Asset Acceptance Reports Lower Revenue on Impairments

Debt purchaser Asset Acceptance Capital Corp. (Nasdaq: AACC) Tuesday reported financial results for the second quarter of 2006. The company reported a drop in both net income and revenue.

Revenue for the quarter declined 2.9% to $66.8 million compared with revenues of $68.8 million in the second quarter of 2005. The drop in revenue was attributed to a $5.5 million net impairment charge compared to a $1.7 million net impairment charge in the second quarter a year ago. In the first quarter of 2006, Asset Acceptance reported net impairments of $2.7 million.

The company reported cash collections of $89.6 million in the second quarter of 2006, a single-quarter record, versus cash collections of $84.9 million in the same period of 2005. Net income for the quarter was $12.4 million, or $0.33 per fully diluted share, compared with a net income of $16.3 million, or $0.44 per fully diluted share, for the second quarter of 2005.

Commenting on the debt purchasing environment, CEO Brad Bradley said in the earnings release, “The purchasing environment remains highly competitive, characterized by elevated portfolio pricing. As before, our purchasing strategy remains both disciplined and opportunistic as we look to acquire portfolios across a broad range of traditional and non-traditional asset classes.

"Turning to the macro supply environment, we continue to see steady deal volume, however, at elevated prices. While the quality and cost of a portfolio are key factors in determining our decision to invest, we continue to seek out portfolios in which we are able to leverage our unique collections infrastructure and capital resources over less experienced, under-capitalized competitors.”

Asset Acceptance CFO, Mark Redman, commenting on the company’s cash position, said, “During the quarter we invested $19.2 million in new portfolios and approximately $16.3 million on the PARC acquisition. We are pleased with our capital structure at quarter-end, highlighted by our cash position of $55.3 million, investments of $4.9 million and an untapped $100 million line of credit.”