NCO Group Reports 2008 Results
The ARM giant reported a hefty loss in 2008, but achieved its EBITDA goals as much of the loss was attributable to a one-time non-cash impairment charge.
Accounts receivable management and customer relations giant NCO Group Wednesday reported results for the full year and fourth quarter 2008 marked by a large loss on non-cash impairments and a sharp rise in revenue.
Horsham, Pa.-based NCO Group, Inc. reported a net loss for the full year 2008 of $337.1 million. In 2007, the company lost $31.7 million.
In the fourth quarter of 2008, the company reported a net loss of $286.6 million.
The losses were due to non-cash impairment charges related to a transaction in 2006 that took the company private, and to the company’s purchased debt portfolios.
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NCO recorded a $289.5 million non-cash impairment of goodwill and other intangible assets in connection with the going-private transaction in November 2006. The charge had a direct impact on net operating figures for the year. The company also took a $98.9 million impairment charge on its purchased debt portfolios for the year.
NCO said that the impairment of goodwill and other intangible assets is a non-cash charge that does not affect the company's cash flows from operations, liquidity, or compliance with the financial covenants in its senior credit facility.
Mike Barrist, NCO’s Chairman and CEO, said that the company had achieved its goals for the year exclusive of the impact of non-cash portfolio impairments and restructuring charges.
The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) for the full year was $95.5 million.
“As we continue to navigate through 2009, we believe NCO is well positioned among its peers within each of its core markets to capitalize on all available opportunities,” said Barrist.
NCO also noted that it eliminated executive bonuses and reduced certain non-executive bonuses in 2008 to cut costs. It also experienced a “meaningful reduction in overall discretionary spending.”
But revenues soared in 2008. NCO said that it crossed the billion-and-a-half-dollar mark in 2008 by bringing in $1.51 billion in total revenues, up nearly 18 percent from total revenues reported in 2007.
The company attributed much of the increase in revenue to the acquisition of Outsourcing Solutions, Inc. (OSI), which at the time was the second largest collection agency in the U.S. The OSI deal closed in March 2008 (“NCO Group Completes Acquisition of OSI,” March 3, 2008). NCO said that OSI contributed $337.3 million in revenues in 2008.
Of the $1.51 billion in total revenue in 2008, $1.22 billion was generated by NCO’s ARM unit, up from $915.6 million in 2007. The company noted in an SEC filing that 60 percent of the ARM unit’s revenues were generated “from the recovery of delinquent accounts receivable on a contingency fee basis.”
NCO also said in its SEC filing that it spent $126.5 million on debt portfolio purchases in 2008, roughly the same amount it spent in 2007.
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Comments
Comment from Silas Goldman on April 1, 2009 at 4:04PM EST
Wow, wish them the best.
Comment from Anonymous on April 1, 2009 at 7:20PM EST
The losses could not have happened to a better company. They can state it in a manner that is pretty and full of rainbow's, but the truth is that NCO did not make their goals. (Ask employees at the collection level the story their being fed.) As a matter of fact, they are trying so hard to stop the leakage of money that they have implemented restrictive policies that limit associates to: "1 pen - 1 pad of paper and 1 highlighter" at their desk. Even if the employees bring work supplies from home, having them found in your desk are grounds for termination. This is their idea of "meaningful reduction in overall discretionary spending." For those of us with a behind the scene view, NCO is struggling and continues to close offices around the country. (i.e. - Jacksonville, FL). Like many major conglomerates, NCO will only release the information they want us to know. We will not see the real picture until they fall and their AIG mentality is finally exposed to the rest of the world. As I said, a net loss of $337.1 million couldn't of happened to a better company.
Comment from Anonymous on April 2, 2009 at 9:33AM EST
With modern software and with all the focus on CPNI and other regulations related to consumer privacy, many ARM's are implementing "no pen and paper" policies for security reasons. These policies say nothing about the fiscal health of any company that talks to consumers.
Comment from Anonymous on April 3, 2009 at 10:32PM EST
Who's talking about "no pen and paper" policies? We're talking no calculator, no FDCPA manuels, no scotch tape, no ruler, no calendar's, no desk matts, nothing other than 1-pen, 1-highliter and 1 pad of paper. If this were a "no pen and paper" policy, wouldn't allowing the 1-pen and 1-pad of paper be a bit of an oxy moran?
Comment from Anonymous on April 5, 2009 at 1:34PM EST
Looks like more jobs outsourced to countries making up for those losses.