ASFI Asta Funding Inc

Asta Funding, Inc. (NASDAQ:ASFI) (the “Company”), a diversified financial services company, today announced results for the three and nine months ended June 30, 2016.

Gary Stern, Asta chairman, president and CEO said, “Investments made over the last few years in each of our business segments are gaining traction.  Results in the third quarter were driven by the strong performances of those investments." 

Mr. Stern continued, “Looking forward, we are committed to investing in our areas of focus for growth, including personal injury claims, structured settlements and international distressed consumer assets, while remaining focused on cost savings, balanced growth and value creation for shareholders.”

Fiscal Third Quarter 2016 Results

For the three months ended June 30, 2016, net income attributable to Asta Funding, Inc. was $3.2 million, or $0.26 per diluted share, as compared to net income attributable to Asta Funding, Inc. of $0.2 million, or $0.01 per diluted share for the three months ended June 30, 2015.  

For the three months ended June 30, 2016, net income was $4.7 million as compared to net income of $0.3 million for the three months ended June 30, 2015. 

Total income for the three months ended June 30, 2016 increased $8.8 million to $19.0 million, compared to $10.2 million for the three months ended June 30, 2015.  Total revenue included in the three months ended June 30, 2016 is approximately $3.2 million in revenue from CBC Settlement Funding, LLC on structured settlements, as compared to $2.6 million for the three months ended June 30, 2015.  Also included in total revenues for the three months ended June 30, 2016 is approximately $9.8 million from Pegasus Funding, LLC, the joint venture in the personal injury finance industry, as compared to $1.7 million for the three months ended June 30, 2015. Disability fee income for the three months ended June 30, 2016 was up by $0.6 million to $1.2 million as compared to $0.6 million for the three months ended June 30, 2015.

Finance income from the distressed receivable business was down by approximately $0.6 million to $4.6 million for the three months ended June 30, 2016, as compared to $5.2 million for the three months ended June 30, 2015.    

General and administrative expenses were $10.6 million for the three months ended June 30, 2016, as compared to $9.2 million for the three months ended June 30, 2015.  The increase for the three months ended June 30, 2016 was primarily attributable to an increase in legal fees, as well as increased operating costs for GAR Disability Advocates relative to the growth in the segment. 

Interest expense was $0.8 million for the three months ended June 30, 2016 as compared to $0.6 million for the three months ended June 30, 2015.

Year-to-Date Results

For the nine months ended June 30, 2016, net income attributable to Asta Funding, Inc. was $3.2 million, or $0.26 per diluted share, as compared to net income attributable to Asta Funding, Inc. of $0.9 million, or $0.07 per diluted share for the nine months ended June 30, 2015.

For the nine months ended June 30, 2016, net income was $5.3 million as compared to $1.1 million for the nine months ended June 30, 2015.   

Total income for the nine months ended June 30, 2016 was $42.3 million, as compared to $31.5 million for the nine months ended June 30, 2015. Total revenue included for the nine months ended June 30, 2016 is approximately $9.1 million in revenue from CBC Settlement Funding, LLC on structured settlements, as compared to $7.6 million for the nine months ended June 30, 2016.  Also included in total revenues for the nine months ended June 30, 2016 is approximately $14.8 million from Pegasus Funding, LLC, as compared to $6.1 million for the nine months ended June 30, 2015.  Disability fee income for the nine months ended June 30, 2016 was up by $1.8 million to $2.7 million, as compared to $0.9 million for the nine months ended June 30, 2015. 

Finance income from the distressed receivable business was down by approximately $1.0 million to $14.7 million for the six months ended June 30, 2016 from $15.7 million for the nine months ended June 30, 2015.  

General and administrative expenses were $32.0 million for the nine months ended June 30, 2016, as compared to $27.8 million for the nine months ended June 30, 2015.  The increase for the nine months ended June 30, 2016 was primarily attributable to expected settlement costs of $2.0 million in connection with an expected legal settlement and a $1.0 million loss reserve related to a reduction in the carrying value of one of the Company’s investments, as well as increased operating costs for GAR Disability Advocates relative to the growth in the segment.

Interest expense was $2.3 million for the nine months ended June 30, 2016, as compared to $1.7 million for the nine months ended June 30, 2015.  The increase in interest expense is related to the growth in our structured settlement business segment, CBC Settlement Funding, LLC.  As of June 30, 2016, CBC's invested balance in structured settlements has increased 23% and 90% since September 30, 2015, and 2014, respectively.

Balance Sheet Review

As of June 30, 2016 the Company had approximately $73.9 million in cash and cash equivalents, $176.5 million in stockholders' equity, and a net book value per share of $14.91.  At June 30, 2016, the Company had an invested balance of $79.9 million in structured settlements and $43.7 million in personal injury claims.

As part of its tender offer, on May 12, 2016, the Company repurchased 274,284 shares of its common stock at a price of $10.25 per share.  Total shares repurchased by the Company as a part of its previously terminated Shares Repurchase Plan and tender offer during the nine months ended June 30, 2016 was 1,258,484 at an average price of $8.86.

Investor Call Information

A conference call for investors to hear and discuss results for the three and nine months ended June 30, 2016 will be held on Tuesday, August 9, 2016 at 10:00 am EDT.

Toll-free dial-in number (U.S. and Canada): (800) 668-4132 International dial-in number: (224) 357-2196

Conference ID:60869283

Phone Replay: Toll-Free #: (800) 585-8367 Toll #: (404) 537-3406 Conference ID # 60869283Recording will be available for replay two hours after the call's completion through 11:59 pm, EDT on 8/15/16.

