Asset Acceptance Announces Results of a Tough First Quarter

Debt buyer Asset Acceptance Capital Corp. (NASDAQ: AACC) late Monday released its financial results for the first quarter of 2013 marked by a decline in net income and revenue, but an increase in debt buying activity.

Asset Acceptance said it recorded net income of $400,000, or $0.01 per share, during the first three months of 2013, a sharp drop from the $5.4 million ($0.18 per share) it reported in the first quarter of 2012. Adjusted Earnings Before Interest Taxes Depreciation and Amortization (Adjusted EBITDA) was $56.5 million, a 3.3 percent increase from $54.7 million in the first quarter of 2012.

First quarter revenues fell 10.7 percent to $55.2 million. Net portfolio impairments were $200,000 in Q1 2013.

Asset Acceptance said that its cash collections increased 2.6 percent in the first quarter to $103.8 million.

The debt purchaser said that it slightly increased its investment in portfolios in the quarter, but bought more expensive paper. In Q1 2013 Asset Acceptance spent $27.1 million in charged-off consumer receivables with a face value of $431.6 million for a blended rate of 6.27 percent of face value, compared to Q1 2012 purchasing activity of $21.1 million spent on accounts with a face value of $803.2, representing a blended rate of 2.63 percent of face value.

The company also noted that its average U.S. in-house collector count was cut in half over the past year, from 500 at the end of Q1 2012 to 250 at the end of the most recent quarter. The number of representatives at its off-shore third party collection partner grew from 225 to 300 over the same period.

Management did not offer comment on the results and did not hold a conference call. The company noted in its press release that its planned takeover by rival Encore Capital Group is expected to close in the second quarter.