Spanish economy – Disturb Media http://disturbmedia.com/ Mon, 13 Dec 2021 08:28:42 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 https://disturbmedia.com/wp-content/uploads/2021/10/icon-6-120x120.png Spanish economy – Disturb Media http://disturbmedia.com/ 32 32 Omega Healthcare Investors (OHI) Q3 2021 Earnings Call Transcript https://disturbmedia.com/omega-healthcare-investors-ohi-q3-2021-earnings-call-transcript/ Mon, 13 Dec 2021 06:58:25 +0000 https://disturbmedia.com/?p=706 Image source: The Motley Fool. Omega Healthcare Investors ( OHI -1.27% ) Q3 2021 Earnings Call Nov 05, 2021, 10:00 a.m. ET Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks: Operator Good morning, and welcome to the Omega Healthcare Investors third quarter 2021 earnings conference call. [Operator instructions] Please note, this event is being recorded. […]]]>

Image source: The Motley Fool.

Omega Healthcare Investors ( OHI -1.27% )
Q3 2021 Earnings Call
Nov 05, 2021, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Omega Healthcare Investors third quarter 2021 earnings conference call. [Operator instructions] Please note, this event is being recorded. I’d now like to turn the conference over to Michele Reber. Please go ahead.

Michele ReberSenio. Director of Asset Management

Thank you, and good morning. With me today are Omega’s CEO, Taylor Pickett; COO, Dan Booth; CFO, Bob Stephenson; chief corporate development officer, Steven Insoft; and Megan Krull, senior vice president of operations. Comments made during this conference call that are not historical facts may be forward-looking statements such as statements regarding our financial projections, dividend policy, portfolio restructurings, rent payments, financial condition or prospects of our operators, contemplated acquisitions, dispositions or transitions, and our business and portfolio outlook generally. These forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially.

Please see our press releases and our filings with the Securities and Exchange Commission, including, without limitation, our most recent report on Form 10-K, which identify specific factors that may cause actual results or events to differ materially from those described in forward-looking statements. During the call today, we will refer to some non-GAAP financial measures, such as NAREIT FFO, adjusted FFO, FAD, and EBITDA. Reconciliations of these non-GAAP measures to the most comparable measure under generally accepted accounting principles as well as an explanation of the usefulness of the non-GAAP measures are available under the Financial Information section of our website at www.omegahealthcare.com, and in the case of NAREIT FFO and adjusted FFO in our recently issued press release. In addition, certain operator coverage and financial information that we discuss is based on data provided by our operators that has not been independently verified by Omega.

I will now turn the call over to Taylor.

Taylor PickettChief Executive Officer

Thanks, Michele. Good morning, and thank you for joining our third quarter 2021 earnings conference call. Today, I will discuss our third quarter financial results, skilled nursing facility industry trends and operator liquidity issues. We posted strong quarterly results with third quarter adjusted FFO of $0.85 per share and funds available for distribution of $0.81 per share.

We have maintained our quarterly dividend of $0.67 per share. Dividend payout ratio remains conservative at 79% of adjusted FFO and 83% of funds available for distribution. However, approximately $0.07 per share of our funds available for distribution is the result of applying letters of credit and other collateral to fund third quarter rent and interest obligations. Fortunately, our liquidity and our balance sheet have never been stronger as we work with our operators to navigate through what is hopefully the tail end of the pandemic.

Turning to skilled nursing facility industry trends. Positive trends include: one, occupancy continues to improve and is now 76% for the Omega portfolio; two, approximately 20% of our facilities are at or above pre-COVID occupancy levels. Three, the federal government has released $25 billion in Provider Relief Funding with distribution anticipated over the next several months; and four, most states continue to support the industry through supplemental Medicaid reimbursement. Negative trends include: one, labor and the continuing labor shortage and related increasing wages, combined with the dramatically increased usage of staffing agency labor and increased hourly cost.

Two, we are several months into the recoupment cycle for those operators that took Medicare advanced payments when the pandemic started. The repayment of these advances has significantly impacted operator liquidity, including the liquidity of a Agemo and Gulf Coast. Three, the pace of occupancy recovery remains a big question mark, and we could see additional operators face liquidity issues in the coming months. And four, uncertainty regarding the amount and timing of ongoing federal and state support.

Turning to operator liquidity issues and restructuring. Dan will provide detail regarding specific operator current liquidity and restructuring issues. In general, these efforts include one or more of the following actions: one, rent deferrals; two, asset sales or transitions to a new operator; and three, in certain cases, rent resets with other amended lease provisions. Examples include elimination of purchase options, future upward potential rent resets, lease extensions or revisions of renewal rights and collateral enhancements, adjustments or usage.

Historically, in many of our restructurings, one or more of the actions that I’ve outlined are sufficient to protect the value of our assets and most, if not all, of the long-term cash flow generation from the restructured assets. We continue to remain hopeful that the outcome of our COVID restructurings will yield a similar result. Finally, I again thank our operating partners, and in particular, the frontline caregivers and staff who have cared for the tens of thousands of residents within our facilities. I will now turn the call over to Bob.

Bob StephensonChief Financial Officer

Thanks, Taylor, and good morning. Turning to our financials for the third quarter. Our NAREIT FFO for the quarter was $181 million or $0.73 per share on a diluted basis as compared to $15 million or $0.06 per diluted share for the third quarter of 2020. Our adjusted FFO was $209 million or $0.85 per share for the quarter and excludes several items as outlined in our adjusted FFO reconciliation to net income found in our earnings release, in our supplemental and also on our website.

Revenue for the third quarter was approximately $282 million before adjusting for the nonrecurring items compared to $119 million for the third quarter of 2020. The year-over-year increase is primarily the result of straight line and lease inducement write-offs that occurred in the third quarter of 2020 of $142 million related to three operators that were placed on a cash basis in 2020 due to substantial doubt regarding their ability to continue as a going concern. As previously disclosed, Agemo failed to make its 2021 contractual payments for August and September and subsequently October. During August and September, we recorded $8.4 million of revenue by drawing on Agemo’s letters of credit and application of their security deposit.

Additionally, we recorded a provision for credit losses of approximately $16.7 million related to two outstanding loans to Agemo. As discussed during our second quarter earnings call, in June, we placed Gulf Coast on a cash basis as they informed us they would be unable to pay its rental obligations. In Q3, despite Gulf Coast continued failure to pay, we were able to recognize $7.4 million of revenue through the application of their security deposits and other collateral against uncollected contractual rent. It’s important to note NAREIT FFO and adjusted FFO include our ability to apply collateral and recognized revenue related to these operators’ nonpayments.

However, when this collateral is exhausted and if these tenants continue not to pay, we expect that this would reduce our near-term financial results, including NAREIT FFO, adjusted FFO and FAD. Our balance sheet remains strong, thanks to the steps we’ve taken over the past year to further improve our liquidity, capital stack and maturity ladder. On the debt side, at September 30, we had no outstanding borrowings under our $1.45 billion revolving credit facility and approximately $103 million in cash, and we have no bond maturities until August of 2023. On the equity side, in the third quarter, we issued 1.3 million shares of common stock through a combination of our ATM and dividend reinvestment and common stock purchase plan, generating $49 million in gross cash proceeds.

Year to date, we have issued 7.5 million common shares, generating $280 million in gross cash proceeds. At September 30, over 99% of our $5.3 billion in debt was fixed. Our net funded debt to adjusted annualized EBITDA was 4.9 times and our fixed charge coverage ratio was 4.6 times. It’s important to note, similar to NAREIT FFO, adjusted FFO and FAD, EBITDA in these liquidity calculations includes our ability to apply collateral and recognize revenue related to the operator nonpayments previously discussed.

However, if the collateral is exhausted, a decrease in EBITDA will increase our liquidity ratios. While we believe our actions to date provide us with significant liquidity and flexibility to weather a potential prolonged impact to our business, primarily driven by COVID-19, we will continue to evaluate any additional steps that may be needed to further enhance our liquidity. I will now turn the call over to Dan.

Dan BoothChief Operating Officer

Thanks, Bob, and good morning, everyone. As of September 30, 2021, Omega had an operating asset portfolio of 944 facilities with over 96,000 operating beds. These facilities were spread across 63 third-party operators and located within 42 states and the United Kingdom. Trailing 12-month operator EBITDARM and EBITDAR coverage for our core portfolio as of June 30, 2021, decreased to 1.63 times and 1.28 times, respectively, versus 1.8 times and 1.44 times, respectively, for the trailing 12-month period ended March 31, 2021.

During the second quarter of 2021, our operators cumulatively recorded approximately $49 million in federal stimulus funds as compared to approximately $74 million recorded during the first quarter. Trailing 12-month operator EBITDARM and EBITDAR coverage would have decreased during the second quarter of 2021 to 1.22 times and 0.89 times, respectively, as compared to 1.24 times and 0.9 times, respectively, for the first quarter when excluding the benefit of any federal stimulus funds. EBITDAR Coverage for the stand-alone quarter ended 6/30/2021 for our core portfolio was 1.2 times, including federal stimulus and 0.99 times excluding the $49 million of federal stimulus funds. This compares to the stand-alone first quarter of 1.17 times and 0.83 times with and without $74 million in federal stimulus funds, respectively.

Based upon what Omega has received in terms of occupancy reporting for October to date, occupancy has continued to improve, averaging approximately 75.5%, up from a low of 72.3% in January of 2021. While coverages have improved quarter over quarter, the fact that coverage without stimulus remains below 1x highlights the reason why we have had a handful of operators unable to pay rent this quarter and into October. The lack of or delay in additional federal and state stimulus in certain circumstances, coupled with a very slow occupancy recovery and a tough labor market had put a strain on the cash flow of operators with certain operators being hit to early hard. For the third quarter ending September 30, 2021, the percentage of rent and interest collected including the application of security deposits, letters of credit and other offsets was 99%.

Excluding the application of the aforementioned collateral items, the percentage drops to 93%. For the month of October 2021, those percentages are 91% and 88%, respectively, as much of the collateral available for this purpose was utilized in the third quarter. Turning to portfolio matters. In June of 2021, Gulf Coast and operator representing approximately $30 million or 3% of annual revenue, informed Omega that the June rent of approximately $2.5 million would not be paid and that future rent payments would not be remitted in the coming months.

Subsequently, on October 14, 2021, Gulf Coast filed for Chapter 11 bankruptcy in Wilmington, Delaware. As part of that filing, the debtors and Omega agreed upon and entered into a restructuring support agreement. Ultimately, and subject to approval of the court among other things, it is the intention of both parties to transition to 24 facilities associated with Gulf Coast to an unrelated third-party or parties. At this time, it is too early to predict the ultimate outcome or timing of those transitions.

Since the failure of this operator to pay rent in June, Omega has had two other material operators ceased paying rent. The first, Agemo, representing approximately $53 million or 5.3% of annual revenue, stopped paying rent and interest in August of 2021, and has also failed to pay and interest in September and October. Accordingly, Omega drew upon an existing security deposit of approximately $9.5 million to pay all rent due for August, September and a portion of October, thereby exhausting our deposits. We are in ongoing discussions with the Agemo to bring this lease back into compliance and begin the resumption of lease payments.

These discussions may involve the releasing or sale of certain facilities within the portfolio. The other operator, Guardian, representing approximately $37 million or 3.7% of annual revenue failed to pay its contractual rent and interest in October of 2021. We have been and continue to be in active ongoing discussions with Guardian to transition a significant portion of this portfolio to an unrelated third party. The exact number of facilities involved and the timing of such transitions has not yet been finalized.

Turning to new investments. As previously disclosed on our second quarter earnings call, on July 1, 2021, Omega provided $66 million of mortgage financing to an existing operator. The loan is secured by mortgages on six nursing facilities located in Ohio and bears an initial interest rate of 10.5%. Separately, on July 14, 2021, Omega completed $10 million purchase lease transaction for two care homes in the U.K.

The facilities were added to an existing operator’s master lease with an initial cash yield of 8% with 2.5% escalators. Year to date, Omega has made new investments totaling $821 million, including $144 million for capital expenditures. Turning to dispositions. During the third quarter of 2021, Omega divested 15 facilities for $110 million.

As of September 30, Omega has divested a total of 45 facilities for approximately $311 million. I will now turn the call over to Megan.

Megan KrullSenior Vice President of Operations

Thanks, Dan, and good morning, everyone. In September, HHS finally announced a $25.5 billion release of funds from the Provider Relief Fund, consisting of $17 billion for a Phase 4 general distribution tied to losses incurred for the second half of 2020 and the first quarter of 2021 and $8.5 billion associated with the funds set aside for rural providers those part of the American Rescue Act. As the application deadline was October 26, it is too soon to tell what level of funding our operators will receive, especially in light of the fact that the determination on what percentage of losses a building will be reimbursed for is not just based on the number of applicants, but also weighted differently depending on the size of the operator, whether it serves a rural versus an urban population and whether it serves Medicare, Medicaid and SHIP residents. On the state front, there’s been positive news out of the state of Florida as yesterday, $100 million in FMAP funds for nursing homes was approved.

This is extremely welcome news that Florida had not previously provided any stimulus to the industry. It is still too soon to know what the ultimate payout will be for each operator. While we are cautiously optimistic about the benefit of both of these federal and state developments, we had certainly hoped for a more targeted federal distribution to the long-term care space in light of the devastating effect that COVID has had on the industry. In terms of COVID itself, case counts at Omega facilities have declined over the last two months, which appears to be the Delta variant surge tapering off.

Thankfully, due to the vaccination programs, the impact from this surge is not anywhere near what we saw throughout last year and into early this year. Vaccine rates for both residents and staff have also been increasing according to reporting into CMS and facilities have started administering booster shots. Additionally, the interim final rule on the vaccine mandate by the federal government on all healthcare workers was just released with the January 4 deadline for vaccination. Labor shortages continue to persist which is exacerbating the slow occupancy recovery.

According to our recent AHCA/NCAL survey, 58% of nursing homes have had to limit new admissions due to staff shortages. This is consistent with what we are hearing from our operators, many of whom say that the admissions are there, but for the fact that they do not have enough staff to allow them to fill the beds. So while certain fundamentals are improving with occupancy slowly rebounding and COVID-related expenses decreasing, operators are facing a double hit from the substantial labor shortages, which are stalling the occupancy recovery while simultaneously also increasing labor expenses exponentially as a result of wage scale adjustments, overtime, bonuses and substantial agency usage. Agency expense itself on a per patient day basis for our core portfolio for year-to-date 2021 is more than four times what it was in 2019.

And this too is likely to get worse with the vaccine mandate, especially in locations where community vaccination rates are low. All of this means that the continued support of both the federal and state government is critical to clearing the path to recovery for the long-term care industry as a whole. And while we applaud these most recent efforts, we also hope that they recognize the need to provide additional support in the future. I will now turn the call over to Steven.

Steven InsoftChief Corporate Development Officer

Thanks, Megan, and thanks to everyone on the line for joining today. Inspire New York, our ALF Memory Care high rise at Second Avenue 93rd Street in Manhattan leased to and operated by Maplewood Senior Living opened at the end of March and in the midst lease-up. Lease-up momentum has been solid and in line with our underwriting and expectations. Maplewood’s newest property, Maplewood at Princeton in Princeton, New Jersey opened in August with very strong pre-leasing momentum and a strong early move in pace.

The COVID-19 pandemic poses certain challenges unique to senior housing operators. While the rollout of vaccines has helped considerably in stemming the spread an adverse effect of virus. Operators continue to battle with increasing costs driven by scarcity of labor. Additionally, private pay senior housing operators have not seen the level of government support provided to other areas of senior care.

Along with continued pandemic-related challenges, we saw stability and signs of strength in our senior housing occupancy throughout the second quarter. The strengthening of occupancy is more evident in certain markets than others. Our Maplewood portfolio, which is concentrated in the early affected Metro New York and Boston markets saw meaningful census erosion early in the pandemic, with second quarter 2020 census hitting a low point of 80.4% in early June of 2020. With that said, their portfolio occupancy level had returned to 88.6% in August of 2021.

