Asta Beats Estimates, Reports Record Quarter and Fiscal Year
by Patrick Lunsford, CollectionIndustry.com
Debt purchaser/collector Asta Funding (Nasdaq: ASFI) reported financial results for their fiscal Q4 and 2006 fiscal year that far exceeded estimates and expectations.
Net income for the fourth quarter ended September 30, 2006, rose 50.7% to a record $13.6 million or $0.93 per share, from $9.0 million or $0.62 per share, in the same prior year period. Analysts had been expecting earnings of $0.78 per share.
Finance income for the fiscal Q4 was $29.8 million, a 49.5% increase compared to finance income of $20.0 million for the fourth quarter ended September 30, 2005.
Net income for the year rose 47.7% to $45.8 million or $3.13 per diluted share, from $31.0 million, or $2.15 per diluted share, in the same prior year period. Finance income for the year ended September 30, 2006, was $101.0 million, an increase of 45.4% compared to finance income of $69.5 million for the year ended September 30, 2005.
Asta had previously portended a solid financial year when it declared a very large one-time dividend to shareholders in September. Even Asta’s CEO, Gary Stern, admitted that the company far-exceeded expectations: “We are extremely pleased to report record quarter and fiscal year results. Our performance reflects the success of our business model, although this quarter and year were aided by certain factors, principally collections and sales significantly in excess of amounts previously estimated.”
Stern also commented on specific performance and portfolio purchases in the earnings release: “Fiscal 2006 included $159.4 million in net cash collections from collection of consumer receivables acquired for liquidation, up 53.0% from $104.2 million in the year ago period. Net cash collections represented by account sales of consumer receivables acquired for liquidation were $55.0 million, down from $64.7 million for the year ended September 30, 2005. The Company also acquired approximately $5.2 billion in face value receivables, the highest level in the Company's history, at a purchase price of $200.2 million. This is a major accomplishment given the continued pricing pressures that still face our industry.”
Stern did, however, warn on increasing portfolio prices, “The challenge of finding suitable purchases will be more intense in 2007, as our growth is reliant on purchasing ever increasing dollar amounts of accounts in a difficult market."
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