Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - ASTA FUNDING INC | d271493d8k.htm |
Exhibit 99.1
NASDAQ: ASFI
FOR IMMEDIATE RELEASE
CONTACT:
Robert J. Michel, CFO
Asta Funding, Inc.
(201) 567-5648
Asta Funding, Inc. Announces Financial Results for Year and Fourth Quarter of Fiscal Year 2011
| • | Net Income increases to $10.5 Million, or $0.71 Per Diluted Share for Fiscal Year |
| • | $106.9 Million of Cash and Cash Equivalents and Investments at September 30, 2011 |
| • | Management Exploring Other Financing Markets to Enhance Returns |
ENGLEWOOD CLIFFS, N.J., December 14, 2011 – Asta Funding, Inc. (NASDAQ: ASFI) (the “Company”), a financial services consumer receivable asset management and liquidation company, today reported its results for the fiscal year and fourth quarter ended September 30, 2011. The Company reported $106.9 million in cash and cash equivalents, and investments at September 30, 2011, representing a $22.7 million or 26.9% increase from 2010 and providing the Company the resources it needs to move into fiscal year 2012 without the immediate need for external financing.
Fiscal Year 2011
The Company reported net income of $10,521,000 for the fiscal year ended September 30, 2011, or $0.71 per diluted share, as compared to net income of $3,129,000, or $0.22 per diluted share, for the fiscal year ended September 30, 2010. Revenues for the fiscal year ended September 30, 2011 were $43,167,000, a decrease of 5.8% as compared to $45,849,000 for the fiscal year ended September 30, 2010. Included in total revenues for the fiscal year ended September 30, 2011 was a one time charge of approximately $1.3 million against revenues due to a third party servicer invoicing the Company for previously unbilled collection costs. Revenues for the year ended September 30, 2011, excluding this one time charge, were $44,439,000, down $1.4 million, or 3.1%.
Net cash collections from collection of receivables acquired for liquidation, including net cash collections represented by account sales, were $81,205,000 for the fiscal year ended September 30, 2011, as compared to $101,919,000 during fiscal year 2010, a 20.3% decrease from the prior year. Net collections during the fiscal year 2011 were impacted by the previously-mentioned one time charge of approximately $1.5 million (against collections). Net cash collections represented by account sales were $390,000 in the fiscal year ended September 30, 2011, less than 1% of total net collections from collection of receivables acquired for liquidation, as compared to $3,485,000, or 3.4% of total net collections from consumer receivables acquired for liquidation in the prior year. Collections on the Great Seneca portfolio were $13.0 million during fiscal year 2011 as compared to $16.5 million during the prior year. The carrying value of the Great Seneca portfolio was $78.3 million at September 30, 2011 as compared to $91.3 million at September 30, 2010.
Income from fully amortized portfolios (zero basis revenue) was $34.3 million for both fiscal years ended September 30, 2011 and September 30, 2010. Excluding the one time charge, income from fully amortized portfolios was $35.6 million. The Company invested in portfolios with a face value of $19.5 million at a cost of $7.5 million during the fiscal year ended September 30, 2011 as compared to portfolio investments with a face value of $269 million at a cost of approximately $8.0 million during the fiscal year ended September 30, 2010. Portfolio investments during fiscal 2011 were medical-related litigation receivables.
General and administrative expenses were $21,807,000 for the fiscal year ended September 30, 2011 as compared to $23,211,000 for the fiscal year ended September 30, 2010, a reduction of approximately 6%. General and administrative expenses were lower due primarily to lower collection-related expenses, amortization expense, and professional fees offset by higher stock based compensation expenses. Excluding the non-cash stock based compensation expense of $2.0 million, general and administrative expenses decreased 10.3% from the prior year.
Interest expense for the fiscal year ended September 30, 2011 was $3,016,000 as compared to $4,368,000 for fiscal year 2010, a 31% reduction, as the Company paid off the senior debt balance of $1.5 million in January 2010 and the subordinated debt balance of $2.4 million in December 2010. The non-recourse financing due to Bank of Montreal (“BMO”), supporting the Great Seneca portfolio, was $71.6 million at September 30, 2011 as compared to $90.5 million at September 30, 2010.
An impairment charge of $721,000 was recorded during fiscal year 2011 as compared to $13,029,000 of impairment charges recorded during fiscal year 2010.
Fourth Quarter Fiscal Year 2011
The Company reported net income of $1,656,000, or $0.11 per diluted share, for the fourth quarter of fiscal year 2011, as compared to a net loss of $5,342,000, or $0.37 per share, for the same period in fiscal year 2010. The Company reported revenues of $9,798,000 for the fourth quarter of fiscal year 2011, as compared to $11,499,000 for the fourth quarter of fiscal year 2010, a decrease of 14.8%. Included in total revenue for the quarter ended September 30, 2011 was the previously-mentioned one time charge against revenues of approximately $1.3 million. Revenues for the quarter, excluding this one time charge, were $11,070,000, a decrease of $429,000, or 3.7%.