Including the land and CIP, at the end of the first quarter, Omega senior housing portfolio totaled $2.3 billion of investment on our balance sheet. All of our senior housing assets are in triple net master leases. Including our 24 recently acquired Brookdale assets, our overall senior housing investment comprises 157 assisted living, independent living and memory care assets in the U.S. and U.K.

This portfolio, including the 24 Brookdale properties on a stand-alone basis had its trailing 12-month EBITDAR lease coverage fell four basis points to 0.98x at the end of the second quarter. With COVID outbreaks having affected different markets at various times, this decrease in performance was to be expected. Rising vaccination rates among residents and staff as well as availability of labor are critical to restoring occupancy and performance. While we remain constructive about the prospects of private pay senior housing, the pandemic along with its inflationary backdraft has warranted a far more selective approach, increases in labor and construction costs, coupled with supply chain challenges are making attractive projects more elusive.

While we make further progress on our existing ongoing developments, we continue to work with our operators on strategic reinvestment in our existing assets. We invested $96 million in the third quarter in new construction and strategic reinvestment. $80.1 million of this investment is predominantly related to our active construction projects. The remaining $15.9 million of this investment was related to our ongoing portfolio capex reinvestment program.

I will now open the call up for questions.

Questions & Answers:

Operator

[Operator instructions] Today’s first question comes from Connor Siversky of Berenberg. Please go ahead. 

Connor SiverskyBerenberg Bank — Analyst

Good morning, everybody. Thank you for having me on the call. So we’ve got Agemo down. But for the other two disclosed tenants, Guardian, Gulf Coast, that are not current on cash obligations.

Can you walk through how much revenue was booked in Q3 for each of the operators? And then in what composition, whether that was cash, security deposits, letters of credit or so forth?

Bob StephensonChief Financial Officer

Connor, thanks for joining us. It’s Bob here. Yes, I’ll walk through all three of them. Just to reiterate that.

We laid them out in the press release, both Dan and I talked a little bit about them. I’ll start with Gulf Coast. So Gulf Coast did not make any contractual payments in Q3. However, we recognized $7.4 million of revenue in Q3 through the application of $900,000 in security deposits.

The remaining $6.5 million we booked based on our legal right to offset any unpaid rent against certain Omega sub debt obligations. Gulf Coast, as we stated, filed for bankruptcy and will not be making any contractual payments in Q4. However, we’ll use the sub debt obligation collateral and record $7.4 million of revenue in Q4. Looking at Agemo, we recorded $12.9 million of revenue in Q3.

Of the $12.9 million, Agemo paid $4.5 million in July to cover July rent and interest. The remaining $8.4 million was pulled from a Agemo’s security deposit and letters of credit to cover August and September. For our Q4, we had $115,000 of security deposits remaining which we pulled in October to partially cover October rent. The remaining fourth quarter contractual revenue and interest is $12.8 million for Agemo, which will only be recognized in Q4 to the extent Agemo make any additional payments.

As Dan stated, he’s in ongoing discussions with the Agemo to bring that lease back into compliance. And the final one was Guardian. Guardian made all its contractual payments in Q3 and we recorded $9.3 million of revenue. And as Dan stated in his prepared remarks, Guardian failed to pay the contractual rent and interest in October.

Yet, he’s in active negotiations with Guardian. So Q4 revenue will be determined by the outcome of the negotiations. We currently have $7.4 million in letters of credit related to Guardian. I hope I covered all that.

Connor SiverskyBerenberg Bank — Analyst

You did. Thank you. That was very helpful. Then I know you just mentioned Guardian, but for Agemo and Gulf Coast, is there any — can you give us any sense of what kind of capacity is left in these backstops to continue booking revenue, assuming they’re not paying cash in Q4 to Q1?

Bob StephensonChief Financial Officer

For Gulf Coast, basically when we — at the end of Q4, we will have exhausted the collateral there. From Agemo standpoint, I think there’s still a personal guarantee sitting out there of roughly $8 million.

Connor SiverskyBerenberg Bank — Analyst

And no more security deposits? OK. OK. And then for Agemo, you mentioned some conversations to get that lease back into compliance. I mean what would that take necessarily? Is that downsizing the portfolio? And maybe shoring up Agemo’s operations that way of providing working capital loan? Just any color there, appreciated.

Bob StephensonChief Financial Officer

So the discussions, as we indicated, are ongoing. So it could be a whole host of different things that could involve some sales or some transitions. There is some virtually all of our operators expect to have some federal stimulus money received either by the end of the fourth quarter or early in the first quarter. And then also out there, Megan talked about some Florida stimulus money that we also expect to get in probably at the end of the fourth quarter and into the first quarter.

So there is some money on the horizon from both the federal government and from the state of Florida specifically.

Connor SiverskyBerenberg Bank — Analyst

Got it. OK. That’s very helpful. I’ll leave it there.

Thank you.

Operator

And our next question today comes from Amanda Sweitzer of Baird. Please go ahead.

Amanda SweitzerRobert W. Baird and Company — Analyst

Thanks. Good morning. In your comments about agency expense being used by our operators about four times higher today. Do you have any data on what percentage of overall compensation or operator expenses that represents? And then have you seen any moderation in that agency usage into the fourth quarter?

Megan KrullSenior Vice President of Operations

We haven’t been seeing any agency moderation, unfortunately. I mean it’s gotten worse probably over the last quarter or two. It’s just a really, really tough market out there. And I’d have to find out what percentage that represents.

But it’s just tough from a labor perspective right now.

Bob StephensonChief Financial Officer

It’s going to vary tremendously by market as well.

Amanda SweitzerRobert W. Baird and Company — Analyst

OK. That makes sense. And then on capital allocation. Have you disposed of assets? What have you seen in terms of demand and pricing for underperforming assets in the private transaction market today?

Bob StephensonChief Financial Officer

So interestingly enough, underperforming assets are still producing sales prices that would equate to a more normalized environment. There are people that are buying based upon say, for instance, 2019 results, pre-pandemic. And then they’re also buying off of historical bed values in the states that they’re picking up. So we have not seen that buying activity weighing.

It’s still a pretty hot market right now.

Amanda SweitzerRobert W. Baird and Company — Analyst

And do you think the underlying volume or demand for that type of asset that was deep enough if you were to go in try to sell additional assets today?

Bob StephensonChief Financial Officer

Well, we have been selling assets. And right now, it still runs pretty deep. So we’re hoping that continues for the foreseeable future.

Amanda SweitzerRobert W. Baird and Company — Analyst

Appreciate the time. 

Operator

And our next question today comes from Nick Joseph at Citi. Please go ahead. 

Michael GriffinCiti — Analyst

This is Michael Griffin on for Nick. I wanted to touch kind of on external growth opportunities and sort of how you view the current attractiveness of your cost of capital versus any future potential external growth opportunities?

Bob StephensonChief Financial Officer

While we’ve been pretty successful as a seller because the market is hot, opportunities are somewhat limited because the buyer market is hot and things are getting bid up. We are not in the market right now of buying a lot of distressed assets. So we’re really looking at more sort of off-market transactions with our existing operators. We’re seeing a fair amount of volume in the U.K.

But in the United States right now, it’s a pretty tough market to be investing in.

Taylor PickettChief Executive Officer

And then on the cost of capital side, obviously, it’s not particularly attractive for us. But as Bob noted, we have cash on the balance sheet. And to the extent we’re recycling capital that makes sense for us.

Michael GriffinCiti — Analyst

Gotcha. That’s very helpful. And then you noted the mortgage loan investment this past quarter. Just curious your appetite for those going forward? And then would you rather see more of those or kind of other opportunities for future growth?

Bob StephensonChief Financial Officer

Our bread and butter still remains buying the simple title to the properties, mortgages are sort of either accommodations or some structural nuance that requires a mortgage loan versus a purchase of the actual asset. So we’ll still do mortgages, but it’s pretty limited, and it’s not our mainstay.

Michael GriffinCiti — Analyst

That’s it for me. Thanks for the time. 

Operator

Thank you. And our next question today comes from Tayo Okusanya with Credit Suisse. Please go ahead. 

Tayo OkusanyaCredit Suisse — Analyst

Yes. Good morning, everyone. I wanted to understand a little bit better what’s happening at the federal government level in regards to providing additional kind of help for the sector? I think — correct me if I’m wrong, but you mentioned that they had released the final $25 billion in the emergency funds. If any of that come into skilled nursing? And exactly what’s happening on the lobbying front to kind of help skilled nursing operators live to fight another day?

Megan KrullSenior Vice President of Operations

So they haven’t released everything in the fund at this point. What they agreed to release was $17 billion that was left in the fund as well as $8.5 billion that was related to rural providers that was part of the American Rescue Act. And it’s really tough to tell. That’s for all providers.

That’s not necessarily directly to this industry. So it’s tough to tell how much it’s to go to the industry specifically. Part of it is going to be based on the number of applicants, right? So they have to put in thousands and thousands of pages of data related to their losses for the second half of last year and the first quarter of this year. So it’s the number of applicants that are putting money — or applying for it as well as whether they’re rural versus urban providers and a variety of other factors.

So it’s difficult to tell how much will actually come to the industry.

Tayo OkusanyaCredit Suisse — Analyst

That’s it. And then anything else from a lobbying perspective, is it possible that the Medicare advance payments get stopped or anything else can potentially happen just to kind of give operators a little bit more breathing room?

Megan KrullSenior Vice President of Operations

I mean I think AHCA is constantly lobbying the government to give more from the Provider Relief Fund and hopefully, in a more targeted fashion. But in terms of the Medicare Advance payments, I don’t think that’s going away anytime soon. So I think folks will just continue paying that out.

Bob StephensonChief Financial Officer

I think most operators will have actually paid back most of those advanced payments either by the end of the first quarter or early into the second quarter of 2022.

Tayo OkusanyaCredit Suisse — Analyst

Thanks for the time.

Operator

Thank you. And our next question today comes from John Pawlowski with Green Street Advisors. Please go ahead.

John PawlowskiGreen Street Advisors — Analyst

A question about the distribution of EBITDAR coverage across the group. So the 16% of rent that’s currently below one times. I’m trying to better understand kind of the current level, not on a trailing 12-month basis. So a couple of quarters from now, where does this number trend best guesses on where the number trend, best guess [Inaudible] the labor cost issues fully flow through the financials and kind of the trailing 12 period rolls forward?

Bob StephensonChief Financial Officer

I wish I had the answer to that. I would say that there was a big chunk of federal stimulus money that came out sort of the beginning of last year, which runs through these EBITDAR coverage buckets, if you will. And as there has been no or little stimulus money, those quarters are dropping off. So the coverages are naturally going away because of the lack of federal stimulus money.

Have we bottomed out? I would say that, at least on a quarter-to-quarter basis, if you heard the stats there, we saw improvement on a stand-alone quarterly basis within our portfolio. We hope that continues. And if it does, then this trend should cease and start to reverse itself.

John PawlowskiGreen Street Advisors — Analyst

OK. Great. And then is there anything — you mentioned in the opening remarks, just potentially the vaccine mandate causing more — another kind of shot of pain in terms of the labor pressures in certain states. Are there any — are there any regions in the country you’re worried about tipping into kind of the troubled bucket in the next few quarters that we haven’t seen yet?

Bob StephensonChief Financial Officer

I’m not going to call out states by name, but there are areas of the country which have lower vaccination rates, right, than others. So yes, there are — those particular states are going to feel the vaccination mandate harder than those with higher vaccination rates. That’s just a fact. So we could see some of that come through when the mandate kicks in January.

John PawlowskiGreen Street Advisors — Analyst

Thanks for the time. 

Operator

[Operator instructions] Ladies and gentlemen, this concludes our question-and-answer session. I’d like to turn the conference back over to Taylor Pickett for any closing remarks.

Taylor PickettChief Executive Officer

Thanks. Thanks for joining us this morning. As always, feel free to reach out to the team in particular, Matthew or Bob, for any follow-ups you may have. Have a great day.

Thanks.

Operator

[Operator signoff]

Duration: 37 minutes

Call participants:

Michele ReberSenio. Director of Asset Management

Taylor PickettChief Executive Officer

Bob StephensonChief Financial Officer

Dan BoothChief Operating Officer

Megan KrullSenior Vice President of Operations

Steven InsoftChief Corporate Development Officer

Connor SiverskyBerenberg Bank — Analyst

Amanda SweitzerRobert W. Baird and Company — Analyst

Michael GriffinCiti — Analyst

Tayo OkusanyaCredit Suisse — Analyst

John PawlowskiGreen Street Advisors — Analyst

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Alaris Equity Partners Income Trust Releases Q3 2021 https://disturbmedia.com/alaris-equity-partners-income-trust-releases-q3-2021/ Mon, 13 Dec 2021 06:58:21 +0000 https://disturbmedia.com/?p=709 NOT FOR DISTRIBUTION IN THE UNITED STATES. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW. CALGARY, Alberta, Nov. 09, 2021 (GLOBE NEWSWIRE) — Alaris Equity Partners Income Trust (together, as applicable, with its subsidiaries, “Alaris” or the “Trust“) is pleased to announce its results for the three and […]]]>

NOT FOR DISTRIBUTION IN THE UNITED STATES.

FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW.

CALGARY, Alberta, Nov. 09, 2021 (GLOBE NEWSWIRE) — Alaris Equity Partners Income Trust (together, as applicable, with its subsidiaries, “Alaris” or the “Trust“) is pleased to announce its results for the three and nine months ended September 30, 2021. The results are prepared in accordance with International Accounting Standard 34. All amounts below are in Canadian dollars unless otherwise noted.

Q3 2021 Highlights:

  • Generated revenue of $42.9 million in the quarter, the largest quarter of revenue in Alaris’ history and an increase of 44% on a per unit basis compared to Q3 2020. Revenue of $110.0 million in the nine months ended September 30, 2021 represents a per unit increase of 17% compared to the $77.6 million in 2020;
  • Normalized EBITDA of $33.3 million in the quarter (Q3 2020 – $20.1 million) and in the nine months ended September 30, 2021 Normalized EBITDA totalled $94.3 million (2020 – $58.5 million). These increases on a per unit basis of approximately 32% are primarily the result of incremental revenue from capital deployment in excess of $400 million in the last twelve months;
  • During the quarter, Alaris received an additional US$3.4 million of Distributions from Kimco Holdings, LLC (“Kimco”) related to unaccrued deferred Distributions from prior years. Kimco continues to evaluate the possibility of a full or partial redemption of Alaris’ investment. Nothing is imminent, nor can any redemption be assured; however, the redemption value is estimated to be between US$60.0 million and US$70.0 million, inclusive of unaccrued and unpaid Distributions from prior periods of US$13.6 million;
  • Net cash from operating activities during the quarter was $0.66 per unit, which was an increase of more than 100% compared to Q3 2020, which includes $0.10 per unit related to additional collections from Kimco in the quarter. This resulted in $0.33 of net cash per unit in excess cash generated in the quarter after paying $0.33 in Trust distributions to unitholders;
  • Subsequent to September 30, 2021, Federal Resources Supply Company (“FED”) redeemed all of Alaris’ FED preferred units and repaid the outstanding loan for total proceeds to Alaris of US$80.9 million. Alaris’ total return on the FED investment was US$75.7 million or 113% which represents an unlevered IRR of over 19% during the six-year partnership. The total proceeds of US$80.9 million included a US$13.9 million premium in excess of the total invested capital of US$67.0 million;
  • The weighted average combined Earnings Coverage Ratio (“ECR”) remains above 1.7x on a trailing twelve month basis;
  • Based on the financial results of Alaris’ Partners so far in 2021, Alaris currently expects an overall positive reset on Distributions for 2022 of approximately 2.0% which would result in additional revenue of $2.6 million, or $0.06 per unit; and
  • Alaris reduced its outstanding debt to $257 million subsequent to quarter end using the proceeds from the FED redemption, additional cash received from Kimco in the quarter (US$3.4 million) and excess cash flow generated in the quarter of US$10.0 million as a result of Alaris’ Actual Payout Ratio of 47%.

“Recovering some previously written off amounts from Kimco made for a record quarter of revenue, along with all of the new partner revenue generated from the last twelve months of deployment. With healthy ECR’s across the board, a sub-70% Run Rate Payout Ratio and over $140 million of dry powder following the FED redemption, we are in a strong position to continue our positive trajectory”, said Darren Driscoll, CFO.

