ARM Earnings Reports All Over the Place; Sallie Mae Up, Intrum Flat, WAM Reorganizes

Early earnings announcements this week for the third quarter of 2009 from large accounts receivable companies and corporate units have been all over the place, ranging from modest increases to complete realignment.

Two major ARM units and one large European ARM firm announced results for the third quarter this week: Sallie Mae’s Asset Performance Group, Sweden-based Intrum Justitia, and West Corporation’s Receivables Management unit. At least two publicly traded U.S. ARM companies – Encore Capital Group and Portfolio Recovery Associates – are scheduled to report Q3 earnings next week.

West Corporation Wednesday reported results for the third quarter of 2009. West has a very large ARM unit that operates as West Asset Management (WAM).

The company announced that it would no longer be reporting WAM results – reported as its Receivables Management segment – separately. Instead, the results were being folded into the existing Communication Services segment, which includes the company’s substantial call center businesses. CEO Tom Barker noted on a conference call Thursday that WAM results had always been a part of the Communications segment. “But when purchased paper became a significant part of receivables management, we broke it out because the accounting was separate and we thought it was important to highlight what we were doing with that business,” said Barker. Now that the company is winding down its debt purchasing business, management felt it was wise to once again include ARM results with the rest of its call center operations.

West said that it made no debt purchases in the third quarter, and hasn’t made a portfolio purchase since the first quarter of this year, when it spent only $1.7 million on accounts. The company also announced that the unit had taken an impairment charge on purchased debt that reduced revenue by $25.5 million. Also, total revenues for the unit were down $40.7 million compared to Q3 2008, but total revenue figures were not given.

Barker noted that the company is actively working to improve and expand its ARM business. WAM is a major player in the collection industry, holding a spot on the Department of Education’s student loan collection contract and ranking near the top of third party collectors in the country.

In a release issued in early October, West said that it was preparing for a public stock offering, once again putting the company in the publicly traded space. West, which had been public since 1996, announced that it would be taken private in late 2006.

Student loan giant Sallie Mae reported Q3 earnings Tuesday. The company also has a very large ARM operation that includes debt collection agencies Pioneer Credit Recovery and General Revenue Corp., among others. The ARM unit is called the Asset Performance Group (APG) in Sallie Mae’s financial reports.

Sallie Mae said that APG recorded revenues of $97.8 million in the third quarter of 2009, up 2.5 percent from the second quarter, but exponentially from the third quarter of 2008 when the unit reported revenues of -$79 million due to impairments. Net income in the third quarter in the APG was $7.2 million, compared to $2.5 million in the second quarter and a loss of $124 million a year ago.

Across the Atlantic, European ARM Giant Intrum Justitia reported $14.5 million in net earnings for the third quarter of 2009, down 22 percent from the year ago quarter. But revenues grew 13 percent year-over-year to $150.7 million in the quarter. The company invested $26.5 million in the purchase of charged-off receivables in the third quarter.

Intrum has been restructuring its operations in the United Kingdom and Ireland over the course of the year and reported that as of the end of the third quarter, the restructuring is complete.

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