Exhibit 99.2
ASTA FUNDING, INC.
MODERATOR: GARY STERN
MAY 17, 2007
12:00 PM CT
Operator: Good afternoon, my name is (Paula) and I will be your
conference operator today. At this time, I would like to
welcome everyone to the Asta Funding second quarter and
six month fiscal 2007 results conference call.
All lines have been placed on mute to prevent any
background noise. After the speaker's remarks, there
will be a question and answer session. If you would like
to ask a question during this time, simply press star
then the number 1 on your telephone keypad. If you would
like to withdraw your question, press the pound key.
Thank you. Mr. (Lowensteiner), you may begin your
conference.
(Adam Lowensteiner): Thank you, (Paula). Good afternoon and thank you all for
joining us for Asta Funding's quarterly conference call
to discuss the results for the second quarter and six
months results ended March 31, 2007.
By now, all of you should have had the opportunity to
review the press release discussing the financial
results but if you have not, please Wolfe Axelrod
Weinberger Associates at 212-370-4500 and we will
immediately send it to you either by fax or email.
On the call with me today is Mr. Arthur Stern, Chairman
of Asta Funding, Mr. Gary Stern, Chief Executive
Officer, and Mr. Mitchell Cohen, Chief Financial
Officer.
Before I ask our host, Gary Stern, CEO of Asta Funding
to discuss the current results, let me take a few
minutes to read the forward looking statement.
Except for historical information contained herein the
matter set forth in this conference call are forward
looking statements as defined in the Private Securities
Litigation Reform Act of 1995.
Although Asta Funding, Inc. believes these expectations
reflected in such forward looking statements are based
upon reasonable assumptions there can be no assurance
that its expectations will be realized.
Forward looking statements involve certain risks and
uncertainties and -- that could cause actual results to
differ materially from Asta Funding, Inc.'s
expectations.
Factors that could contribute to such differences
include those identified those in Asta Funding, Inc.'s
Fork 10-K for the fiscal year ended September 30, 2006
and those described from time to time in Asta Funding,
Inc.'s other filings with the Securities Exchange
Commission, news releases and other communications
including that Asta may not be able to purchase consumer
receivable portfolios at the favorable prices or on
sufficient favorable terms or at all and may not be able
to continue its quarterly dividend program.
Asta Funding, Inc.'s reports with the SEC are available
free of charge through its Website at
www.astafunding.com.
With that out of the way, let me please turn the
discussion over to Gary Stern, President and Chief
Executive Officer of Asta Funding. Gary.
Gary Stern: Thank you, (Adam). Good afternoon, everyone and thank
you for joining today's conference call to discuss
Asta's second quarter and six month's financial results.
I am pleased to report another quarter of solid results.
For the second quarter ended March 31, 2007, we
purchased consumer receivable portfolios. The aggregate
charged (off) balances (or) face value of approximately
$9.8 billion at an aggregate cost of $386.7 million,
which includes a major portfolio purchase of $6.9
billion for a cost of $300 million. That was financed
through a combination of our existing credit facility,
our new credit facility as well as cash flow from
operating activities.
Asta continues to have low overhead costs with our
expenses being fairly fixed at approximately $5 to $5.2
million per quarter. The fact that Asta has such
(scalability) to its business especially when it comes
to cost control remains of utmost important.
While our general and administrative expenses increased
approximately $942,000 during the quarter ended March
31, 2007 as compared to the same period of 2006, it
should be noted that approximately $662,000 is
attributable to a non-cash charge relating to our stock
option and restricted stock plans.
Our general and administrative expenses for the quarter
ended March 31, 2007 represents 17.9% of financing come
down from 19.5% in the same period a year ago including
the compensation charge.
As for our balance sheet at the end of the second
quarter, our capital structure remained very sound with
$209.7 million in shareholders equity. Our debt, which
was approximately $377.2 million at quarter end, is
currently approximately $349 million.
Now I'd like to take a moment to take you through Asta's
financial results.
As to reported revenues for the quarter of $33.1
million, a 33.2% increase over revenues of $24.8 million
for the second quarter of fiscal 2006. This was driven
by strong net collections of $76.1 million during the
quarter, an increase of 37% from the prior year quarter
of $55.6 million.
During the quarter, net cash collections represented by
account sales was $13.9 million or 18.3% of net cash
collections in the quarter down from 22.2% in the second
quarter of fiscal 2006.
Revenues for the six month period ended March 31, 2007
were $58.7 million, up 30.3% from revenues of $45.1
million in the same period one year ago. Net cash
collections during this six months ended March 31, 2007
were $135.1 million, up 32.7% from $101.8 million in the
prior year period.
During this six month period, net cash collections
represented by account sales of consumer receivables
acquired for liquidations were $31 million or 22.9% of
net cash collections in the quarter down from 25.8% in
the same period of fiscal 2006.
Total overhead expenses for the quarter excluding
interest increased to $8.2 million up from $4.9 million
in the same quarter one year ago. This increase includes
impairments of $2.4 million during the quarter versus no
impairments during the same period one year ago. The
impairments are made up of three (pools), two from
portfolios purchased in fiscal year ended 2004 and one
from a portfolio purchased in fiscal 2006.