Net cash collections of receivables acquired for liquidation, including net cash collections represented by account sales, were $16,466,000 for the fourth quarter of fiscal year 2011, as compared to $21,033,000 for the fourth quarter of fiscal year 2010, down 21.7% from the prior year. Included in the fourth quarter of fiscal year 2011 was the impact of the previously-mentioned one time charge of approximately $1.5 million. Excluding this one time charge, net collections would have been $18,009,000 down $3.0 million, or 14.4%. Net collections on the Great Seneca portfolio were $2.6 million in the fourth quarter of fiscal year 2011 as compared to $3.3 million in the fourth quarter of fiscal year 2010.
Income from fully amortized portfolios (zero basis revenue) was $7.4 million for the fourth quarter ended September 30, 2011, compared to $8.7 million for the comparable period in 2010. Included in zero basis revenue was the one time charge of $1.3 million. Excluding this one time item, zero basis revenue would have been $8.7 million – flat compared to the same period of the prior year.
General and administrative expenses for the fourth quarter of fiscal year 2011 were $5,704,000 as compared to $6,472,000 in the fourth quarter of fiscal year 2010, a decrease of almost 12%. Expenses were lower in the fourth quarter of fiscal year 2011 as compared to fiscal year 2010 due to lower amortization expense, collection related expenses, and professional fees, offset by increased non-cash stock based compensation expense.
2
An impairment charge of $672,000 was recorded in the fourth quarter of fiscal year 2011 as compared to $13,029,000 in the fourth quarter of fiscal year 2010. The impairment recorded in the fourth quarter of fiscal year 2010, was related to the Great Seneca portfolio.
The Company invested in portfolios with a face value of $1.7 million at a cost of $0.6 million during the fourth quarter of fiscal year 2011, compared to purchases of $113.4 million in face value at a cost of $4.7 million during the fourth quarter of fiscal year 2010. The portfolio investments in the fourth quarter of fiscal year 2011 were in medical-related litigation receivables.
Interest expense for the fourth quarter of 2011 was $687,000, as compared to $1,003,000 for the comparable period in 2010, as we paid off our senior debt in the prior year and paid off the subordinated debt in December 2010, in addition to a lower average balance in the non-recourse financing due to BMO in the current year period.
Gary Stern, Chairman, President and CEO of the Company commented, “We are pleased by the results of fiscal year and fourth quarter of 2011, with continued lower overhead costs, lower interest cost and the lowest level of impairments in five years.” Mr. Stern continued, “Although total revenues are lower than the prior year, if not for the one time charge of $1.3 million against zero basis revenue in the fourth quarter of fiscal year 2011, zero basis revenue would have been up over the prior year instead of being flat with the prior year at $34.3 million – a testament to the quality of the overall distressed receivable portfolio. At September 30, 2011 our cash and cash equivalents and investments totaled $106.9 million. As of today the total is $108.8 million. Our strong balance sheet puts us in an excellent position for funding potential investment opportunities without the immediate need for external financing. We continue to review all of our investment options in the distressed receivables market; however in this challenging pricing and collection environment we are continuing to explore other financing markets that we can effectively service and that have the potential to provide attractive returns.
During the first quarter of fiscal year 2012, we have invested $3.8 million in the litigation funding business with a focus on investing in personal injury claims. We are working with an industry leader who sources and manages these types of investments. We look forward to growing the litigation funding business during fiscal year 2012.”
A conference call to discuss the results of the fiscal year 2011 and the fourth quarter of fiscal year 2011 will be held on Wednesday, December 14, 2011 at 4:00 PM, EST.
Toll-free dial-in number (U.S. and Canada):
(800) 668-4132
International dials-in number:
(224) 357-2196
Conference ID
35863044
Phone Replay:
Toll-Free #: (855) 859-2056
Toll #: (404) 537-3406
Conference ID # 35863044
Recording will be available from: 12/14/2011 7:00 PM EST to 12/20/2011 11:59 PM EST
Based in Englewood Cliffs, NJ, Asta Funding, Inc., is a leading consumer receivable asset management company that specializes in the purchase, management and liquidation of performing and non-performing consumer receivables. For additional information, please visit our website at http://www.astafunding.com.
Important Information about Forward-Looking Statements: All statements in this new release other than statements of historical facts, including without limitation, statements regarding our future financial
3
position, business strategy, budgets, projected revenues, projected costs, and plans and objective of management for future operations, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expects,” “intends,” “plans,” “projects,” “estimates,” “anticipates,” or “believes” or the negative thereof, or any variation thereon, or similar terminology or expressions. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Important factors which could materially affect our results and our future performance include, without limitation, our ability to purchase defaulted consumer receivables at appropriate prices, changes in government regulations that affect our ability to collect sufficient amounts on our defaulted consumer receivables, our ability to employ and retain qualified employees, changes in the credit or capital markets, changes in interest rates, deterioration in economic conditions, negative press regarding the debt collection industry which may have a negative impact on a debtor’s willingness to pay the debt we acquire, and statements of assumption underlying any of the foregoing, as well as other factors set forth under “Item 1A. Risk Factors” in our annual report on Form 10-K for the year ended September 30, 2010 and other filings with the SEC. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the foregoing. Except as required by law, we assume no duty to update or revise any forward-looking statements.