             
Per Unit Results Three months ended Nine months ended
Period ending September 30   2021   2020 % Change   2021   2020   % Change
Revenue   $0.95   $0.66 +43.9 % $2.52   $2.16   +16.7 %
Normalized EBITDA   $0.74   $0.56 +32.1 % $2.16   $1.63   +32.5 %
Net cash from operating activities   $0.66   $0.28 +135.7 % $1.76   $1.39   +26.6 %
Distributions declared   $0.33   $0.31 +6.5 % $0.95   $1.01   -6.2 %
Basic earnings / (loss)   $1.03   $0.80 +28.8 % $2.25   $(0.29 ) +867.5 %
Fully diluted earnings / (loss)   $0.97   $0.75 +29.3 % $2.16   $(0.29 ) +835.9 %
Weighted average basic units (000’s)   45,032   35,584     43,615   36,003    

For the three months ended September 30, 2021, revenue per unit increased by 43.9% as a result of Distributions from Alaris’ new investments in Vehicle Leasing Holdings, LLC, dba D&M Leasing (“D&M”), 3E LLC, (“3E”), Brown & Settle Investments, LLC and a subsidiary thereof (collectively, “Brown & Settle”), Falcon Master Holdings LLC, dba FNC Title Services (“FNC”) and Edgewater Technical Associates (“Edgewater”), as well as the additional Distributions from follow-on investments in Accscient, LLC (“Accscient”), Body Contour Centers, LLC (“BCC”) and GWM Holdings, Inc. and its subsidiaries (“GWM”). The increase is also attributable to (i) US$3.4 million of additional unaccrued distributions received from Kimco related to periods prior to 2020 and (ii) the deferral of Distributions in Q3 2020 from PF Growth Partners, LLC (“PFGP”) as a result of the impact of COVID-19. These were partially offset by the depreciation of the US dollar against the Canadian dollar compared to the prior year, as the quarterly average rate was approximately 6% lower in Q3 2021.

Basic earnings per unit in the quarter of $1.03 increased by 28.8% compared to the prior year due to the higher revenue described above, partially offset by a non-recurring gain of $10.6 million in the prior year related to the re-valuation of the convertible debentures due to Alaris’ conversion to an income trust.

Normalized EBITDA of $0.74 per unit in Q3 2021 was an increase of 32.1% from $0.56 per unit in the prior year, primarily as a result of the new and follow-on investments made during the previous twelve months. The Trust declared distributions of $0.33 per unit during the three months ended September 30, 2021, resulting in an Actual Payout Ratio of 47.1% for the period.

The net cash from operating activities of $0.66 per unit in the three months ended September 30, 2021 was a significant increase from the prior year as a result of the increase in revenue per unit along with consistent general and administrative expenses compared to the prior year. This was partially offset by higher cash interest paid in the current period due to a higher average total debt outstanding balance compared to Q3 2020.

Outlook

The Trust’s total capital deployment of greater than $400 million in the trailing twelve-month period has resulted in a record quarter of revenue for Alaris with $42.9 million in Q3 2021. As outlined below, the outlook for the next twelve months continues to be positive following this deployment and the continued overall health of the portfolio. During Q3 2021, PFGP returned to paying full distributions of US$0.8 million per month, which is also reflected in the Run Rate Cash Flow table below. The resulting Run Rate Revenue for Alaris is approximately $141.8 million over the next twelve months. This includes current contracted amounts, the removal of Distributions from FED following their redemption in October 2021 and an estimated aggregate of $3.2 million of common dividends or distributions. Alaris expects total revenue from its Partners in Q4 2021 of approximately $36.2 million.

Annual general and administrative expenses are currently estimated at $13.0 million and include all public company costs. The Trust’s Run Rate Payout Ratio is expected to be within a range of 65% and 70% when including run rate distributions, overhead expenses and its existing capital structure. The table below sets out our estimated Run Rate Cash Flow alongside the after-tax impact of positive net deployment and the impact of every $0.01 change in the USD to CAD exchange rate.

Run Rate Cash Flow ($ thousands except per unit) Amount ($) $ / Unit  
Revenue   $141,800   $3.15    
General & Admin.     (13,000 )   (0.29 )  
Interest & Taxes     (37,300 )   (0.83 )  
Free cash flow   $91,500   $2.03    
Annual Distribution     (59,500 )   (1.32 )  
Excess Cash Flow   $ 32,000   $ 0.71    
         
Other Considerations (after taxes and interest):      
New Investments Every $50 million deployed @ 14%   +3,563     +0.08    
USD to CAD Every $0.01 change of USD to CAD +/- 900   +/- 0.02    

The senior debt facility was drawn to $352.0 million at September 30, 2021 in the Trust’s statement of financial position. The annual interest rate on that debt, inclusive of standby charges on available capacity, was approximately 4.2% for the nine months ended September 30, 2021. Subsequent to September 30, 2021, the US$80.9 million received from the redemption of FED was used to repay senior debt, bringing the total drawn as of the date of this release to approximately $256.6 million, with the capacity to draw up to another $143.4 million based on covenants and credit terms.

The Consolidated Statement of Financial Position, Statement of Comprehensive Income, and Statement of Cash Flows are attached to this news release. Alaris’ financial statements and MD&A are available on SEDAR at www.sedar.com and on our website at www.alarisequitypartners.com.

Earnings Release Date and Conference Call Details

Alaris management will host a conference call at 9am MDT (11am EDT), Wednesday, November 10, 2021 to discuss the financial results and outlook for the Trust.

Participants in North America can access the conference call by dialing toll free 1-866-475-5449. Alternatively, to listen to this event online, please click the webcast link and follow the prompts given: Q3 Webcast. Please connect to the call or log into the webcast at least 10 minutes prior to the beginning of the event.

For those unable to participate in the conference call at the scheduled time, it will be archived for instant replay for a week. You can access the replay by dialing toll free 1-855-859-2056 and entering the Conference ID: 7852. The webcast will be archived and is available for replay by using the same link as above or by finding the link we’ll have stored under the “Investor” section – “Presentation and Events”, on our website at www.alarisequitypartners.com.

An updated corporate presentation will be posted to the Trust’s website within 24 hours at www.alarisequitypartners.com.

About the Trust:

Alaris, through its subsidiaries, provides alternative financing to private companies (“Partners”) in exchange for distributions, dividends or interest (collectively, “Distributions”) with the principal objective of generating stable and predictable cash flows for distribution payments to its unitholders. Distributions from the Partners are adjusted annually based on the percentage change of a “top-line” financial performance measure such as gross margin or same store sales and rank in priority to the owner’s common equity position.

Non-IFRS Measures
The terms EBITDA, Normalized EBITDA, Run Rate Payout Ratio, Actual Payout Ratio, Run Rate Revenue, Run Rate Cash Flow, Earnings Coverage Ratio, Per Unit and IRR are financial measures used in this news release that are not standard measures under International Financial Reporting Standards (“IFRS”). The Trust’s method of calculating EBITDA, Normalized EBITDA, Run Rate Payout Ratio, Actual Payout Ratio, Run Rate Revenue, Run Rate Cash Flow, Earnings Coverage Ratio, Per Unit and IRR may differ from the methods used by other issuers. Therefore, the Trust’s EBITDA, Normalized EBITDA, Run Rate Payout Ratio, Actual Payout Ratio, Run Rate Revenue, Run Rate Cash Flow, Earnings Coverage Ratio, Per Unit and IRR may not be comparable to similar measures presented by other issuers.

Run Rate Payout Ratio refers to Alaris’ total distribution per unit expected to be paid over the next twelve months divided by the estimated net cash from operating activities per unit that Alaris expects to generate over the same twelve month period (after giving effect to the impact of all information disclosed as of the date of this report).

Actual Payout Ratio refers to Alaris’ total cash distributions paid during the period (annually or quarterly) divided by the actual net cash from operating activities Alaris generated for the period.

Run Rate Revenue refers to Alaris’ total revenue expected to be generated over the next twelve months.

Run Rate Cash Flow refers to Alaris’ total cash flows expected to be generated and disbursed over the next twelve months.

EBITDA refers to earnings determined in accordance with IFRS, before depreciation and amortization, net of gain or loss on disposal of capital assets, interest expense and income tax expense. EBITDA is used by management and many investors to determine the ability of an issuer to generate cash from operations. Management believes EBITDA is a useful supplemental measure from which to determine the Trust’s ability to generate cash available for debt service, working capital, capital expenditures, income taxes and distributions.

Normalized EBITDA refers to EBITDA excluding items that are non-recurring in nature and is calculated by adjusting for non-recurring expenses and gains to EBITDA. Management deems non-recurring items to be unusual and/or infrequent items that Alaris incurs outside of its common day-to-day operations. For the three and nine months ended September 30, 2021, this includes the additional distributions received from Kimco related to prior year periods. For the nine months ended September 30, 2021, this includes the unit-based compensation expense related to the quarterly re-valuation of the outstanding RTU’s and Options and the reversal of previously recorded credit losses related to the Kimco promissory notes and accounts receivable. For the three and nine months ended September 30, 2020, this includes the non-recurring legal expenses related to the income trust conversion, the non-cash impact of trust conversion and the unit-based compensation expense related to the quarterly re-valuation of the outstanding unit-based compensation. For the nine months ended September 30, 2020, this includes the distributions received upon the redemption of Sales Benchmark Index (“SBI”). Transaction diligence costs are recurring but are considered an investing activity. Foreign exchange unrealized gains and losses are recurring but not considered part of operating results and excluded from normalized EBITDA on an ongoing basis. Changes in investments at fair value are non-cash and although recurring are also removed from normalized EBITDA. Adjusting for these non-recurring items allows management to assess cash flow from ongoing operations.

Earnings Coverage Ratio refers to the Normalized EBITDA of a Partner divided by such Partner’s sum of debt servicing (interest and principal), unfunded capital expenditures and distributions to Alaris. Management believes the earnings coverage ratio is a useful metric in assessing our partners continued ability to make their contracted distributions.

Per Unit values, other than earnings per unit, refer to the related financial statement caption as defined under IFRS or related term as defined herein, divided by the weighted average basic units outstanding for the period.

IRR refers to internal rate of return, which is a metric used to determine the discount rate that derives a net present value of cash flows to zero. Management uses IRR to analyze partner returns.

The terms EBITDA, Normalized EBITDA, Run Rate Payout Ratio, Actual Payout Ratio, Run Rate Revenue, Run Rate Cash Flow, Earnings Coverage Ratio, Per Unit and IRR should only be used in conjunction with the Trust’s annual audited financial statements while complete versions are available on SEDAR at www.sedar.com.

Forward-Looking Statements

This news release contains forward-looking information and forward-looking statements (collectively, “forward-looking statements”) under applicable securities laws, including any applicable “safe harbor” provisions. Statements other than statements of historical fact contained in this news release are forward-looking statements, including, without limitation, management’s expectations, intentions and beliefs concerning the growth, results of operations, performance of the Trust and the Partners, the future financial position or results of the Trust, business strategy and plans and objectives of or involving the Trust or the Partners. Many of these statements can be identified by looking for words such as “believe”, “expects”, “will”, “intends”, “projects”, “anticipates”, “estimates”, “continues” or similar words or the negative thereof. In particular, this news release contains forward-looking statements regarding: the anticipated financial and operating performance of the Partners; the Trust’s Run Rate Payout Ratio, Run Rate Cash Flow and Run Rate Revenue; the impact of recent new investments and follow-on investments; expected resets of Distributions in 2022; the Trust’s consolidated expenses; expectations regarding receipt (and amount of) any common equity distributions or dividends from Partners in which Alaris holds common equity, including the impact on the Trust’s net cash from operating activities, Run Rate Revenue, Run Rate Cash Flow and Run Rate Payout Ratio; the use of proceeds from the senior credit facility; the Trust’s ability to deploy capital; potential Partner redemptions, including the timing, if at all, thereof and the amounts to be received by the Trust (including, specifically, the potential Kimco redemption); Q4 2021 revenue; and the Trust’s expenses for Q4 2021. To the extent any forward-looking statements herein constitute a financial outlook or future oriented financial information (collectively, “FOFI”), including estimates regarding revenues, Distributions from Partners (including expected resets, restarting full or partial Distributions and common equity distributions), Run Rate Payout Ratio, Run Rate Cash Flow, net cash from operating activities, expenses and impact of capital deployment, they were approved by management as of the date hereof and have been included to provide an understanding with respect to Alaris’ financial performance and are subject to the same risks and assumptions disclosed herein. There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements are based will occur.

By their nature, forward-looking statements require Alaris to make assumptions and are subject to inherent risks and uncertainties. Assumptions about the performance of the Canadian and U.S. economies over the next 24 months and how that will affect Alaris’ business and that of its Partners (including, without limitation, the ongoing impact of COVID-19) are material factors considered by Alaris management when setting the outlook for Alaris. Key assumptions include, but are not limited to, assumptions that: the Canadian and U.S. economies will continue to stabilize from the economic downturn created by COVID-19 and will not be detrimentally impacted over the next twelve months, interest rates will not rise in a material way over the next 12 months, that those Alaris Partners previously affected by COVID-19 will not see a detrimental impact from COVID-19 over the next 12 months; the businesses of the majority of our Partners will continue to grow; more private companies will require access to alternative sources of capital; the businesses of new Partners and those of existing Partners will perform in line with Alaris’ expectations and diligence; and that Alaris will have the ability to raise required equity and/or debt financing on acceptable terms. Management of Alaris has also assumed that the Canadian and U.S. dollar trading pair will remain in a range of approximately plus or minus 15% of the current rate over the next 6 months. In determining expectations for economic growth, management of Alaris primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies as well as prevailing economic conditions at the time of such determinations.

There can be no assurance that the assumptions, plans, intentions or expectations upon which these forward-looking statements are based will occur. Forward-looking statements are subject to risks, uncertainties and assumptions and should not be read as guarantees or assurances of future performance. The actual results of the Trust and the Partners could materially differ from those anticipated in the forward-looking statements contained herein as a result of certain risk factors, including, but not limited to, the following: the ongoing impact of the COVID-19 pandemic on the Trust and the Partners (including how many Partners will experience a slowdown or closure of their business and the length of time of such slowdown or closure); management’s ability to assess and mitigate the impacts of COVID-19; the dependence of Alaris on the Partners; leverage and restrictive covenants under credit facilities; reliance on key personnel; general economic conditions, including the ongoing impact of COVID-19 on the Canadian, U.S. and global economies; failure to complete or realize the anticipated benefit of Alaris’ financing arrangements with the Partners; a failure to obtain required regulatory approvals on a timely basis or at all; changes in legislation and regulations and the interpretations thereof; risks relating to the Partners and their businesses, including, without limitation, a material change in the operations of a Partner or the industries they operate in; inability to close additional Partner contributions or collect proceeds from any redemptions in a timely fashion on anticipated terms, or at all; a change in the ability of the Partners to continue to pay Alaris at expected Distribution levels or restart distributions (in full or in part); a failure to collect material deferred Distributions; a change in the unaudited information provided to the Trust; and a failure to realize the benefits of any concessions or relief measures provided by Alaris to any Partner or to successfully execute an exit strategy for a Partner where desired. Additional risks that may cause actual results to vary from those indicated are discussed under the heading “Risk Factors” and “Forward Looking Statements” in Alaris’ Management Discussion and Analysis and Annual Information Form for the year ended December 31, 2020, which is filed under Alaris’ profile at www.sedar.com and on its website at www.alarisequitypartners.com.

Readers are cautioned that the assumptions used in the preparation of forward-looking statements, including FOFI, although considered reasonable at the time of preparation, based on information in Alaris’ possession as of the date hereof, may prove to be imprecise. In addition, there are a number of factors that could cause Alaris’ actual results, performance or achievement to differ materially from those expressed in, or implied by, forward looking statements and FOFI, or if any of them do so occur, what benefits the Trust will derive therefrom. As such, undue reliance should not be placed on any forward-looking statements, including FOFI.

The Trust has included the forward-looking statements and FOFI in order to provide readers with a more complete perspective on Alaris’ future operations and such information may not be appropriate for other purposes. The forward-looking statements, including FOFI, contained herein are expressly qualified in their entirety by this cautionary statement. Alaris disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

For more information please contact:
Investor Relations
Alaris Equity Partners Income Trust
403-260-1457
ir@alarisequity.com

Alaris Equity Partners Income Trust
Condensed consolidated interim statements of financial position

     
  30-Sep 31-Dec
$ thousands   2021     2020  
Assets    
Cash and cash equivalents $ 19,364   $ 16,498  
Derivative contracts       1,489  
Accounts receivable and prepayments   2,127     981  
Income taxes receivable   20,036     12,669  
Promissory notes and other assets   12,462     4,000  
Current Assets $ 53,989   $ 35,637  
Promissory notes and other assets   5,722     19,233  
Deposits   21,180     20,206  
Property and equipment   697     846  
Investments   1,166,907     880,512  
Non-current assets $ 1,194,506   $ 920,797  
Total Assets $ 1,248,495   $ 956,434  
     
Liabilities    
Accounts payable and accrued liabilities $ 6,242   $ 5,351  
Distributions payable   14,878     12,089  
Derivative contracts   125      
Office Lease   538     659  
Income tax payable       723  
Current Liabilities $ 21,783   $ 18,822  
Deferred income taxes   30,740     16,112  
Loans and borrowings   352,013     229,477  
Convertible debenture   88,692     86,029  
Other long-term liabilities   1,994     980  
Non-current liabilities $ 473,439   $ 332,598  
Total Liabilities $ 495,222   $ 351,420  
     
Equity    
Unitholders’ capital $ 753,401   $ 659,988  
Equity reserve   17,621     17,621  
Translation reserve   11,890     12,431  
Retained earnings / (deficit)   (29,639 )   (85,026 )
Total Equity $ 753,273   $ 605,014  
     
Total Liabilities and Equity $ 1,248,495   $ 956,434  
     

Alaris Equity Partners Income Trust
Condensed consolidated interim statements of comprehensive income / (loss)

           
           
  Three months ended September 30   Nine months ended September 30
 $ thousands except per unit amounts   2021     2020       2021     2020  
           
Revenues, net of realized foreign exchange gain or loss $ 42,878   $ 23,421     $ 110,045   $ 77,595  
Net realized gain / (loss) from investments   (10,259 )         (10,259 )   11,603  
Net unrealized gain / (loss) of investments at fair value   26,122     11,885       47,880     (76,257 )
Bad debt recovery             4,030      
Total revenue and other operating income / (loss) $ 58,741   $ 35,306     $ 151,696   $ 12,941  
           
General and administrative   3,920     3,604       8,235     10,089  
Transaction diligence costs   109     1,076       2,845     4,011  
Unit-based compensation   1,371     66       3,977     1,689  
Depreciation and amortization   45     50       165     169  
Total operating expenses   5,445     4,796       15,222     15,958  
Earnings / (loss) from operations $ 53,296   $ 30,510     $ 136,474   $ (3,017 )
Finance costs   6,858     4,269       18,265     13,331  
Unrealized (gain) / loss on foreign exchange, including derivatives   (4,315 )   1,542       2,022     (4,721 )
Non-cash impact of trust conversion       (10,647 )         (10,647 )
Earnings / (loss) before taxes $ 50,753   $ 35,346     $ 116,187   $ (980 )
Current income tax expense / (recovery)   (4,553 )   1,619       3,593     3,890  
Deferred income tax expense   9,128     5,156       14,452     5,686  
Total income tax expense   4,575     6,775       18,045     9,576  
Earnings / (loss) $ 46,178   $ 28,571     $ 98,142   $ (10,556 )
           
Other comprehensive income          
Foreign currency translation differences   12,327     (6,600 )     (541 )   11,208  
Total comprehensive income $ 58,505   $ 21,971     $ 97,601   $ 652  
           
Earnings / (loss) per unit          
Basic $ 1.03   $ 0.80     $ 2.25   $ (0.29 )
Fully diluted $ 0.97   $ 0.75     $ 2.16   $ (0.29 )
Weighted average units outstanding          
Basic   45,032     35,584       43,615     36,003  
Fully Diluted   49,530     40,100       48,113     36,395  

Alaris Equity Partners Income Trust
Condensed consolidated interim statements of cash flows

     
  Nine months ended September 30
 $ thousands   2021     2020  
Cash flows from operating activities    
Earnings / (loss) for the period $ 98,142   $ (10,556 )
Adjustments for:    
Finance costs   18,265     13,331  
Deferred income tax expense   14,452     5,686  
Depreciation and amortization   165     169  
Bad debt recovery   (4,030 )    
Net realized (gain) / loss from investments   10,259     (11,603 )
Net unrealized (gain) / loss of investments at fair value   (47,880 )   76,257  
Unrealized (gain) / loss on foreign exchange, including derivatives   2,022     (4,721 )
Non-cash impact of trust conversion       (10,647 )
Transaction diligence costs   2,845     4,011  
Unit-based compensation   3,977     1,689  
Changes in working capital:    
– accounts receivable and prepayments   (1,146 )   680  
– income tax receivable / payable   (8,794 )   (4,244 )
– accounts payable, accrued liabilities   1,905     (5 )
Cash generated from operating activities   90,182     60,047  
Cash interest paid   (13,585 )   (9,835 )
Net cash from operating activities $ 76,597   $ 50,212  
     
Cash flows from investing activities    
Acquisition of investments $ (264,900 ) $ (28,178 )
Transaction diligence costs   (2,845 )   (4,011 )
Proceeds from partner redemptions   14,913     111,306  
Proceeds on disposal of assets and liabilities held for sale       39,196  
Promissory notes and other assets issued   (5,818 )    
Promissory notes and other assets repaid   14,435     784  
Changes in working capital – investing       (8,723 )
Net cash from / (used in) investing activities $ (244,215 ) $ 110,374  
     
Cash flows from financing activities    
Repayment of loans and borrowings $ (146,913 ) $ (181,077 )
Proceeds from loans and borrowings   269,585     64,225  
Debt amendment and extension fees   (552 )    
Issuance of unitholders’ capital, net of unit issue costs   90,287      
Distributions paid   (39,966 )   (30,480 )
Trust unit repurchases       (10,051 )
Office lease payments   (121 )   (136 )
Net cash from / (used in) financing activities $ 172,320   $ (157,519 )
     
Net increase in cash and cash equivalents $ 4,702   $ 3,067  
Impact of foreign exchange on cash balances   (1,836 )   (3,440 )
Cash and cash equivalents, Beginning of period   16,498     17,104  
Cash and cash equivalents, End of period $ 19,364   $ 16,731  
     
Cash taxes paid $ 11,777   $ 8,204  


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Semi-Truck Financing With Bad Credit: Get Semi-Truck Loans From Top Auto Financing Platforms of 2021 – Blog https://disturbmedia.com/semi-truck-financing-with-bad-credit-get-semi-truck-loans-from-top-auto-financing-platforms-of-2021-blog/ Mon, 13 Dec 2021 06:58:02 +0000 https://disturbmedia.com/?p=742 Commercial trucks, like semis, straddle the boundary between vehicle, living space, and business. Semis share the road with vehicles intended for personal use, but for many, commercial trucks are a business on wheels. Many Americans make their living by running independent shipping companies or by using the semi they own to work for large shipping […]]]>

Commercial trucks, like semis, straddle the boundary between vehicle, living space, and business. Semis share the road with vehicles intended for personal use, but for many, commercial trucks are a business on wheels. Many Americans make their living by running independent shipping companies or by using the semi they own to work for large shipping conglomerates.

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If you have below-average credit, your vehicle lender may reject your request for a commercial truck loan. Do not lose hope, though; there are ways you can secure financing even if you have a poor credit score and would like to purchase a new or used semi-truck. For example, individuals with low credit scores can improve their chances of obtaining auto financing by paying a down payment. Trading in an older vehicle may also be an option to lower the amount that needs to be financed and improve your loan chances.

However, finding out what all your options are is a long and arduous process. Auto loan network platforms can help take some of the guesswork out of finding a loan, especially when you have poor credit. These platforms can connect you with creditors that provide auto loans to people with your particular credit score, monthly income, payment history, and so forth. Their partnerships with lenders provides users access to lower prices at more affordable rates.

Using online sites that offer connections to truck lenders will also make the application process for an auto loan easier. You can apply for an auto loan online and complete all the paperwork without ever stepping outside of your home or office. As long as you present your documents and accurate personal information, you can get approved for a loan.

In this article, we compiled our top three list for the best semi-truck auto loan platforms for those with bad credit. Each of our recommendations comes with an in-depth review of the platform. We also put together a list of frequently asked questions with our answers so that you can make an informed decision when searching for a semi financing.

2021’s Best Options For Semi-Truck Auto Loans With Bad Credit

  1. Auto Credit Express: Editor’s Pick for Bad Credit Semi-Truck Financing
  2. myAutoloan.com: Best Interest Rates for Semi-Truck Auto Loans
  3. car.Loan.com: Fast Approval for Semi-Truck Loans

Loan Networks for Semi-Trucks

Loan networks like the ones below are a great option to look for financing for semi-trucks. These semi-truck loan networks do not require an excellent credit score for you to pre-qualify for a loan. The network will connect you with lenders who can give you financing offers and terms.

The benefits of using an online loan network are convenience and eligibility. These loan networks are designed especially for people with bad credit who would like to purchase a vehicle and simultaneously rebuild their credit. They have connections to dealerships and lenders, which can give you multiple options for your semi-truck financing.

#1. Auto Credit Express: Editor’s Pick for Bad Credit Semi-Truck Financing 

Auto Credit Express is a well-known loan network for people who have poor credit. This platform first launched in 1999 and has been actively helping people get access to better financing, regardless of their credit score, ever since.

The network’s goal is to help Americans rebuild their credit by providing options to loans that are flexible and attainable. So, whether you have good or bad credit, you can get access to auto loans that can rebuild your credit.

Auto Credit Express has an A+ rating on Better Business Bureau, providing exemplary assistance and service to its users. They are also an accredited business which means they are assessed and evaluated using industry standards.

Auto Credit Express also accepts people who have recently filed for bankruptcy and need a new vehicle. The approval rate and the number of lenders who are willing to work with you will depend on where you currently stand with your bankruptcy case.

The network also has a wide connection of dealers that offer leasing and purchasing programs. These programs are designed for people who would like to purchase a vehicle without requiring a credit check. Your dealer may also offer financing options such as an auto loan where you can pay off your loan over time.

Auto Credit Express is the largest network for an auto loan and financing for both borrowers and lenders. They processed over a million requests this year, and the numbers are only growing. People trust and choose this network because of its convenience and service.

⇒ Visit the Official Website of Auto Credit Express

#2. myAutoloan.com: Best Interest Rates for Semi-Truck Auto Loans 

If you are looking for or considering refinancing options for your vehicle, you can take a look at myAutoloan.com. Refinancing is a type of service where you can reduce and change your current auto loan terms to better fit your monthly salary.

This option is great if you find it challenging to follow through with your monthly payments. myAutoloan.com may be able to offer refinancing options that do not require any payment from the borrower within 90 days, giving you breathing room to reorganize your expenses.

They also have multiple tools that you can use to check for your financing needs, including an interest rate chart and calculator. The interest rate chart can give you a viewpoint on the lowest interest rates you can get depending on the loan type that you prefer.

You can also use their interest rate estimator without damaging your credit score. Depending on your current credit score, the interest rate estimator will give you your estimated interest on your auto loan. And lastly, they also offer a payment calculator for borrowers.

A payment calculator is a helpful tool that can help you calculate your interest rate and the maximum amount of loan that you can borrow. The network not only helps you connect with multiple lenders and dealerships but also helps borrowers follow responsible lending.

The network does not charge for their services, and you have multiple options for purchasing your vehicle. You can request a loan for a private party and lease buyout, which can help you get ownership of the vehicle that you are currently leasing so you can get the title of the car immediately.

⇒ Visit the Official Website of myAutoloan.com

#3. car.Loan.com: Fast Approval for Semi-Truck Loans

Car Loan is another lending network that accepts all kinds of credit for semi-truck financing, no matter if you have a poor or excellent credit score. They also have multiple options for borrowers to choose from if they are planning to take out an auto loan.

This platform is an excellent option if you are looking into different options for your vehicle, such as renting, leasing, or buying. The network has a huge connection to lenders who specialize in different loan terms, including lease-to-own options.

You can easily get a response to your loan request within minutes after finishing their secured form. They also have options for both new and used cars and use a system that matches you with dealers that can offer you financing terms that suit your preferences.

There are no fees to using their services, and you can pre-qualify without damaging your credit. The network will connect you with a dealer or lending partner, depending on the type of financing you want. If you want to lease a vehicle, they might connect you to dealers that offer a lease-to-purchase financing option.

On the other hand, if you want to purchase and are looking for a loan option for your down payment, you can look into auto loans. The network also has lenders that offer auto loan financing for semi-trucks without a good credit score.

This loan network is great for people who would like to get back on the road as soon as possible. After matching and accepting a dealership or lender offer, you can go to your preferred dealership and purchase your new vehicle immediately.

⇒ Visit the Official Website of car.Loan.com

FAQs on Commercial Truck Financing

Q1. What If My Credit Score is Only 500?

Truck drivers are currently in demand. With many trucking companies looking for truck drivers to deliver supplies and other needs, investing in a truck could be a good choice. Research says that this demand will only continue to grow over time.

It is also because of this demand that many truck companies offer financing and flexible terms when it comes to purchasing a truck. You can always ask or inquire with a truck company if they provide any assistance.

Other dealerships also provide loans that can stretch for a few years. Even though your loan lasts longer, you can have a lower required payment every month this way. The only drawback to this is that you will be paying more interest compared to a shorter duration.

Choose the duration of the loan that you can afford to pay each month. The key take here is to find the best value in between. Do not look at the APR alone; consider what is best according to your financial situation. After all, not paying your loan can damage your credit.

The typically required credit score for purchasing a truck is 700, which is considered good credit. If you have fair or below-average credit, it can be difficult to acquire financing assistance for your vehicle. However, this does not mean it is not possible.

A lease-to-own deal is where you can secure financing for the vehicle of your choice. You can then use this vehicle however you want but are not the legal owner of the vehicle. You will only become the legal owner once you pay off all the remaining loans you have from that dealership.

Getting approved for an auto loan like this could be easier if you have poor credit. However, make sure to pay all your monthly payments on time because the lender can repossess your vehicle if you do not pay your bills.

Aside from repossessing your vehicle, you would not get any reimbursement from all your previous payments for that loan. This situation depends on your contract with the dealer, however. Discuss the details of your loan deal with your lender, including in the case of a default. However, this option is your best shot if your credit score is 500 or less.

Online lending platforms may be able to connect you with lenders who can approve you of an auto loan despite having poor credit. These platforms also have a connection to dealers that can give you the best offers when it comes to purchasing a new pick-up truck.

Another way you can get approved for financing for your semi-truck is by having a co-signer. A co-signer is someone who promises to pay off your debt to your lender in case you are not able to pay. Having a co-signer makes dealers or lenders more likely to approve your loan.

However, finding a co-signer who is willing to vouch for you can be challenging. Being a co-signer is risky, after all. If so, the last option you have for improving your chances of getting approved is securing a down payment for your auto loan.

A down payment is money that you pay to your lender upfront before purchasing the vehicle. Securing a down payment has many benefits, including increasing your chances of your auto loan being approved.

Aside from this, a down payment can be used to lower your overall monthly payments. This is because the higher you pay as a down payment, the less money you need to loan overall. If you have extra cash lying around, it could be a good idea to talk to your dealer about this.

Trading in an old vehicle for a new one at your dealership can also be a great way to acquire an auto loan and reduce your monthly payments. If you trade in a vehicle, the value of your vehicle will be subtracted from the value of the new vehicle you are planning to purchase.

However, suppose you have an “upside-down” equity, meaning your vehicle still has an outstanding loan on it. In that case, you will need to pay additional funds to cover the remaining balance before you can trade-in your vehicle. If you have “upside-down” equity, we do not recommend rolling over your new balance into a new loan, as this can increase your interest rates and total monthly payments.

Q2. Is It Possible to Get Financing for My Semi-Truck if I Have Poor Credit?

Before we can discuss possible financing methods for people with bad credit, we need to know what bad credit is. There are different types of categories for each credit score, and it depends on the dealer whether they approve this credit score or not.

You have an exceptional or excellent credit score if your FICO score is 800 or 850. This is considered near perfect, and you are more likely to get approved for loans that require no down payment for your purchase.

Most dealerships for commercial trucks or other vehicle purchases require you to have at least a good credit score. What this means is that your FICO score should fall anywhere between 670 to 739.

Having a FICO score of 300 to 579 means that you have a poor credit score. However, falling into this category does not mean you cannot get financing for your semi-truck or other vehicles. It only means that you will have fewer options compared to people who have good credit.

Your best possible option for getting financing for your semi-truck is getting a lease-to-own vehicle. This type of loan means that you are leasing the vehicle that you purchased until you pay back all the loans you have in full.

You need to make sure you pay all your monthly loan requirements on time, or the dealership will get a hold of your vehicle. They can take back the vehicle from you if you do not make the effort to stay on time with your monthly payments.

After you pay all the payments required from the loan, you will get the title to the vehicle. This title means that you are now the official owner of the truck. This option is also great if you would like to improve your poor credit.

If you can stay on time with your monthly payments, your FICO score or credit score will steadily go up. The lenders or dealerships are required to take note of your monthly payments and relay them to the major credit bureaus, increasing your credit score.

Falling into the category of poor credit score can be disadvantageous, but it does not mean you are out of options. You can get approved for the lease-to-own auto loans without having your credit history checked.

The lender or dealership will check your monthly salary or income to see if you can afford to pay back the auto loan. If you can, you are more likely to get approved for the auto loan. Otherwise, you can improve your chances by putting down a down payment or having a co-signer.

Making small purchases on your credit and paying it on time can also boost your credit score in a short time. If you only need a few more points before falling into the fair credit score category, you can do this method. The fair credit score category has a FICO score of 580 to 669.

However, due to the demand for truck drivers, many borrowers like to use the option called lease-purchase operator. A lease-purchase operator means that you are leasing your commercial truck and using it for business until you can pay back what you owe.

The average cost of a truck without financing comes to about $40,000, and not everyone can afford that. Many people do not have enough down payment for a price that large either. This type of program can also help you get past the constraints of owning the truck.

Going for a leasing program also has other advantages, including added benefits and add-ons from your leasing company. You can have scheduled maintenance for your truck that can help keep your vehicle pristine and new.

You can also get extra training as a driver if you have not already. Aside from this, using a lease-to-purchase program means you get access to managing benefits like tracking your working hours. Other leasing companies will also offer to get your IFTA taxes and information done for you.

Joining a leasing program does not mean that you cannot choose the model of the truck that you want. Most lease-to-purchase loans give you access to new vehicles at a lower cost and price. If you would like to save more money, you can also look at used vehicles, which have a lower price tag than new vehicles.

Getting a lease-to-purchase truck also means that your leasing company can do all the necessary work permits for you. However, some leasing companies require you to do that paperwork on your own. Talk to your leasing company about necessary permits before accepting the lease.

We recommend finding carriers with a freight board. This feature can make your truck operation easier because you can book your freight from your home or wherever you are. Talking to other drivers can help you decide if participating in a lease-to-purchase for your truck is worth it.

You can also take a look at online lending communities, where they can link you to lenders that are willing to offer loans. This option is great for people who are not going to purchase commercial trucks but instead semi-trucks.

A smaller truck means you may need a lower down payment. Smaller auto loans can be approved faster and much easier compared to other loans. Online lending networks can also help you pre-qualify without damaging your credit score.

Other banks and lenders may pull out your credit score report, which can damage it. This type of pulling out your credit is called a hard check. Lenders and creditors do this when you are pre-qualifying or taking out a new loan. So be sure to ask your lenders if they are going to be doing a hard check on your credit first.

Q3. Do I Need a Down Payment for My Truck?

Making a down payment on your truck is one option to increase your chances of getting approved. You can also lower your monthly payments by providing a down payment for your truck when purchasing it.

The type of truck you are purchasing will also affect the down payment you need before taking out a loan. Commercial trucks or bigger vehicles typically require a bigger down payment upfront compared to smaller pick-up trucks.

The rule of thumb when it comes to the down payment of commercial trucks is that you need to put down at least 5% of its price. So, if you are going for a new vehicle, the total price for an average truck would be between $80,000 to $150,000, depending on your vehicle.

If we calculate it based on this estimated price, your required down payment would be around $4000 to $7500. These numbers can go down if you are willing to purchase a used truck instead of a new one. However, repair and maintenance costs can offset its overall value.

However, this does not mean that you need a down payment to purchase your truck. There are two options you can take a look into when buying a truck. The lease-to-purchase option is when you lease your truck while paying off the remaining loan.

If you choose to lease-to-purchase your vehicle, most leasing companies will not ask for a down payment. It depends entirely on your leasing company if they allow you to not make any down payment or require a smaller amount of down payment for your vehicle.

In most cases, however, leasing companies that offer lease-to-purchase loans will not require a down payment because you do not get full ownership of the vehicle. This type of loan is called a secured loan. It means that your truck is considered the collateral of the loan.

Collateral is an item, or in this case, a vehicle, that the leasing company can take back in case you do not follow through with your monthly payments. So, even though it has a downside, the benefit to this type of loan is that some leasing companies will not check your credit if you go through with this leasing plan.

If you have a lower credit score, this can be beneficial for you. The requirements you need to get approved for lease-to-purchase vehicles are less as well. Your leasing company will have its own set of requirements and eligibility for approval, so be sure to check that beforehand.

An online lending platform that offers an auto loan will typically not require a credit check for your loan request. These loan platforms also have tools that you can use to determine and estimate the loan you can request based on your monthly salary.

Other platforms such as Auto Credit Express offer a fast and convenient pre-qualifying process. These platforms are a great option if you would like to receive an answer for your loan request within minutes. Other creditors can take a long time before getting back to you about your loan request.

You can also track the progress of your loan on this kind of platform. If you prefer this kind of feature, online lending platforms may work well for you. These platforms specialize in helping people with poor credit scores get financing for their vehicles.

Working directly with a lender like this will give you more freedom in choosing your semi-truck. After all, you can request a loan and head to the dealership of your choice to acquire the new vehicle. On the other hand, dealing with a dealership may place constraints on the type of vehicle you can purchase.

If you are looking to finance semi-trucks, working with a lender directly can help you. Most platforms will have multiple lenders who will connect and work with you even if you have a poor credit history. Even though these lenders will perform a basic credit check, they will not harm your credit report as well.

The interest rate for each option will vary. However, it is up to you to choose which type of auto loan is most suitable for your lifestyle. Investing in a trucking business as an independent contractor using lease-to-purchase or auto loan is an excellent choice for people who are only starting as truck drivers.

The demand for truck drivers is continuously growing. With this, more and more dealerships and leasing companies are willing to give you loans for a semi-truck without a down payment. You may also receive more affordable rates and financing as long as you talk and negotiate with your leasing company about it.

Leasing companies may also offer other benefits such as managing your taxes and providing loads. Some dealerships will also offer maintenance for your car to prevent any accidents and future repairs. Talk to your leasing company or dealer about benefits like these so you can choose the best option for you.

Getting the Best Value for a Truck

The best value for a truck depends entirely on your preferences and financial situation. However, there is a common rule that most people follow when it comes to purchasing trucks and other vehicles in general.

This rule is called the 20, 4, and 10 rule. Meaning, you have to put down at least 20% of the total truck’s price as a down payment. If you are planning to purchase a new commercial truck, this can be a hefty price that you need to pay upfront.

Next is that you have to have a maximum of four years when it comes to your loan duration. Other dealerships offer more than four years for their loan duration. A longer auto loan term may mean that you will have lower monthly payments, but this can increase the total interest that you have to pay for your truck.

On the other hand, getting a shorter loan term means that your monthly payments may be higher. However, you can get the ownership and title to the vehicle fast, and if you can afford to follow through with the payment every month, this is a better option.

Lastly, make it so the payment you have to pay for your auto loan each month is only 10% of your monthly salary. Keeping the loan you request is proportional to your monthly salary is one of the ways you can keep up with the payments without missing any due dates.

Not all people can abide by this rule. Everyone’s financial situation is different, and this rule is only applicable for people who have enough income and savings. For people who are planning to invest in a truck and become full-time truck drivers, you can bend this rule slightly.

You can think of your truck as a business investment. After all, you are getting back a portion of your income when using the truck. Unlike most vehicles bought for personal use, semi-trucks can generate income that you can use to pay off your loan.

If this is your case, you can increase the 10% to 25%. Increasing the auto loan you have to pay every month may seem risky, but you can reduce the duration of your loan and get the ownership of your truck faster than a longer duration.

We do not recommend going to a percentage higher than this, but every person’s situation is different. Ultimately, the decision falls into your hands. Paying higher than 25% of your income may prevent you from saving money and using your income on other assets such as housing and other medical financings.

We recommend making a budget or using a tool to estimate your total monthly expenses before applying for an auto loan. Add the estimated monthly payment for your vehicle on top of those expenses to see if your expenses go over your monthly income.

Conclusion: Which is the Best Option for Semi-Truck Auto Loan?

People who have poor credit may still be able to get the semi-truck they need. There are multiple financing methods that they can use to purchase a new semi-truck. Auto loans and lease-to-purchase options like Auto Credit Express, myAutoloan.comn, and car.Loan.com can finance a semi-truck without requiring a good credit score.

Check out our recommendations above and consider some of our advice as you search for a semi-truck auto loan.


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AMERICAN PUBLIC EDUCATION INC Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q) https://disturbmedia.com/american-public-education-inc-managements-discussion-and-analysis-of-financial-condition-and-resultsof-operations-form-10-q/ Mon, 13 Dec 2021 06:57:44 +0000 https://disturbmedia.com/?p=751 In this Quarterly Report on Form 10-Q, or Quarterly Report, “we,” “our,” “us,” “the Company” and similar terms refer to American Public Education, Inc., or “APEI,” and its subsidiary institutions collectively unless the context indicates otherwise. The following discussion of our historical results of operations and our liquidity and capital resources should be read in […]]]>

In this Quarterly Report on Form 10-Q, or Quarterly Report, “we,” “our,” “us,”
“the Company” and similar terms refer to American Public Education, Inc., or
“APEI,” and its subsidiary institutions collectively unless the context
indicates otherwise. The following discussion of our historical results of
operations and our liquidity and capital resources should be read in conjunction
with the Consolidated Financial Statements and related notes that appear
elsewhere in this Quarterly Report and the audited financial information and
related notes, as well as Management’s Discussion and Analysis of Financial
Condition and Results of Operations and other disclosures, included in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2020, or our
Annual Report.

Forward-Looking Statements

This Quarterly Report contains forward-looking statements intended to be covered
by the safe harbor provisions for forward-looking statements in Section 21E of
the Securities Exchange Act of 1934, as amended, or the Exchange Act. We may use
words such as “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,”
“should,” “would,” “could,” “potentially,” “will,” or “may,” or other words that
convey uncertainty of future events, conditions, circumstances, or outcomes to
identify these forward-looking statements. Forward-looking statements in this
Quarterly Report include, without limitation, statements regarding:

•actions by the Department of Defense, or DoD, or branches of the United States
Armed Forces, including actions related to the disruption and suspension of DoD
tuition assistance programs and ArmyIgnitED, and their and our expectations
regarding the effects of those actions;
•our expectations regarding the effects of and our response to the COVID-19
pandemic, including the demand environment for online education or nursing
education as the pandemic abates, impacts on business operations and our
financial results, and our ability to comply with regulations related to
emergency relief;
•changes to and expectations regarding our student enrollment, net course
registrations, and the composition of our student body, including the pace of
such changes;
•our ability to maintain, develop, and grow our technology infrastructure to
support our student body;
•our conversion of prospective students to enrolled students and our retention
of active students;
•our ability to update and expand the content of existing programs and develop
new programs to meet emerging student needs and marketplace demands, and our
ability to do so in a cost-effective manner or on a timely basis;
•our plans for, marketing of, and initiatives at, our institutions;
•our maintenance and expansion of our relationships and partnerships and the
development of new relationships and partnerships;
•federal appropriations and other budgetary matters, including government
shutdowns;
•our ability to comply with the extensive regulatory framework applicable to our
industry, as well as state law and regulations and accrediting agency
requirements;
•our ability to undertake initiatives to improve the learning experience and
attract students who are likely to persist;
•changes in enrollment in postsecondary degree-granting institutions and
workforce needs;
•the competitive environment in which we operate;
•our cash needs and expectations regarding cash flow from operations;
•our ability to manage and influence our bad debt expense;
•the expected effects of our workforce reduction;
•our ability to manage, grow, and diversify our business and execute our
business initiatives and strategy; and
•our financial performance generally.

Forward-looking statements are based on our beliefs, assumptions, and
expectations of our future performance, taking into account information
currently available to us and are not guarantees of future results. There are a
number of important factors that could cause actual results to differ materially
from the results anticipated by these forward-looking statements. Risks and
uncertainties involved in forward-looking statements include, among others:

•the loss of our ability to receive funds under DoD tuition assistance programs
or the reduction, elimination, or suspension of tuition assistance;

                                       23

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•the effects, duration and severity of the ongoing COVID-19 pandemic and the
adverse effects on demand for online education or nursing education as impacts
of the pandemic abate, and the actions we have taken or may take in response,
particularly at Hondros College of Nursing, or HCN, and Rasmussen University, or
RU, and as a result of working remotely;
•risks related to the acquisition of Rasmussen University, including regulatory
approvals, limitations on growth and expansion at Rasmussen, effective
integration of Rasmussen University's business, and our ability to realize the
expected benefits of the acquisition;
•our dependence on the effectiveness of our ability to attract students who
persist in our institutions' programs;
•our inability to effectively market our programs;
•adverse effects of changes our institutions make to improve the student
experience and enhance their ability to identify and enroll students who are
likely to succeed;
•our inability to maintain strong relationships with the military and maintain
enrollments from military students;
•our failure to comply with regulatory and accrediting agency requirements or to
maintain institutional accreditation;
•our loss of eligibility to participate in Title IV programs or ability to
process Title IV financial aid;
•our need to successfully adjust to future market demands by updating existing
programs and developing new programs;
•our dependence on and need to continue to invest in our technology
infrastructure; and
•risks related to incurring substantial debt under the debt facilities that we
have entered into in connection with financing the acquisition of Rasmussen
University, the cost of servicing that debt, and our ability in the future to
service that debt.

Forward-looking statements should be considered in light of these factors and
the factors described elsewhere in this Quarterly Report, including in the “Risk
Factors” section, in the “Risk Factors” section of our Annual Report, and in our
various filings with the Securities and Exchange Commission, or the SEC. It is
important that you read these factors and the other cautionary statements made
in this Quarterly Report as being applicable to all related forward-looking
statements wherever they appear in this Quarterly Report. If any of these
factors materialize, or if any underlying assumptions prove incorrect, our
actual results, performance, or achievements may differ materially from any
future results, performance or achievements expressed or implied by these
forward-looking statements. You should also read the more detailed description
of our business in our Annual Report when considering forward-looking
statements. We caution readers not to place undue reliance on forward-looking
statements, which speak only as of the date of this Quarterly Report. We
undertake no obligation to publicly update any forward-looking statements except
as required by law.

Overview

Background

We are a provider of online and on-campus postsecondary education to
approximately 107,800 students through three subsidiary institutions. Our
subsidiary institutions offer programs designed to prepare individuals for
productive contributions to their professions and society, and to offer
opportunities that may advance students in their current professions or help
them prepare for their next career. Our subsidiary institutions are licensed or
otherwise authorized by state authorities, or are in the process of obtaining
such licenses or authorizations, to offer postsecondary education programs to
the extent the institutions believe such licenses or authorizations are
required, and are certified by the United States Department of Education, or ED,
to participate in student financial aid programs authorized under Title IV of
the Higher Education Act of 1965, as amended, or Title IV programs.

The COVID-19 pandemic did not materially impact our results of operations during
the nine month period ended September 30, 2021. However, any future impact on
our operations remains uncertain. We believe that the pandemic at times did lead
to increased registrations and enrollments across our subsidiary institutions.
As the COVID-19 pandemic abates, we believe near-term demand for our programs is
moderating. For more information on the potential risks related to COVID-19,
please refer to our Annual Report and to the sections entitled “Results of
Operations” and “Risk Factors” in this Quarterly Report.

Our wholly owned operating subsidiary institutions include the following:

•American Public University System, Inc., or APUS, provides online postsecondary
education to approximately 88,600 adult learners. APUS is an accredited
university system with a history of serving the academic needs of the military,
military-affiliated, public service and service-minded communities through two
brands: American Military University, or AMU, and American Public University, or
APU.

                                       24

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APUS offers 130 degree programs and 112 certificate programs in diverse fields
of study, with a particular focus on those relevant to today’s job market and
emerging fields. Fields of study include traditional academics, such as business
administration, health science, technology, criminal justice, education and
liberal arts, as well as public service-focused fields of study such as national
security, military studies, intelligence, and homeland security. APUS has
institutional accreditation from the Higher Learning Commission, or HLC, and
several of its academic programs have specialized accreditation granted by
industry governing organizations. In August 2021, HLC granted APUS
re-accreditation, with the next evaluation of accreditation due in 2030-2031. As
part of the process, APUS moved to the Open Pathway designation, which affords
institutions greater opportunity to pursue institutional improvement projects
than the previous Standard Pathway designation.

APUS relies on the ability of the Armed Forces to process service members’
participation in TA programs, and from time to time changes to processes have
impacted the ability of service members to participate in the TA programs. The
Army previously announced that it would transition from its legacy system,
GoArmyEd, to a new system, ArmyIgnitED, which soldiers will use to request TA.
On February 12, 2021, after February enrollments for APUS were principally
determined, the Army deactivated GoArmyEd and announced that access to online TA
requests would be suspended until the launch of ArmyIgnitED on March 8, 2021.
During the suspension, soldiers, Army education counselors, and education
institutions such as APUS did not have access to the portal and soldiers could
not apply for TA. On March 8, 2021, the Army launched and then, due to technical
difficulties, suspended ArmyIgnitED. The Army announced on March 18, 2021 that
TA-eligible soldiers could register for courses beginning on or after March 8,
2021
and then retroactively apply for TA for those courses once the TA system
came online in ArmyIgnitED. Soldiers could continue to directly register for
courses with the expectation that TA can be retroactively applied for, and the
Army has created a process for soldiers to seek reimbursement. On July 19, 2021,
the ArmyIgnitED system went live for soldiers seeking to use TA for courses at
APUS. We continue to experience challenges related to system performance,
process changes and software defects, and there is no assurance that the new
portal will ever work correctly or efficiently or will not have continuing
impacts on soldiers’ ability to participate in the TA programs or receive funds
under those programs. The disruption to Army TA and resulting decreases in Army
registrations had an adverse impact on registrations and revenue for the
quarters ended June 30, 2021 and September 30, 2021, and while system
performance is improving, we expect some impact will continue for the remainder
of 2021.

For information on potential risks associated with APUS, please refer to the
section entitled “Risk Factors” in our Annual Report and this Quarterly Report.

•Rasmussen College, LLC, referred to herein as Rasmussen University, or RU,
provides nursing- and health sciences-focused postsecondary education to over
16,900 students at its 23 campuses in six states and online. RU offers a
comprehensive “ladder” of nursing degrees including a pre-licensure Diploma in
Practical Nursing, or PN, an Associate Degree in Nursing, or ADN, and a Bachelor
of Science in Nursing, or BSN, as well as the post-licensure RN to BSN, Master
of Science in Nursing and Doctorate of Nurse Practice. As of September 30, 2021,
approximately 8,500 students are pursuing nursing degrees at Rasmussen
University
, approximately 90% of whom are enrolled in Rasmussen University’s
pre-licensure degree programs. RU is institutionally accredited by HLC with an
Open Pathway designation. The Company completed the acquisition of Rasmussen
University
, or the Rasmussen Acquisition, on September 1, 2021, or the Closing
Date. See “Acquisition of Rasmussen University” below for more information.

•National Education Seminars, Inc., which we refer to as Hondros College of
Nursing
, provides nursing education to approximately 2,300 students at six
campuses in Ohio, including a campus in Akron that opened in April 2021, and one
campus in Indianapolis, Indiana, to serve the needs of local nursing and
healthcare communities, addressing the persistent supply-demand gap of nurses
that is evident nation-wide. In addition to Akron, HCN’s Ohio campuses are
located in the suburban areas of Cincinnati, Cleveland, Columbus, Dayton, and
Toledo.

HCN is institutionally accredited by the Accrediting Bureau for Health Education
Schools
, or ABHES, and HCN’s Ohio locations and programs are approved by the
Ohio State Board of Career Colleges and Schools. In February 2021, ABHES granted
HCN continued accreditation through February 2027 for all programs at all
campuses. HCN’s Ohio Diploma in Practical Nursing, or PN, and Associate Degree
in Nursing, or ADN, Programs are approved by the Ohio Board of Nursing, or OBN,
and the PN Program is accredited by the National League for Nursing Commission
for Nursing Education Accreditation
, or NLN CNEA. HCN is authorized to offer
instruction in Indiana by the Indiana Board for Proprietary Education/Indiana
Commission for Higher Education
. The Indiana State Board of Nursing granted
initial accreditation and authorized the admission of the first cohort of
students. NLN CNEA granted HCN accreditation at its Indianapolis campus
effective January 13, 2021. In July 2021, the Indiana

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Board of Nursing authorized the admission of an additional 30 students per year,
increasing the maximum enrollment to 60 students for the 2022 calendar year. HCN
can petition for an additional class size increase in February 2022.

ABHES annually reviews student achievement indicators, including retention rate,
placement rate, and licensing and credentialing examination pass rate. Under
ABHES policy, ABHES may withdraw accreditation at any time if it determines that
an institution fails to demonstrate at least a 70% retention rate for each
program, a 70% placement rate for each program, and a 70% pass rate on mandatory
licensing and credentialing examinations or fails to meet the state-mandated
results for credentialing or licensure. Alternatively, ABHES may in its
discretion provide an opportunity for a program to come into compliance within a
period of time specified by ABHES, and ABHES may extend the period for achieving
compliance if a program demonstrates improvement over time or other good cause.
For the reporting year ended June 30, 2021, several HCN programs did not satisfy
ABHES’s threshold requirements for retention rates. Each such program had a
retention rate of between 55% and 69% for the reporting year. HCN submitted its
annual report to ABHES on November 2, 2021, including an action plan regarding
areas where benchmarks were not met. We cannot predict how ABHES will respond to
the report.

For information on potential risks associated with HCN, please refer to the
section entitled “Risk Factors” in our Annual Report and this Quarterly Report.

Acquisition of Rasmussen University

On the Closing Date, we completed the acquisition of Rasmussen University, or
the Rasmussen Acquisition, for an adjusted aggregate purchase price, subject to
post-closing working capital adjustments of $325.5 million in cash and without
issuing any shares of non-voting preferred stock. Upon completion of the
Rasmussen Acquisition, Rasmussen University became a wholly owned subsidiary of
APEI. On September 9, 2021, Rasmussen University timely submitted a change in
ownership and control application to ED seeking approval to participate in the
Title IV programs under our ownership. Rasmussen University is also pursuing
other post-closing notices and consents related to the change in ownership. For
the three and nine months ended September 30, 2021, we incurred approximately
$1.5 million and $5.0 million of acquisition-related expenses, respectively,
which are included in general and administrative expenses in the Consolidated
Statements of Income.

We relied on debt financing pursuant to a credit agreement to fund a portion of
the consideration for the Rasmussen Acquisition. For more information on this
financing, see “- Liquidity and Capital Resources – Liquidity – Acquisition of
Rasmussen University” below and “Note 8. Long-Term Debt” included in the
Consolidated Financial Statements in this Quarterly Report.

For more information on the Rasmussen Acquisition, please refer to our Annual
Report, “Note 3. Acquisition Activity” included in the Consolidated Financial
Statements in this Quarterly Report, and the sections entitled “- Regulatory and
Legislative Activity – Rasmussen Acquisition Regulatory Review” below.

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Cost and Expense Reductions

On August 5, 2021, in connection with an evaluation and review of our costs and
expenses, we initiated a plan to reduce costs. The plan includes a reduction in
force that resulted in the termination of 11 full-time faculty members at APUS,
and 28 non-faculty employees across a variety of roles and departments at APEI
and APUS, representing approximately 3.2% of the APUS full-time faculty
workforce, and 3.1% of the APEI and APUS non-faculty workforce. We completed
this workforce reduction by August 9, 2021. We recorded expenses for termination
benefits related to the workforce reduction in the third quarter of 2021 in
accordance with FASB ASC 420, Exit or Disposal Cost Obligations. We incurred an
aggregate of approximately $1.0 million of pre-tax cash expenses associated with
employee severance benefits. The reduction in force is expected to result in
pre-tax labor and benefit savings in 2021 of approximately $1.4 million, and in
the range of approximately $2.6 million to $3.6 million on an annualized basis.
These cost savings do not include expenses associated with employee severance
benefits. The actual costs and benefits of the plan are preliminary and may vary
based on various factors, including the timing of implementation and changes in
underlying assumptions and projections. There is no certainty that the program,
or any other expense reduction initiative, will have the intended benefits of
reducing costs and expenses over the long-term, or whether there will be adverse
impacts, including as a result of the loss of valuable employees.

Regulatory and Legislative Activity

On April 7, 2020, the Department of Veterans Affairs, or VA, announced that,
effective April 1, 2021, it would no longer count the use of Veteran Readiness &
Employment, or VR&E, benefits against the 48-month cap on veterans education
benefits programs imposed when veterans use more than one benefit program. As a
result, veterans who use VR&E benefits prior to using another veterans education
benefits program, such as the Montgomery GI Bill, or the GI Bill, and the
Post-9/11 GI Bill, can still use up to 48 total months of the other veterans
education benefits programs.

In March 2021, ED announced a revised approach for determining relief for
borrowers who successfully assert borrower relief claims. Under this new
approach, a borrower will receive full loan relief when evidence shows that the
institution engaged in certain misconduct. This policy rescinds the prior
administration’s formula that generally granted only partial loan relief for
borrower defense claims. ED also announced changes to the process for borrowers
to seek loan relief due to total or permanent disability. Specifically, ED has
eliminated requirements that borrowers with total or permanent disability prove
that they continue to have sufficiently low-incomes for three years following
their loan discharge.

In June 2021, ED held virtual public hearings to receive feedback on potential
issues for future rulemaking sessions, including borrower defenses to repayment,
change in ownership processes, student outcomes transparency, public service
loan forgiveness programs, and gainful employment requirements. Following these
hearings, ED solicited nominations for non-federal negotiators who can serve on
the negotiated rulemaking committees, which ED indicated that it planned to
convene during the third quarter of 2021. On August 6, 2021, ED announced that
it was establishing a negotiated rulemaking committee to address borrower
defenses to repayment, public service student loan forgiveness programs,
mandatory pre-dispute arbitration and prohibition of class-action lawsuits,
among other issues. The negotiated rulemaking committee held its first session
in October 2021 and plans to meet two more times in November and December. ED is
expected to submit at least one notice of proposed rulemaking on these matters
prior to November 1, 2022. If it does so, any new rules are expected to be
effective July 1, 2023.

Effective May 31, 2021, APUS terminated its lease for administrative offices in
Manassas, Virginia. As a result of this lease termination, APUS is no longer
required to be certified by the State Council of Higher Education for Virginia,
or SCHEV, and therefore did not renew its certification before it expired on
June 30, 2021. This change will not impact our operations in Virginia, and we
will continue to serve our Virginia students as an NC-SARA approved institution.
As a result of this change, APUS will no longer need to seek SCHEV approval
prior to adding any new academic programs.

As part of the Consolidated Appropriations Act, 2021, Congress included
legislative provisions that alter the application process for federal student
aid, including streamlining the Free Application for Federal Student Aid, or
FAFSA. These changes were set to become effective for the 2023-2024 academic
year. On June 11, 2021, ED announced that the agency is delaying implementation,
noting that many of these provisions will not be effective until the 2024-2025
academic year.

On June 8, 2021, the President signed into law the Training in High-Demand Roles
to Improve Veteran Employment Act, or the THRIVE Act, which amended provisions
related to veterans education programs found in the American Rescue Plan Act and
the Johnny Isakson and David P. Roe, M.D. Veterans Health Care and Benefits
Improvement Act of 2020. The legislation requires the VA to work with the
Department of Labor to determine the list of high-demand occupations for the
rapid retraining assistance program, excludes programs pursued solely through
distance learning on a half-time basis or less from the housing stipend
available to those in the retraining program, and requires the Government
Accountability Office to

                                       27

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report on the outcomes and effectiveness of retraining programs. The legislation
also requires the VA to take disciplinary action if a person with whom an
institution has an agreement to provide educational or recruiting services
violates the VA’s incentive compensation prohibitions.

Section 1018 of the Johnny Isakson and David P. Roe, M.D. Veterans Health Care
and Benefits Improvement Act of 2020, became effective June 15, 2021, and
applied to institutions of higher learning beginning August 1, 2021. This
provision mandates that schools that receive veterans education benefits: (i)
provide VA students with information on total cost of an education program and
certain other disclosures; (ii) inform VA students of the availability and
potential eligibility of federal financial aid before packaging or arranging
private student loans or alternative financing programs; (iii) avoid fraudulent
and unduly aggressive recruiting or automatic renewal techniques; (iv) avoid
misrepresentations or payment of incentive compensation; (v) fully disclose
conditions or additional requirements required to obtain any license,
certification, or approval for which the course of education is designed to
provide preparation; (vi) provide VA students with graduation requirements;
(vii) obtain approval of the institutions’ accrediting agency for new courses or
programs; (viii) maintain a policy to accommodate service members and reservists
to be readmitted if they are temporarily unable to attend due to service
requirements; and (ix) appoint a point of contact to provide academic and
financial aid advising. In September 2021, APUS and HCN received waivers for the
requirements of Section 1018 for the period August 1, 2021 through July 31,
2022
. At the conclusion of the waiver period, it is expected that APUS and HCN
will be in compliance with all of the provisions of Section 1018.

In September 2021, the Navy increased their TA benefits, allowing qualified
sailors to use up to 18 semester credit hours annually, previously limited to 12
semester credit hours. Along with the expanded annual credit limit comes new
eligibility requirements, including new requirements as to who can use TA and
when. Eligible sailors can only use TA to fund two courses each quarter of the
fiscal year. The minimum time in service increased from two to three years and
active duty enlisted sailors under 16 years of service and reservists on active
duty orders must have 12 months or more remaining on their current enlistment or
extension as of the course state date to be eligible. Reservists on one-year
orders will no longer be eligible for TA, and sailors who have begun utilizing
TA benefits after only two years of service must pause their TA benefits. These
changes were effective October 1, 2021.

On October 6, 2021, ED announced several changes to the Public Service Loan
Forgiveness program, or PSLF. ED is implementing a time-limited waiver that
would allow borrowers to count all prior payments toward PSLF, regardless of the
loan program. The waiver will apply to borrowers with Direct Loans, those with
other types of loans that submit a consolidation application into the Direct
Loan Program while the waiver is in effect. The waiver will run through October
31, 2022
. Additionally, ED will allow months spent on active duty to count
toward PSLF, even if the service member’s loans were on deferment or
forbearance. This change will allow more service members to pursue loan
forgiveness. ED also plans to implement automatic PSLF crediting for federal
employees and military service members. To further support these efforts, ED
plans to simplify the PSLF application process and improve communication to
PSLF-eligible borrowers.

