Debt Buyer Asset Acceptance Scores Big 2011 After Restructuring

Asset Acceptance Capital Corp. (Nasdaq: AACC) late Monday reported financial results for the fourth quarter and full year 2011 that showed increases in net income, collections, and revenue and a decline in operating expenses helped by major restructuring actions in 2010.

The Warren, Mich.-based debt buyer and collector said that it earned $12 million in 2011 — $0.39 per share — compared to a net loss of $1.6 million in 2010. Adjusted EBITDA for 2011 was $172.9 million, a 15.5 increase over 2010.

For the full year 2011, Asset Acceptance’s revenue increased 9.9 percent to $218.1 million. Cash collections for 2011 were $350 million, an increase of 6.4 percent over the previous year. The company’s call center collections channel, which includes in-house and third party collection agency outsourcing, accounted for 55.1 percent of collections in 2011 while legal collections accounted for 44.9 percent, both virtually unchanged from 2010.

“Although industry dynamics remained challenging, we saw positive momentum each quarter of 2011 in nearly every aspect of our business, but none more evident than in collection growth, cost to collect improvement and earnings growth,” said Rion Needs, Asset Acceptance President and CEO. “We believe the strategic initiatives implemented in 2011, along with the significant increase in purchases during the year, position us well for improved performance in 2012 and beyond.”

The company reported a 6.2 percent decline in operating expenses in 2011. Much of the decline was driven by restructuring activity that took place in 2010. The actions taken in 2010 included exiting the healthcare debt purchasing market, complete with the closing of an office in Florida and the sale of the company’s medical debt portfolio; the closing of offices in Chicago and Cleveland; the termination of a relationship with a third party service provider; and the acquisition of BSI eSolutions, makers of the Cogent brand of collection software.

By contrast, Asset Acceptance said that restructuring charges in 2011 were largely limited to the closure of a call center in San Antonio, Texas in early 2012. The company took a $300,000 charge on that move in the fourth quarter of 2011 and anticipates another $400,000 related expense in 2012.

Asset Acceptance now counts four locations in the U.S.: its corporate 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.  The company counted 659 U.S. full time collection employees, including supervisors, in 2011, down 25 percent from 2010. The number of representatives at a third party agency in India working on the company’s behalf increased 10 percent to 250.

The company acquired $160.9 million of charged-off consumer receivables with a face value of $5,329.4 million in 2011. This compares to 2010 when Asset Acceptance purchased $136 million in charged-off consumer receivables with a face value of $3,782.6 million.