About Asta

Asta Funding, Inc. (NASDAQ:ASFI), headquartered in Englewood Cliffs, New Jersey, is a diversified financial services company that assists consumers and serves investors through the strategic management of four complementary business segments: Personal Injury Claims, Structured Settlements, International Consumer Debt and Disability Advocacy.

Founded in 1994 as a sub-prime auto lender, Asta now manages business units that include funding of personal injury claims through an 80 percent owned subsidiary, Pegasus Funding LLC; structured settlements through its wholly owned subsidiary, CBC Settlement Funding LLC; acquiring and managing international distressed consumer receivables through its wholly owned subsidiary, Palisades Acquisitions LLC; and benefits advocacy through its wholly owned subsidiary, GAR Disability Advocates, LLC. For additional information, please visit our website at http://www.astafunding.com. 

Forward-Looking Statements

All statements in this new release other than statements of historical facts, including without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs, and plans and objectives 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, 2015 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.     

ASTA FUNDING, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(rounded to the nearest thousands, except share data)
	(Unaudited)
	June 30,			September 30,
		2016			2015
ASSETS
Cash and cash equivalents	$	17,111,000		$	24,315,000
Available for sale investments		56,744,000			59,727,000
Consumer receivables acquired for liquidation (at net realizable value)		14,540,000			15,608,000
Structured settlements		79,884,000			64,635,000
Investment in personal injury claims		43,684,000			36,668,000
Other investments, net		3,426,000			4,239,000
Due from third party collection agencies and attorneys		1,081,000			1,422,000
Prepaid and income taxes receivable		4,680,000			6,744,000
Furniture and equipment, net		219,000			480,000
Deferred income taxes		12,270,000			12,279,000
Goodwill		2,770,000			2,770,000
Other assets		9,370,000			8,485,000
Total assets	$	245,779,000		$	237,372,000
LIABILITIES
Other debt – CBC (including non-recourse notes payable of $44.4 million at June 30, 2016 and $47.0 million at September 30, 2015)	$	62,667,000		$	51,611,000
Other liabilities		6,622,000			4,441,000
Total liabilities		69,289,000			56,052,000
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Preferred stock, $.01 par value; authorized 5,000,000 shares; issued and outstanding — none		—			—
Common stock, $.01 par value, authorized 30,000,000 shares; issued 13,297,508 at June 30, 2016 and 13,061,673 at September 30, 2015; and outstanding 11,837,224 at June 30, 2016 and 12,859,873 at September 30, 2015		133,000			131,000
Additional paid-in capital		66,575,000			65,011,000
Retained earnings		123,782,000			120,611,000
Accumulated other comprehensive loss		(173,000	)		(1,685,000	)
Treasury stock (at cost) 1,460,284 shares at June 30, 2016 and 201,800 shares at September 30, 2015		(12,925,000	)		(1,751,000	)
Non-controlling interest		(902,000	)		(997,000	)
Total stockholders’ equity		176,490,000			181,320,000
Total liabilities and stockholders’ equity	$	245,779,000		$	237,372,000

 

ASTA FUNDING, INC. AND SUBSIDIARIESConsolidated Statements of Operations(Unaudited)(rounded to the nearest thousands, except share data)
		Three Months				Three Months				Nine Months				Nine Months
		Ended				Ended				Ended				Ended
		June 30, 2016				June 30, 2015				June 30, 2016				June 30, 2015
Revenues:
Finance income, net		$	4,612,000			$	5,156,000			$	14,668,000			$	15,688,000
Personal injury claims income			9,838,000				1,729,000				14,769,000				6,084,000
Unrealized gain on structured settlements			1,422,000				1,239,000				4,586,000				4,260,000
Interest income on structured settlements			1,765,000				1,356,000				4,473,000				3,314,000
Disability fee income			1,169,000				552,000				2,700,000				911,000
Total revenues			18,806,000				10,032,000				41,196,000				30,257,000
Other income — includes $(32,000) and ($159,000) during the three month periods ended June 30, 2016 and 2015, respectively, and $(63,000) and ($120,000) during the nine month periods ended June 30, 2016 and 2015, respectively, of accumulated other comprehensive income reclassification for unrealized net gains / (losses) on available for sale securities			215,000				185,000				1,108,000				1,216,000
			19,021,000				10,217,000				42,304,000				31,473,000
Expenses:
General and administrative			10,591,000				9,177,000				32,039,000				27,793,000
Interest			832,000				632,000				2,348,000				1,710,000
Impairment of consumer receivables			—				—				124,000				—
			11,423,000				9,809,000				34,511,000				29,503,000
Income before income tax			7,598,000				408,000				7,793,000				1,970,000
Income tax expense — includes tax expense benefit of $ (13,000) and ($64,000) during the three month periods ended June 30, 2016 and 2015 and $(24,000) and ($27,000) during the nine month periods ended June 30, 2016 and 2015, respectively, of accumulated other comprehensive income reclassifications for unrealized net gains / (losses) on available for sale securities			2,853,000				155,000				2,461,000				901,000
Net income			4,745,000				253,000				5,332,000				1,069,000
Less: net income attributable to non-controlling interests			1,549,000				92,000				2,161,000				193,000
Net income attributable to Asta Funding, Inc.		$	3,196,000			$	161,000			$	3,171,000			$	876,000
Net income per share attributable to Asta Funding, Inc.:
Basic		$	0.27			$	0.01			$	0.26			$	0.07
Diluted		$	0.26			$	0.01			$	0.26			$	0.07
Weighted average number of common shares outstanding:
Basic			11,897,139				13,060,839				12,023,156				13,044,905
Diluted			12,433,424				13,313,406				12,294,073				13,311,776

 

Investor Contact:
Bruce R. Foster, CFO    
Asta Funding, Inc.              
(201) 567-5648