General and administrative costs climbed to $5.8 million
for the quarter, an increase of 19.4% from a year ago
primarily from higher receivable servicing costs
including court costs, printing, postage and delivery
costs, data processing costs, salaries, payroll taxes
and benefits, professional fees and telephone charges,
which is a direct result of our increase in portfolios
owned.
Additionally as stated earlier, we took a non-cash
charge of approximately $662,000 relating to our stock
option and restrictive stock plans, which accounted for
a significant portion of the increase and we are
anticipating a charge in the third quarter of
approximately $200,000 for these plans.
Interest expense was $3.8 million in the quarter, up
from $1.3 million one year ago. This increase is
primarily due to the large portfolio that the company
acquired in the second quarter.
Average outstanding borrowings were $209.1 million
during the quarter, up from the average borrowings of
$60.5 million during the same quarter last year.
Despite these increases, the company has been very
nimble in managing expenses given its low, fixed cost
structure, which is primarily benefiting from the
company outsourcing a majority of its collections. To
illustrate this point, despite our large portfolio
purchase, we have yet to devote any significant capital
for additional infrastructure.
Asta's pre-tax income reached $21.1 million in the
quarter, up 13% from prior year results of $18.7
million. For the six month period ended March 31, 2007,
pre-tax income was $40.1 million, an increase of 16.9%
from $34.3 million in the same period one year ago.
Asta's tax rate in the quarter was approximately 41%.
This rate is in line with our expectations and believe
this rate will be the same during the remainder of the
year.
Net income was $12.6 million during the second quarter
increasing 13% compared to $11.1 million in the second
quarter of fiscal 2006. Net income for the six month
period was $23.9 million, up from $20.4 million or 17%.
We reported fully diluted earnings per share of 85 cents
for the second quarter, an 11.8% increase over the prior
year quarter's 76 cents per share. For the six months
period ending March 31, 2007, earnings per share was
$1.63, up 16.4% from $1.40 during the same period one
year ago.
Additionally at quarter's end, shareholders equity
totaled $209.7 million up from $164.8 million at March
31, 2006 and (tangible) book value per share was $15.03
at the end of the second quarter, an increase
sequentially from $14.12 per share at the end of the
last quarter and up from approximately $12.10 per share
at the end of the second quarter of fiscal 2006.
Debt at the end of the quarter was $377.2 million, up
from $109.3 million at the end of the prior quarter
primarily due to the large portfolio purchase in the
quarter.
Before I conclude my formal remarks, I'd like to
reiterate Asta's unique business model where by we
outsource a vast majority of our
receivables, which enables us to maintain a streamlined
infrastructure affording us tremendous operating
leverage and flexibility as we continue to grow.
We believe strongly in this proven model especially as
seen in today's reported results. Our disciplined
approach continues to improve itself each and every
quarter. In fact, the return on average equity during
the quarter was 24.8% on an annualized basis.
To summarize, I am very proud of the accomplishments we
have made this fiscal year to date by producing solid
revenue and earnings results, expanding our book of
business by purchasing a record $9.8 billion of face
value up from $5.1 billion purchased in all of fiscal
2006 and issuing a regularly quarterly dividend.
That concludes our formal remarks. Mitch and I would
like to open the call to any questions. Due to the
increase of interest in Asta Funding, (I'd) please ask
you to limit your questions to one per person with one
follow up.
Operator, please open the call to any questions.
Operator: At this time, I would like to remind everyone if you
would like to ask a question, press star and the number
1 on your telephone keypad. And we'll pause for just a
moment to compile the Q&A roster.
And your first question comes from the line of Audrey
Snell of ThinkEquity.
Audrey Snell: Good afternoon, gentlemen. Quick question on the $2.4
million impairment. Can you give us a little definition
on the (pools)? What caused you take the impairment? And
what the outlook is there?
Mitchell Cohen: Sure, Audrey, it's Mitch. We took impairments on three
portfolios -- three credit card portfolios, two from
fiscal year ended 94, one which had previously been
impaired and one from fiscal year '06, the three (pools)
by -- obviously by definition just were not up to the
standards that we had set for them when we established
the cash projections going forward.
But we're not down (beat) about it all. It's common
place with the new accounting (pronouncement) (SOPO33)
that we're going to have (accretable) yield adjustments
on the upside and impairments on the down side.
Fortunately we're limited to these three pools at the
end of 3/31/07.
Audrey Snell: Okay, just one follow up there. Any outlook on any
additional (pools) that you're watching carefully for
potential impairment?
Mitchell Cohen: No, at the end of the third -- all impairments that are
-- that you see here are reflected in -- are reflected
completely in our 3/31 statements.
Audrey Snell: Okay, thank you.
Mitchell Cohen: You're welcome.
Operator: At this time, sir, there are no further questions.
Mitchell Cohen: Really?
Gary Stern: Okay. Thank you for participating in our second quarter
conference call. As always should you have any
questions, feel free to call Mitch Cohen or myself. Have
a pleasant day.
Operator: This concludes today's conference. You may now
disconnect.
END