servicer relative to the purchase of a $6.9 billion face value portfolio in March 2007 (the Portfolio Purchase), and lower professional fees.

Finance income. For the three month period ended March 31, 2010, finance income decreased $6.9 million or 38.2% to $11.2 million from $18.1 million for the three month period ended March 31, 2009. Finance income has decreased primarily due to the lower level of portfolio purchases over the last seven quarters and, as a result, the increased number of our portfolios that are in the later stages of their yield curves. The average balance of consumer receivables acquired for liquidation decreased from $386.0 million for the three month period ended March 31, 2009 to $184.4 million for the three month period ended March 31, 2010. The decrease in the average balance was attributable to the impairments recorded in the fourth quarter of fiscal year 2009. The Company purchased $33.1 million in face value of new portfolios at a cost of $1.0 million in the second quarter of fiscal year 2010 as compared to $44.0 million and $1.6 million, respectively, in the same prior year period.

During the second quarter of fiscal year 2010, gross collections decreased 30.3% to $40.0 million from $57.4 million for the three months ended March 31, 2009. Commissions and fees associated with gross collections from our third party collection agencies and attorneys decreased $6.1 million, or 29.8%, for the three months ended March 31, 2010 as compared to the same period in the prior year and averaged 35.9% of collections during the three-month period ended March 31, 2010. Net collections decreased by 30.5% to $25.7 million from $36.9 million for the three months ended March 31, 2009. Income recognized from fully amortized portfolios (zero based revenue) was $8.3 million and $10.5 million for the three months ended March 31, 2010 and 2009, respectively. Collections during the quarter were reduced slightly early in the second quarter by the bankruptcy filing of a significant servicer in December 2009 and the subsequent receivership of the primary law firm used by that servicer. All accounts have since been placed with other servicers and collection actions have continued on these accounts. In addition, there will be additional expense involved in working with the trustee for that servicer and the receiver for that law firm in finalizing the transition of all the records and collections.

Net cash provided by operating activities was $9.4 million during the six month period ended March 31, 2010, compared to $11.6 million for the six months ended March 31, 2009. The decrease in net cash provided by operating activities is primarily attributable to lower net income (excluding impairments, a non-cash item), and lower income taxes payable, partially offset by higher deferred income taxes, during the six months ended March 31, 2010 compared to the same prior year period. Net cash provided by investing activity was $29.7 million during the six months ended March 31, 2010 compared to $41.3 million provided by investing activities for the six months ended March 31, 2009. The reduction in net cash provided by investing activity is a reflection of lower collections, largely attributable to reduced purchase levels compared to recent years and a continued difficult collection environment. Net cash used in financing activities decreased to $28.8 million for the six months ended March 31, 2010 from $53.9 million for the same prior year period. The decrease reflects the continuation of our plan to reduce debt.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 2.6/5 (5 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK