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Monday, June 20, 2011

NICK 10-k (continued)

picking up on page 22, Fiscal 2011 vs 2010

Finance interest received was up 11%, receivables were up 12%, due to portfolio increase.  Gross portfolio yield % was actually down slightly.  But the net yield was way up to 20.92% from 17.86% due to a decrease in provisions for credit losses.

SG&A up 10% due to additional staffing at existing branches.  But as a % of finance RXables it was down slightly to 10.15%.

Ave cost of borrowed funds up to 4.92% from 4.83%, mainly offset by the interest rate swap that's always screwing up the GAAP earnings numbers slightly.

Jan 2010 new LOC terms were 30 day LIBOR plus 300 bp, up from 162.5 bp!  This hurts the cost of money now and in the future.

Interest rate swap notional amount is lower.

I see that the losses absorbed less recoveries this year is pretty much the same as the discount they're getting on buying loans.  Was worse last year, which is not surprising.

It seems to me that by now, it's clear that they've been running the business well.  Things held up very well during the downturn.  The numbers are improving and earnings along with them.

Almost 18% recoveries, up from 12%.  No idea why.

They say that the delinqency number improvement is due to NICK putting more resources on collection as well as better discipline on underwriting.  They talk about static pools, which I know they watch very carefully.

Economic conditions are still bad, so don't expect results to continue to improve.

38.51% effective tax rate.  Tack on capital gains and it's a huge amount going to taxes.

2009 was brutal and they had to provision $15.68 million, but that's old history.

Wow, looking at 2009, 2010, and 2011, it's amazing how consistent the cash flows from operations were: between $21.3 million and $21.7 million.

No unexpected contractual obligations.

Dixon Hughes Goodman LLP auditors.  Non-qualified opinion.

I'd use 20 million shares to represent dilution fully.  Considering that, the company has been pulling in $20 million in cash from operations consistently during the worst downturn in a very long time, while operating primarily in Florida, fer cryin out loud.  And capex is down in the noise.


Assets are almost entirely finance receivables, which is good.  Liabilities are almost entire the LOC.  LOC divided by finance receivables is around 51%, which seems like a reasonable ratio.  The rest being equity (dominated by a big pile of retained earnings).

2009: $53 million
2010: $56 million
2011: $63 million

The biggest expense is salaries, 26% of revenues.
43% operating margins.
26% net margin.
$1.41 per diluted share

(continue on page 32)

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