|Asset Acceptance Capital Corp. Reports Fourth Quarter and Full Year 2009 Results|
Highlights from the fourth quarter 2009 include:
Rion Needs, President and CEO, commented: "The operating environment in 2009 has been one of the most challenging periods in our Company's history, with the fourth quarter proving to be one of the most difficult quarters of the year. The macroeconomic environment continued to adversely impact our cash collections, particularly on our older vintages. In connection with the preparation of our financial statements for the quarter and year ended December 31, 2009, we observed a significant difference between actual and projected cash collections in some of these older portfolios, which caused us to perform a more in depth review of our expectation of future cash collections. This resulted in a large non-cash impairment charge of $32.4 million, or $0.66 per share, net of the tax benefit. As a result, we reported a net loss for fourth quarter and the year. We are hopeful that this action will aid in minimizing non-cash impairments going forward."
Needs continued, "While the economic headwinds persisted throughout the year, the pricing environment remained attractive as supply of charge-offs from issuers continued to expand and the overall demand remained soft. We continued to ramp up our purchasing during the back half of the year, and expect this initiative to pay dividends as we move through 2010 and collect on the newer vintage. Additionally, we made further progress with our initiatives to improve operational efficiencies that not only helped us manage through the current economic climate but also positions us for long-term value creation. Despite a difficult 2009, we look forward to 2010 and the opportunities for our business."
Fourth Quarter 2009 Review
Asset Acceptance reported cash collections of $74.8 million in the fourth quarter ended December 31, 2009, versus cash collections of $83.3 million in the year-ago period.
Total revenues were $18.7 million in the fourth quarter of 2009, compared to total revenues of $55.0 million in the fourth quarter of 2008. Amortization of purchased receivables in the fourth quarter of 2009 was 75.6% of total cash collections versus 34.2% of total cash collections in the fourth quarter of 2008. The Company reported a fourth quarter of 2009 non-cash net impairment charge of $32.4 million on purchased receivables, versus $4.6 million in the prior year quarter.
The net loss for the quarter was $20.2 million, or $0.66 per fully diluted share, compared to net income of $3.8 million, or $0.12 per fully diluted share, in the fourth quarter of 2008. Earnings Before Interest, Taxes, Depreciation and Amortization, including purchased receivables amortization ("Adjusted EBITDA"), decreased to $28.2 million in the fourth quarter of 2009, down 28.2% compared to the year-ago period. Please refer to the table on page three, which reconciles net income according to Generally Accepted Accounting Principles ("GAAP") to Adjusted EBITDA.
During the fourth quarter of 2009, the Company invested $43.0 million to purchase charged-off consumer debt portfolios with a face value of $1.4 billion, for a blended rate of 3.08% of face value. This compares to the prior-year fourth quarter, when the Company invested $31.9 million to purchase consumer debt portfolios with a face value of $630.0 million, representing a blended rate of 5.06% of face value. All purchase data is adjusted for buybacks.
In addition to lower cash collections in the quarter, the Company reported higher operating expenses compared to the prior year. Total operating expenses in the quarter increased 5.5% to $48.5 million, from $46.0 million in the fourth quarter of 2008. For the 2009 fourth quarter, Asset Acceptance reported operating expenses of 64.9% of cash collections, up from 55.2% of cash collections in the prior year quarter.
Twelve Months Ended December 31, 2009
For the fiscal year ended December 31, 2009, the Company reported cash collections of $334.0 million compared to cash collections of $369.6 million in fiscal year 2008.
Total revenues in the fiscal year 2009 were $172.5 million versus $234.2 million in 2008. For 2009, amortization of purchased receivables was 48.7% of total cash collections versus 37.0% of total cash collections in the same period of last year. Net non-cash impairments for the fiscal year of 2009 totaled $49.5 million, versus $13.0 million for the year 2008.
The net loss for the twelve months of 2009 was $16.4 million, or $0.54 per fully diluted share, compared to net income of $15.7 million, or $0.51 per fully diluted share, in 2008. For the fiscal year ended December 31, 2009, Adjusted EBITDA declined to $153.3 million, a decrease of 15.3% when compared to the year ended 2008.
The Company invested $121.9 million to purchase charged-off consumer debt portfolios with a face value of $4.5 billion, for a blended rate of 2.73% during 2009, compared to $154.2 million with a face value of $3.8 billion, for a blended rate of 4.05% in 2008. All purchase data is adjusted for buybacks.
