NCO Group Slips in Fourth Quarter on $25 million Portfolio Impairment

http://www.insidearm.com/news/00038428-nco-group-slips-in-fourth-quarter-on-25-m/

Mega-collector NCO Group announced Tuesday that it lost $27.4 million for the full year 2007 on revenues of $1.2 billion citing a $25 million revenue reduction on portfolio impairments in the fourth quarter and a “weaker than expected collection environment.”

The Horsham, Pa.-based debt buyer, collector and CRM provider released financial results for its fourth quarter Tuesday. Included in the release were partial financial results for the full year.

In the fourth quarter, NCO reported revenues of $279.7 million and a net loss of $22.1 million. The company said that the results included a $25 million reduction in revenue from an allowance for impairment of purchased accounts receivable. The company also blamed a weak collection environment and adverse foreign exchange conditions in the face of a falling U.S. dollar.

"During the fourth quarter, we continued to feel the impact of the consumer driven downturn that began during the third quarter,” said CEO Michael Barrist in the release. “Historically, these types of downturns initially impact our business negatively as consumers slow their payment patterns and our clients are forced to make operational changes to offset the adverse impact to their businesses. Additionally, the downturn necessitated our reevaluation of the collectability of our purchase portfolio.”

NCO also revealed some results for its full year in the “Selected Financial Data” section of its press release. For the year, the company reported revenue of $1.2 billion and a net loss of $27.4 million. The company also said that it spent $125 million on portfolio purchasing in the year.

In his comments, Barrist noted that an increase in CRM services volume has the company poised for a better 2008. NCO reported that in the fourth quarter of 2007, its CRM unit had revenues of $84.6 million, a 22.7 percent increase over the unit’s revenue a year earlier.