In October 2021, in what it termed a broad-based initiative to deter for-profit
college fraud, the Federal Trade Commission, or FTC, issued informational
notices to 70 for-profit higher education institutions, including APUS and RU,
informing them of certain marketing practices the FTC had previously determined
to be deceptive or unfair and therefore unlawful under the FTC Act. The FTC
indicated that an institution’s receipt of the notice was not an indication that
the institution has engaged in deceptive or unfair conduct. The informational
notices were sent in furtherance of an FTC Act provision permitting penalties
against those engaging in unfair or deceptive acts or practices with actual
knowledge of their unfair or deceptive nature. The informational notices
informed the institutions that engaging in such practices could subject a
company to civil penalties under that provision. By providing the informational
notices, the FTC is able to document that the institutions have knowledge that
the FTC has found these marketing practices to be unfair or deceptive. The FTC
also announced that it would be enhancing its enforcement cooperation with other
agencies with oversight of educational institutions, including ED’s Office of
Student Aid
and the Department of Veterans Affairs. In addition, on October 6,
2021
, ED announced that it had restored an Office of Enforcement within ED’s
Office of Federal Student Aid
to strengthen oversight of and enforcement actions
against postsecondary institutions that participate in federal student loan,
grant, and work-study programs.

Cohort Default Rate

To remain eligible to participate in Title IV programs, an educational
institution’s student loan cohort default rates must remain below certain
levels. Pursuant to requirements of the Higher Education Act, as amended, if the
cohort default rate for any year exceeds 40%, an institution loses eligibility
to participate in Title IV programs, and if the institution’s cohort default
rate exceeds 30% for three consecutive years, the institution loses eligibility
to participate in Title IV programs. If an institution’s cohort default rate is
equal to or greater than 30% in any year, it must establish a default prevention
task force. In

                                       28

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September 2021, ED released final official cohort default rates for institutions
for federal fiscal year 2018, with ED reporting a 9.4% cohort default rate for
APUS, a 7.8% cohort default rate for RU, and a 8.1% cohort default rate for HCN.
Additional information regarding student loan default rates, prior year default
rates, and potential risks associated with them is available in our Annual
Report.

Higher Education Emergency Relief Funds

In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic
Security Act, or the CARES Act, in response to COVID-19 and its related effects.
Due to the COVID-19 pandemic, many higher education institutions shifted to
distance learning as campuses shut down as a result of the public health
emergency. The CARES Act included provisions designed to provide relief to
higher education institutions in connection with the pandemic, including by
creating the Higher Education Emergency Relief Fund, or HEERF, which included
$12.6 billion in funding for higher education institutions. The CARES Act
authorized ED to allocate HEERF funding based on a statutory formula that
accounted for the relative share of full-time students who are Pell Grant
recipients and that excluded students who were enrolled exclusively in distance
education courses prior to the COVID-19 emergency from the calculation. Wholly
online institutions such as APUS were therefore not eligible to receive an
allocation of funding under the CARES Act HEERF. The CARES Act required
recipient institutions to use at least 50% of their HEERF funds to provide
emergency grants to students for expenses related to the disruption of campus
operations due to COVID-19. The CARES Act also permitted institutions to use up
to 50% of their HEERF funds to cover any costs associated with significant
changes to the delivery of instruction due to COVID-19, with certain exceptions.
By June 30, 2020, HCN distributed its entire allocation of $3.1 million in CARES
Act HEERF funds to eligible students.

In addition, as a result of the CARES Act and subsequent administrative
actions, ED implemented a temporary freeze on payments and interest accruals for
federal student loans. This administrative forbearance period began on March 20,
2020
and will run until at least January 31, 2022.

In December 2020, Congress passed a law that includes the Coronavirus Response
and Relief Supplemental Appropriations Act, or the CRRSAA, which contained
several education-related provisions. The CRRSAA appropriated an additional
$22.7 billion for the HEERF, or CRRSAA HEERF, to be distributed to higher
education institutions. The CRRSAA HEERF allocation formula differs from the
CARES Act HEERF formula in several ways, including new allocations for
institutions based on the number of students enrolled exclusively in distance
education and included certain restrictions regarding allowable uses of CRRSAA
HEERF funds. Under this formula, ED allocated approximately $600,000 for APUS
and $2.0 million for HCN. Both APUS and HCN have distributed the entirety of
their allocated CRRSAA HEERF funds to eligible students.

In March 2021, Congress passed the American Rescue Plan Act of 2021, or ARPA,
which includes an additional $40 billion for HEERF, or HEERF III. ARPA
incorporates CRRSAA’s restrictions regarding allowable uses of HEERF funds.
ARPA’s HEERF III allocation formula decreases the amount of funds allocated to
for-profit institutions. Under this formula, ED allocated approximately $330,000
for APUS and $1.2 million for HCN. APUS distributed the entirety of the
allocated HEERF III funds to eligible students during the third quarter. HCN
declined its HEERF III allocation.

ARPA also includes a provision that amends the provision of the Higher Education
Act of 1964, as amended, or the HEA, that, as a condition of participation in
the Title IV programs, prohibits a for-profit institution from deriving more
than 90% of its revenue (as computed by ED) on a cash accounting basis (except
for certain institutional loans) from Title IV programs for any fiscal year. For
more information on the so-called 90/10 Rule, please refer to our Annual Report.
ARPA modifies the HEA’s 90/10 Rule to require that a for-profit institution
derive not less than 10 percent of its revenue from sources other than “federal
education assistance funds”. ARPA provides that the amendment applies to
institutional fiscal years beginning on or after January 1, 2023. In addition,
ARPA provides that the amendment is subject to the HEA’s master calendar
requirements and negotiated rulemaking and that such negotiated rulemaking shall
commence no earlier than October 1, 2021. An ED final rule to implement the ARPA
provision is not expected to go into effect until July 1, 2023 at the earliest.
ARPA does not define “federal education assistance funds.” We expect such
definition to be developed as part of the required negotiated rulemaking and
anticipate that ED would seek to include TA and VA education benefits in the
scope of the definition. At this time, we cannot predict the impact of the ARPA
90/10 Rule on our business, including because we cannot predict how ED will
implement the ARPA 90/10 Rule provision. We also cannot predict the likelihood
that Congress will pass additional legislation to modify the 90/10 Rule further
with respect to relevant sources of funds or other aspects of the calculation.
For example, other recent congressional proposals have focused on decreasing the
limit on Title IV funds from 90% to 85%. Such proposals, or other similar
legislation, should they become law, could have a material adverse impact on our
financial condition and results of operation.

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On March 27, 2020, Ohio enacted a COVID-19 emergency relief law that allows
individuals who have successfully completed a nursing education program approved
by OBN to receive a temporary license to practice as an RN or LPN before taking
the National Council Licensure Examination, or NCLEX. Graduates of OBN-approved
nursing education programs, such as HCN’s programs, were permitted to apply for
a temporary license that was valid until March 1, 2021 and effective May 14,
2021
was reinstated and extended to July 1, 2021. This law specified that the
individual must have completed the nursing education program no more than two
years before the date of submitting the Licensure by Examination application,
the individual cannot receive a temporary license if they have a prior NCLEX
failure in any state, if they have been convicted of or pleaded guilty to any
felony, or have failed a drug test as determined by the Board. The emergency
relief law expired on July 1, 2021.

The postsecondary education regulatory landscape is complex and continues to
evolve, and the foregoing discussion does not address all of the laws and
regulations that may materially affect our business, financial condition, and
results of operations. Additional information on the regulation of our business,
including certain regulatory developments in 2021 that occurred prior to the
filing of our Annual Report, is available in “Business – Regulatory Environment”
in Item 1 of Part I of our Annual Report. We cannot predict the extent to which
the aforementioned regulatory activity or any other potential regulatory or
legislative activity may impact us or our institutions, nor can we predict the
possible associated burdens and costs. Additional information regarding the
potential risks associated with the regulation of postsecondary education and
our business is available in the sections entitled “Risk Factors” in our Annual
Report and this Quarterly Report.

Rasmussen Acquisition Regulatory Review

The Rasmussen Acquisition was required to be reported to, and in some cases
approved by, various education regulatory bodies. An institution must obtain ED
approval for a change in ownership and control in order to continue to
participate in Title IV programs under the new ownership. ED does not provide
pre-closing approval.

In July 2021, ED notified Rasmussen University that in connection with Rasmussen
University’s
March 2019 change in ownership, ED was imposing certain temporary
growth restrictions on the institution, which included maintaining limitations
on new programs and locations that were already in place and imposing a cap on
the number of students that participate in Title IV programs that can be
enrolled. Additionally, ED continued to require Rasmussen University to submit
periodic financial and enrollment reports, a requirement that it had imposed on
RU in connection with the financial responsibility letter of credit described
below. On September 9, 2021, Rasmussen University timely submitted a change in
ownership and control application to ED seeking approval to participate in the
Title IV programs under our ownership. ED and Rasmussen University entered into
a Temporary Provisional Program Participation Agreement, or TPPPA, effective as
of October 14, 2021, that allows Rasmussen University to continue disbursing
Title IV funds during the period of ED’s review of the change in ownership
application. The TPPPA continues the growth restrictions that ED imposed as a
result of the March 2019 change in ownership, including the same enrollment cap.
The TPPPA specifies that after ED reviews and accepts financial statements and
compliance audits that cover one complete fiscal year of RU’s Title IV
participation under APEI’s ownership, RU may seek to have the enrollment cap
removed and may seek approval for new programs that replace current programs.
The TPPPA also specifies that at least until after ED reviews and accepts
financial statements and compliance audits that cover the second complete fiscal
year of RU’s Title IV participation under APEI’s ownership, RU must seek
pre-approval for new locations, new programs that are not replacing current
programs, and other changes. The growth restrictions under the TPPPA could limit
or adversely affect Rasmussen University’s growth opportunities, including
restricting its ability to serve additional students, particularly additional
nursing students, and limiting its ability to continue to evolve to address
current needs by providing new or changed programs. Rasmussen University is also
pursuing other post-closing notices and consents related to the change in
ownership.

State agencies, accreditors, boards of nursing, and other relevant regulators
also require action with respect to the Rasmussen Acquisition. In some
instances, these bodies required prior approval before the change in ownership
could be completed. For example, HLC requires approval before the closing of a
transaction in order for an institution to maintain accredited status after
closing. The parties submitted an application to HLC for pre-closing approval of
the change in ownership, and HLC conducted focused site visits related to the
application in February and March 2021. Effective in June 2021, HLC approved the
application regarding the change in control. An additional site visit is
required within six months of the Closing Date. Additionally, some regulators
will require approval after a change in ownership in order to continue proper
licensure, accreditation, approval, or authorization.

ED evaluates institutions on an annual basis for compliance with specified
financial responsibility standards, including a complex formula based on line
items from the institution’s audited financial statements. The formula focuses
on three financial ratios: (1) equity ratio (which measures the institution’s
capital resources, financial viability, and ability to borrow); (2) primary
reserve ratio (which measures the institution’s viability and liquidity); and
(3) net income ratio (which measures the

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institution’s profitability or ability to operate within its means). Generally,
an institution’s financial ratios must yield a composite score of at least 1.5
for the institution to be deemed financially responsible. An institution which
does not meet ED’s minimum composite score of 1.5 can demonstrate financial
responsibility by meeting the “zone alternative” or posting a letter of credit
in favor of ED. The “zone alternative” includes a delayed method of cash funding
for Title IV aid, and the
providing of additional information to ED, upon request. As of September 30,
2020
, RU had a composite score equal to 1.4, compared to the minimum required of
1.5. RU elected to post a letter of credit with ED totaling $23.1 million, which
represents 10% of the Title IV program funds received by RU during its most
recently completed fiscal year. Upon the closing of the RU Acquisition, APEI was
required to fund this letter of credit using a restricted deposit account that
required a deposit of 105%, or $24.2 million, to secure the RU letter of credit.
Under the TPPPA for RU described above, a letter of credit will continue to be
required at least until ED reviews and accepts financial statements and
compliance audits that cover one complete fiscal year of RU’s Title IV
participation under APEI’s ownership. Additionally, RU is required to make Title
IV disbursements to eligible students and parents under the heightened cash
monitoring payment method, or HCM1. Under HCM1, Rasmussen University must first
make Title IV disbursements to eligible students and parents and pay any credit
balances before the institution requests or receives funds for the amount of
those disbursements from ED.

APUS, RU and HCN Compliance Reviews

In July 2017, ED began a program review of RU’s administration of Title IV
program during the 2015-2016 and 2016-2017 award years. The program review
remains open and ongoing. At this time, we cannot predict the outcome of the
program review, when it will be completed, or whether ED will place any
liability or other limitations on RU as a result of the review.

On July 9, 2021, HCN received a letter from ED announcing an off-site program
review. The review, which was completed in August 2021, assessed HCN’s
administration of Title IV programs, with a focus on award years 2019-2020 and
2020-2021. The program review is pending while ED is reviewing the data
collected.

Reportable Segments

During the third quarter of 2021, we revised our reportable segments and
updated the results for the prior period to conform to the current period
presentation. As of September 30, 2021, APEI had the following reportable
segments:
•American Public University System Segment, or APUS Segment. This segment
reflects the operational activities of APUS and was previously included within
the former APEI Segment;

•Rasmussen University Segment, or RU Segment. This segment reflects the
operational activities of Rasmussen University; and

•Hondros College of Nursing Segment, or HCN Segment. This segment reflects the
operational activities of HCN.

Prior to the third quarter of 2021, the Company had two reportable segments: the
American Public Education, Inc. Segment, or APEI Segment, and the HCN Segment.
Post-acquisition, the Company has three reportable segments: the APUS Segment,
which was previously included within the APEI Segment; the Rasmussen Segment;
and the HCN Segment. The APEI Segment previously reported the results of both
APUS and remaining unallocated Company expenses. Adjustments to reconcile
segment results to the Consolidated Financial Statements are included in
“Corporate and Other”, which primarily includes unallocated corporate activity
and eliminations, which generally were previously reported within the APEI
Segment. Prior periods have been updated to conform to the revised presentation.

Summary of Results

As discussed above, we completed the Rasmussen Acquisition on September 1, 2021.
Our results of operations for the three and nine months ended September 30, 2021
include the results of RU from the Closing Date through September 30, 2021. We
did not consolidate the financial results of the RU Segment prior to the Closing
Date. Accordingly, the financial results of each period presented are not
directly comparable. This discussion highlights changes in the APUS and HCN
segments, as those results are fully included in each period.

For the three months ended September 30, 2021, our consolidated revenue
increased to $98.2 million from $79.1 million, or by 24.2%, compared to the
prior year period. Our operating margins decreased to 1.2% from 4.2% for the
three months ended September 30, 2021, compared to the prior year period. For
the three months ended September 30, 2021, the net loss for the period was $0.3
million
, compared to net income of $2.6 million for the three months ended
September 30, 2020, a

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——————————————————————————–

decrease of $2.9 million. For the nine months ended September 30, 2021, our
consolidated revenue increased to $264.8 million from $235.9 million, or 12.3%,
compared to the prior period. Our operating margins decreased to 5.3% from 6.4%
for the nine month periods ended September 30, 2021, compared to the prior year
period. Net income decreased to $8.4 million from $11.8 million, a decrease of
$3.4 million, or 28.8%, compared to the prior year period.
For the three months ended September 30, 2021, APUS Segment revenue decreased to
$65.9 million from $69.7 million, or by 5.4%, compared to the prior year period.
Net course registrations at APUS for the three months ended September 30, 2021
decreased to approximately 83,100 from approximately 90,300, or approximately
8.0%, compared to the prior year period. APUS Segment operating margins
increased to 11.9% from 10.6% for the three months ended September 30, 2021,
compared to the prior year period.

For the nine months ended September 30, 2021, APUS Segment revenue decreased to
$210.3 million from $210.4 million, or by less than 1%, compared to the prior
year period. Net course registrations at APUS for the nine months ended
September 30, 2021 decreased to approximately 258,700 from approximately
264,700, or approximately 2.3%, compared to the prior year period. APUS Segment
operating margins increased to 14.7% from 14.2% for the nine months ended
September 30, 2021, compared to the prior year period.

