NCO Group Narrows Net Loss to $24 million in Third Quarter
NCO reported a large headline loss, but its operating results show significant improvement from this time last year as it lowers costs and keeps revenue steady in a difficult economy.
Accounts receivable management and contact center giant NCO Group said Friday that it recorded a significant net loss in the third quarter of 2009, but it marked an improvement from the same quarter a year ago.
In a filing with the Securities and Exchange Commission (SEC), Horsham, Pa.-based NCO reported a net loss attributable to the company of $24.6 million, down from the $26.5 million loss a year ago.
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But the company significantly reduced its net loss from operations to $1.8 million in the third quarter of 2009 from $19.6 million in Q3 2008. In the third quarter of 2008, the firm recorded a significant tax benefit in contrast with the tax liability in the third quarter of this year. NCO also reported income from operations of $31.9 million for the first nine months of 2009 compared to a loss from operations of $13.6 million in the same period in 2008.
Revenue in the quarter was down 1.9 percent to $373.6 million. Total revenue for the first nine months of 2009 was up 0.3 percent to $1.154 billion.
NCO said that its collection unit, called ARM, accounted for revenue of $306.9 million, down slightly from the year ago period. Revenue in the company’s Customer Relationship Management (CRM) unit was down 7.1 percent to $85.1 million. NCO’s debt buying arm – Portfolio Management – brought in $2.3 million. Portfolio Management recorded a $13.9 million impairment charge on purchased accounts in the third quarter of 2009.
The company said in the filing that “the decrease in ARM’s revenue was primarily attributable to a $6.7 million decrease in fees from collection services performed for Portfolio Management, and lower than expected overall collections, partially offset by increased volume from new and existing clients in both first-party (early stage) and contingent collections.”
NCO said that in the third quarter of 2009 it spent $15 million on debt portfolio purchases totaling $573 million in face value accounts, down from the $33.9 million it spent in the third quarter of 2008.
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