Reconciliation of GAAP Net (Loss) Income to Adjusted EBITDA (Unaudited)
This press release includes a discussion of "Adjusted EBITDA," which is a non-GAAP financial measure. The Company defines Adjusted EBITDA as net (loss) income plus (a) the (benefit) provision for income taxes, (b) interest expense, net, (c) depreciation and amortization, (d) share-based compensation, (e) (gain) loss on sale of assets, net, (f) impairment of assets and (g) purchased receivables amortization.
The Company believes this non-GAAP financial measure provides important supplemental information to management and investors. This non-GAAP financial measure reflects an additional way of viewing aspects of the Company's operations that, when viewed with the GAAP results and the accompanying reconciliation to the most directly comparable GAAP financial measure, provide a more complete understanding of factors and trends affecting the Company's business and results of operations.
Management uses Adjusted EBITDA for planning purposes, including the preparation of internal budgets and forecasts; in communications with the Board of Directors, stockholders, analysts and investors concerning our financial performance; as a key component in management's annual incentive compensation plan; and as a measure of operating performance for the financial covenants in our amended credit agreement. The Company also believes that analysts and investors use Adjusted EBITDA as supplemental measures to evaluate the overall operating performance of companies in its industry.
Adjusted EBITDA, which is a non-GAAP financial measure, should not be considered an alternative to, or more meaningful than, net (loss) income prepared on a GAAP basis. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare this financial measure with other companies' non-GAAP financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from the Company's non-GAAP measure should not be construed as an inference that these costs are unusual, infrequent or non-recurring.
The Company provided the following table which reconciles GAAP net (loss) income, as reported, to Adjusted EBITDA.
Fourth Quarter and Full Year 2009 Earnings Conference Call
Asset Acceptance Capital Corp. will host a conference call at 5 p.m. Eastern today to discuss these results and current business trends. To listen to a live webcast of the call and access the presentation, please go to the investor section of the Company's web site at www.AssetAcceptance.com. A replay of the webcast will be available until March 10, 2011.
About Asset Acceptance Capital Corp.
For more than 45 years, Asset Acceptance has provided credit originators, such as credit card issuers, consumer finance companies, retail merchants, utilities and others an efficient alternative in recovering defaulted consumer debt. For more information, please visit www.AssetAcceptance.com.
Asset Acceptance Capital Corp. Safe Harbor Statement
This press release contains certain statements, including the Company's plans and expectations regarding its operating strategies, charged-off receivables and costs, which are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include reference to the Company's presentations and webcasts. These forward-looking statements reflect the Company's views, expectations and beliefs at the time such statements were made with respect to such matters, as well as the Company's future plans, objectives, events, portfolio purchases and pricing, collections and financial results such as revenues, expenses, income, earnings per share, capital expenditures, operating margins, financial position, expected results of operations and other financial items. Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Risk Factors") that make the timing, extent, likelihood and degree of occurrence of these matters difficult to predict. Words such as "anticipates," "believes," "estimates," "expects," "intends," "should," "could," "will," variations of such words and similar expressions are intended to identify forward-looking statements. There are a number of factors, many of which are beyond the Company's control, which could cause actual results and outcomes to differ materially from those described in the forward-looking statements. Risk Factors include, among others: ability to purchase charged-off consumer receivables at appropriate prices, ability to continue to acquire charged-off receivables in sufficient amounts to operate efficiently and profitably, employee turnover, ability to compete in the marketplace and acquiring charged-off receivables in industries that the Company has little or no experience. These Risk Factors also include, among others, the Risk Factors discussed under "Item 1A Risk Factors" in the Company's most recently filed Annual Report on Form 10-K and in other SEC filings, in each case under a section titled "Risk Factors" or similar headings and those discussions regarding risk factors as well as the discussion of forward-looking statements in such sections are incorporated herein by reference. Other Risk Factors exist, and new Risk Factors emerge from time to time that may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Furthermore, the Company expressly disclaims any obligation to update, amend or clarify forward-looking statements.
Supplemental Financial Data
Note 1: Core amortization rate is amortization divided by collections on non-fully amortized portfolios.
Note 2: All purchase data is adjusted for buybacks.
The Company provided the following details regarding purchased receivable revenues:
(1) "N/M" indicates that the calculated percentage is not meaningful.
(2) The monthly yield is the weighted-average yield determined by dividing purchased receivable revenues recognized in the period by the average of the beginning monthly carrying values of the purchased receivables for the period presented.
SOURCE: Asset Acceptance Capital Corp.
|Print Page | E-mail Page | RSS | E-mail Alerts | Contacts|