— Financial Tables Follow
4
Asta Funding, Inc.
Consolidated Statements of Operations
| Year Ended September 30, |
Three Months Ended September 30, |
|||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Revenues: |
||||||||||||||||
| Finance income, net |
$ | 42,610,000 | $ | 45,631,000 | $ | 9,544,000 | $ | 11,434,000 | ||||||||
| Other income |
557,000 | 218,000 | 254,000 | 65,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 43,167,000 | 45,849,000 | 9,798,000 | 11,499,000 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| General and administrative expenses |
21,807,000 | 23,211,000 | 5,704,000 | 6,472,000 | ||||||||||||
| Interest expense |
3,016,000 | 4,368,000 | 687,000 | 1,003,000 | ||||||||||||
| Impairments of consumer receivables acquired for liquidation |
721,000 | 13,029,000 | 672,000 | 13,029,000 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 25,544,000 | 40,608,000 | 7,063,000 | 20,504,000 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income (loss) before income taxes |
17,623,000 | 5,241,000 | 2,735,000 | (9,005,000 | ) | |||||||||||
| Income tax expense (benefit) |
7,102,000 | 2,112,000 | 1,079,000 | (3,663,000 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income (loss) |
$ | 10,521,000 | $ | 3,129,000 | $ | 1,656,000 | $ | (5,342,000 | ) | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Basic net income (loss) per share |
$ | 0.72 | $ | 0.22 | $ | 0.11 | $ | (0.37 | ) | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted net income (loss) per share |
$ | 0.71 | $ | 0.22 | $ | 0.11 | $ | (0.37 | ) | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average shares outstanding: |
||||||||||||||||
| Basic |
14,626,973 | 14,292,215 | 14,633,409 | 14,271,946 | ||||||||||||
| Diluted |
14,827,608 | 14,534,982 | 14,881,599 | 14,271,946 | ||||||||||||
5
ASTA FUNDING, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
| September 30, | ||||||||
| 2011 | 2010 | |||||||
| ASSETS |
| |||||||
| Cash and cash equivalents |
$ | 84,347,000 | $ | 75,301,000 | ||||
| Investments: |
||||||||
| Available-for-sale |
13,515,000 | — | ||||||
| Other |
9,060,000 | 8,934,000 | ||||||
| Restricted cash |
1,031,000 | 1,304,000 | ||||||
| Consumer receivables acquired for liquidation (at net realizable value) |
115,195,000 | 147,031,000 | ||||||
| Due from third party collection agencies and attorneys |
2,084,000 | 3,528,000 | ||||||
| Prepaid and income taxes receivable |
3,369,000 | 196,000 | ||||||
| Furniture and equipment (net of accumulated depreciation of $3,316,000 in 2011 and $3,066,000 in 2010) |
563,000 | 338,000 | ||||||
| Deferred income taxes |
14,358,000 | 18,762,000 | ||||||
| Other assets |
4,529,000 | 3,770,000 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 248,051,000 | $ | 259,164,000 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Liabilities |
||||||||
| Non recourse debt |
$ | 71,604,000 | $ | 90,483,000 | ||||
| Subordinated debt — related party |
— | 4,386,000 | ||||||
| Other liabilities |
3,167,000 | 2,105,000 | ||||||
| Dividends payable |
293,000 | 292,000 | ||||||
| Income taxes payable |
31,000 | — | ||||||
|
|
|
|
|
|||||
| Total liabilities |
75,095,000 | 97,266,000 | ||||||
|
|
|
|
|
|||||
| Commitments and contingencies |
||||||||
| STOCKHOLDERS’ EQUITY |
||||||||
| Preferred stock, $.01 par value; authorized 5,000,000; Issued — none |
— | — | ||||||
| Common stock, $.01 par value, authorized 30,000,000 shares, issued and outstanding 14,639,456 shares in 2011 and 14,600,423 shares in 2010 |
146,000 | 146,000 | ||||||
| Additional paid-in capital |
74,793,000 | 72,717,000 | ||||||
| Retained earnings |
98,377,000 | 89,026,000 | ||||||
| Accumulated other comprehensive (loss) income, net of income taxes |
(290,000 | ) | 9,000 | |||||
| Treasury Stock (at cost) |
(70,000 | ) | — | |||||
|
|
|
|
|
|||||
| Total stockholders’ equity |
172,956,000 | 161,898,000 | ||||||
|
|
|
|
|
|||||
| Total liabilities and stockholders’ equity |
$ | 248,051,000 | $ | 259,164,000 | ||||
|
|
|
|
|
|||||
6