Asta Reports Strong First Quarter, Sees Challenging Collection Ahead

Debt purchaser and collector Asta Funding, Inc. Monday reported financial results for the first quarter of its fiscal 2008 marked by a nearly 18 percent rise in net income on a 33 percent increase in revenue. But the company cautioned that collections were challenging in the quarter and would continue to deteriorate over 2008.

Englewood, N.J.-based Asta (Nasdaq: ASFI) reported revenue of $34.2 million for the quarter ended Dec. 31, 2007, up 33.4 percent from the $25.6 million the company reported in the first quarter of 2007. Net income rose 17.6 percent to $13.3 million in the quarter.

Total collections were $57.9 million for the first quarter, down from $59 million in the first quarter of fiscal 2007. Asta CEO Gary Stern blamed broad economic weakness for the slowdown. “Our cash collections slowed during the quarter due to a challenging economic environment,” Stern said in a release.

Mitchell Cohen, Asta’s CFO, also noted in a conference call late Monday that the collections environment will be difficult going forward. In the release, Stern concluded, “In the near term we believe collections in general will continue to be challenging. That being said, we are optimistic about future purchasing opportunities.”

Asta remained very active in the quarter purchasing $1.1 billion in face value debt for $37.5 million. The company said that the total includes $8.6 million invested in a portfolio purchased from a major financial institution located in South America. In fourth quarter of 2007, Asta paid $38.6 million for portfolios with a face value of $644.8 million.

Stern said, “Asta will continue to pursue portfolios as long as pricing meets our strict purchasing criteria. We continue to review portfolio opportunities and believe that there will be enough supply to support future purchases at opportunistic prices.”