The decreases in APUS Segment revenue were due to the decreases in net course
registrations which we believe were due to a moderation in near-term demand for
online education due to the abatement of the COVID-19 pandemic, and also in part
to the temporary suspension and disruption of the Army’s TA program.

From the Closing Date through September 30, 2021, RU Segment revenue was $21.1
million
. RU Segment operating margin was negative 4.7% for the three months
ended September 30, 2021.

For the three months ended September 30, 2021, HCN Segment revenue increased to
$11.2 million from $9.5 million, or by 17.8%, compared to the prior year period.
Total enrollment at HCN for the three months ended September 30, 2021 increased
to approximately 2,300 from approximately 2,000, or approximately 18.9%, as
compared to the prior year period. HCN Segment operating margins decreased to
4.0% from 4.9% for the three months ended September 30, 2021, compared to the
prior year period.

For the nine months ended September 30, 2021, HCN Segment revenue increased to
$33.5 million from $25.7 million, or by 30.5%, compared to the prior year
period. HCN Segment operating margins increased to 4.0% from negative 1.8% for
the nine months ended September 30, 2021, compared to the prior year period.

For more information on Army TA program suspension and delays, their related
impacts on the Company, and related risks, please refer to “Overview-Background”
above and the section entitled “Risk Factors” in this Quarterly Report.

Critical Accounting Policies and Use of Estimates

For information regarding our Critical Accounting Policies and Use of
Estimates, see the “Critical Accounting Policies and Use of Estimates” section
of “Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in our Annual Report.

Results of Operations

Below we have included a discussion of our operating results and material
changes in our operating results during the three and nine months ended
September 30, 2021 compared to the three and nine months ended September 30,
2020
. Our revenue and operating results normally fluctuate as a result of
seasonal or other variations in our enrollments and the level of expenses in our
reportable segments. Our student population varies as a result of new
enrollments, graduations, student attrition, the success of our marketing
programs, and other reasons that we cannot always anticipate. We expect
quarterly fluctuations in operating results to continue as a result of various
enrollment patterns and changes in revenue and expenses, including due to the
Rasmussen Acquisition.

                                       32

——————————————————————————–

We believe the decrease in net course registrations at APUS for the three and
nine months ended September 30, 2021 was due, in part, to the temporary
suspension and disruption of the Army’s TA program on March 8, 2021, resulting
from delays in the transition from its legacy system, GoArmyEd, to a new system,
ArmyIgnitED, and a moderation in near-term demand for online education due to
the abatement of the COVID-19 pandemic. For more information on the impacts of
the Army TA program delays on the Company and the potential risks related to
this, please refer to “Overview” in this Management’s Discussion and Analysis of
Financial Condition and Results of Operation and the section entitled “Risk
Factors” in this Quarterly Report.

We believe that the increase in enrollment at HCN for the three and nine
months ended September 30, 2021 as compared to the prior year period is due in
part to an increase in demand for nursing education, a change in the competitive
environment due to COVID-19, an increase in marketing expenditures, and the
continued impact of initiatives implemented in 2019 and 2020, such as the direct
entry ADN Program and the institutional affordability grant. We cannot predict
whether our initiatives and efforts will continue to be successful over the long
term and cannot guarantee continued enrollment and revenue growth in our HCN
Segment. The success of these efforts could also be adversely affected by future
impacts of the COVID-19 pandemic or a further moderation of or decrease in the
demand for nursing education as the pandemic abates. For more information on the
impacts of COVID-19 on the Company and the potential risks related to COVID-19,
please refer to “Overview-Background” in this Management’s Discussion and
Analysis of Financial Condition and Results of Operation and the section
entitled “Risk Factors” in our Annual Report and this Quarterly Report.

Our consolidated results for the three and nine months ended September 30, 2021
and 2020 reflect the operations of our APUS and HCN Segments only and include
the results of our RU Segment from the Closing Date. We did not consolidate the
RU Segment prior to the Closing Date. Rasmussen enrollment was approximately
16,900 during the three months ended September 30, 2021, which compares to
17,200 during the three months ended September 30, 2020. We believe this decline
in enrollment may have been caused, in part, due to a moderation in near-term
demand for Rasmussen’s programs due to the abatement of the COVID-19 pandemic.
However, because we have only recently acquired Rasmussen University, we cannot
provide a full assessment of the factors that could have led to the decline in
enrollments at Rasmussen University.

For a more detailed discussion of our results by reportable segment, refer to
“Analysis of Operating Results by Reportable Segment” below.

© Edgar Online, source Glimpses


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Title Loans No Credit Check Increase Your Chances Of Approval https://disturbmedia.com/title-loans-no-credit-check-increase-your-chances-of-approval/ Mon, 13 Dec 2021 02:35:00 +0000 https://disturbmedia.com/increase-chances-of-auto-loan-approval-with-bad-credit/ A poor credit score upfront is a huge disadvantage in the event of taking out a loan for a car. There are lenders that can help those who have credit issues, and we’ve got some suggestions to boost your chances of obtaining car financing. Step 1: Pick the most suitable title loan lender, which doesn’t require […]]]>

A poor credit score upfront is a huge disadvantage in the event of taking out a loan for a car. There are lenders that can help those who have credit issues, and we’ve got some suggestions to boost your chances of obtaining car financing.

Step 1: Pick the most suitable title loan lender, which doesn’t require credit check

If you are aware that your credit score is not good then choosing the correct car loan lender can help to improve the eligibility of your car loan. Greenday doesn’t check credit for title.

There are numerous auto loan providers to choose from. The majority of consumers consider credit unions or banks as their primary source for car financing needs, however the majority of dealerships are associated with third-party lenders who might be able to assist people with issues.

  • Credit unions and banks Direct Auto lenders. They provide pre-approvals, and might be able to provide low interest rates, and typically require that borrowers have a good credit score.
  • Captive lenders of auto manufacturers Third-party lenders like GM Financial, Kia Motors Finance, and Ford Motor Credit. These lenders are known for providing amazing discounts and deals and most of them require that borrowers meet high credit score criteria.
  • Lenders at Risk Third party lenders that specialize in helping borrowers with difficulties with their credit, and who are registered with specific financing concessions. They usually require several documents to help understand a borrower’s credit score and the person who is borrowing from them.
  • Internal financing is usually available to purchase Here pay here cars stores and dealerships, where the dealer acts as the lender. A credit check might not be necessary, just used vehicle sales. However, it might be required to charge an extremely high interest rate to cover the lack of a credit report.

It isn’t easy to satisfy the requirements for credit scores of traditional auto lenders, like the credit union, bank or the captive lender.

If you’ve been rejected for car finance with traditional lenders because you’re struggling with credit If you are looking for other lenders, such as an underprime lender or within a the finance department could provide more chances of getting approval’ for a loan for your car.

Step 2: Consider a co-signer

If you’ve never lent money before, or your credit rating isn’t the best co-signers are an excellent way to boost the chance of having a loan for a car approved. Co-signers assist you in meeting the lender’s requirements for credit scores. They also pledge that they will repay the loan if you are unable to repay it and thus serve as a backup payer that helps secure the loan.

It is not every person’s dream to have a member of the family available to sign a co-signer for an auto loan. But, there’s usually no limit regarding who your co-signer could be. A relative, friend or even a coworker can be your co-signer, provided they have credit that is sufficient. The only exception to this is that your spouse can’t serve as your co-signer.

Step 3: make an account

One of the things you can do to increase the chances of getting the loan is to make the deposit. The down payment will lower the amount you’ll need to finance, lowering the amount of your monthly payments and prove to the lender that you are willing to put part of your own funds into the car.

As a rule of thumb for those with poor credit, you will require at least $1,000 (or 10%) of your car’s selling price. In many instances the more cash you are able to put into the more you can increase your credit eligibility for auto financing.

Step 4 4. Purchase realistically

If you’ve got bad credit it may not be the best time to finance your dream vehicle. If you have bad credit it’s usually best to pick a low-cost used vehicle that will meet your requirements for transportation, without breaking the bank.

The cost of used cars is generally lower than brand new ones, and even certified pre-owned cars are usually cheaper. In addition, if you’re with a lender that assists people with bad credit it’s likely that you’ll require a downpayment.

It’s likely to be much easier to fulfill the down payment requirements for a pre-owned car because of the lower price of used cars. A car that is affordable could also result in lower monthly installments, which will boost your chances of being able to pay off the loan, and consequently your ability to qualify.

Step 5: Locate a credit card company that will meet your requirements

Locating a dealer that is been approved by auto lenders with bad credit starts by finding a finance dealer. But, you don’t need to conduct the research on your own by beginning your car shopping journey by contacting Greenday Online. We’ve developed a national network of specialist finance brokers and we’re looking to locate the one closest to you. Fill out our no-cost auto loan form and we’ll start working!

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Secured Loans And Unsecured Loans – What’s The Difference? https://disturbmedia.com/secured-loans-and-unsecured-loans-whats-the-difference/ Thu, 11 Nov 2021 14:35:50 +0000 https://disturbmedia.com/secured-loans-and-unsecured-loans-whats-the-difference/ SAN JOSE, California, September 28, 2021 / PRNewswire / – If you are planning to borrow money, you may come across both secured and unsecured loans. While secured loans require some form of collateral, unsecured loans do not. This does not mean, however, that unsecured loans are always better. (PRNewsfoto / myFICO) Here’s what you […]]]>

SAN JOSE, California, September 28, 2021 / PRNewswire / – If you are planning to borrow money, you may come across both secured and unsecured loans. While secured loans require some form of collateral, unsecured loans do not. This does not mean, however, that unsecured loans are always better.

(PRNewsfoto / myFICO)

Here’s what you need to know about secured and unsecured loans and how each can affect you as a borrower, from myFICO.

For more information on loans and credit visit the myFICO blog at https://www.myfico.com/credit-education/blog

What is a secured loan?
A secured loan is a type of credit secured by collateral. If the borrower defaults on the debt, the lender can grab the collateral and use it to collect the amount owed.

Some types of loans are almost always secured, while others may or may not be, depending on your credit situation. Here are some common secured loans that you might come across:

Real estate loans: Mortgages are almost always secured by the property you buy with the loan. Home equity loans and lines of credit are also secured against the equity in your home.

  • Auto loans: The lender usually asks you to pledge the vehicle you are purchasing with the loan as collateral.

  • Guaranteed personal loans: Sometimes referred to as shared collateralized or savings collateralized loans, these loans require you to hold a fixed amount of money in an interest-bearing account such as collateral for the loan. Depending on the lender, you can borrow up to 100% of the value of the collateral or less.

  • Secure credit card: Secured cards require that you make an initial deposit, usually, but not always, equal to the credit limit that you are looking for on the card. In most cases, you will get the deposit back when you close the account, but some card issuers may return it before that date if you use the card responsibly.

  • Manufacturer credit: Designed specifically for people with bad credit, limited credit, or no credit at all, home builder loans work a little differently from other loans. Instead of giving you the loan proceeds up front, they are placed in an interest-bearing account while you make monthly payments. Once the loan is fully repaid, you will receive the funds.

Note that there are other types of secured loans, including auto title loans, pawn shops, and life insurance loans. But these are generally not recommended.

Benefits of secured loans

  • May qualify with lower FICO® scores: Many secured loans are designed for people with less than stellar credit. If you’re looking to build your credit, a secured credit card, secured credit loan, or personal loan can help.

  • They usually come with lower prices: While this is not always true, secured loans often charge lower interest rates than their unsecured counterparts because the lender takes less risk.

  • Larger loans: In some cases, the lender can afford to offer a larger loan amount because it is secured by collateral.

Disadvantages of secured loans

  • It can be difficult to qualify for: In the case of a secured savings loan or a secured credit card, it can be difficult to get approved if you don’t have enough money to meet the deposit requirements.

  • The fault can be costly: It is never ideal to default on a loan. But if you fail to secure a secured loan, you will likely lose the asset that you pledged as collateral. With larger loans like mortgages and auto loans, foreclosure or repossession can be a real setback.

What is an unsecured loan?
Unsecured loans do not require any collateral of any kind. So while defaulting on payment can damage your FICO® scores and sometimes lead to debt collection attempts, your assets will not be repossessed. Here are some common types of unsecured loans:

  • Personal loans

  • Student loans

  • Credit card

There are other types of unsecured loans like payday loans, but it is better to avoid these.

Benefits of unsecured loans

  • No warranty requirement: You don’t have to worry about needing the money to get approval or losing a major asset if you can’t afford to pay off the debt at some point in the future.

  • Competitive rates for borrowers with strong credit: If you have good or excellent credit, you may still qualify for a relatively low interest rate on an unsecured personal loan, student loan, or credit card.

  • Quick financing: Since there is no need to transfer money for a deposit or do an appraisal on a secured loan, you may be able to access your loan funds faster with an unsecured loan.

Disadvantages of Unsecured Loans

  • Usually more expensive: While you can get a competitive interest rate if your FICO® scores are high, unsecured loans still charge higher interest rates on average than secured loans.

  • No more limitations for borrowers with low FICO® scores: If your credit history is rated as poor or limited, or if you have no credit history, you may face higher interest rates and fees, as well as lower loan amounts.

  • Risk of lawsuit or recovery: With a secured loan, the lender can simply use the collateral to recoup his losses. But with an unsecured loan, they can sell the debt to a collection agency, who can try to sue you. While this doesn’t always happen, it’s important to make payments on time to avoid this possibility.

The bottom line
Both secured and unsecured loans have their uses and in some cases you may not have a choice between the two. While you can choose, there are also times when one option makes more sense than the other.

The important thing is that if you are looking to borrow money, it is crucial to understand the terms of the loan as well as the pros and cons of the type of loan you choose, and to make sure you take the time to store lenders. Take the time to consider all of your borrowing options before choosing the one that best suits your needs.

About myFICO
myFICO makes it easier to understand your credit with FICO® Scores, credit reports and alerts from the 3 bureaus. myFICO is the consumer division of FICO – get your FICO scores from the people who do the FICO scores. For more information visit https://www.myfico.com.

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Here is where the lawsuits against her stand now, with courts blocking family planning challenges https://disturbmedia.com/here-is-where-the-lawsuits-against-her-stand-now-with-courts-blocking-family-planning-challenges/ Thu, 11 Nov 2021 14:35:50 +0000 https://disturbmedia.com/here-is-where-the-lawsuits-against-her-stand-now-with-courts-blocking-family-planning-challenges/ Top line Abortion rights advocates won a narrow victory over Texas’ near-total ban on the procedure on Monday as a court temporarily barred anti-abortion group Texas Right to Life from suing Planned Parenthood under of the law, in one of a series of lawsuits challenging the controversial legislation – here’s where the main litigation against […]]]>

Top line

Abortion rights advocates won a narrow victory over Texas’ near-total ban on the procedure on Monday as a court temporarily barred anti-abortion group Texas Right to Life from suing Planned Parenthood under of the law, in one of a series of lawsuits challenging the controversial legislation – here’s where the main litigation against the ban stands:

Highlights

A judge in Travis County, Texas, awarded a injunction which prevents Texas Right to Life from suing Planned Parenthood and its employees under the law, which grants private citizens the power to enforce the abortion ban through lawsuits against abortion providers and d ‘others who “help and encourage” an abortion.

The judge already had blocked Texas Right to Life to sue Planned Parenthood until September 17, but this injunction, which was reached through an agreement between the two parties, will last as long as the litigation takes to unfold, which will at least be done through a trial scheduled to begin on April 4, 2022.

The Planned Parenthood lawsuit is one of at least two narrowly tailored decisions that block prosecutions against specific plaintiffs, as Travis County Court has also temporarily separated blocked Texas Right to Life to sue an individual plaintiff.

A broader lawsuit by abortion providers seeking to repeal the law entirely is pending in lower federal courts after the Supreme Court of the United States chose not to shoot it.

An appeals court on Friday suspended the law keeping the law in force while it considers whether the appeals court has jurisdiction to hear the case, barring a district court from considering the ‘case for a second time.

The US Department of Justice has brought its own trial against Texas last week seeking to repeal the law, which remains pending in federal court.

Crucial quote

Planned Parenthood is “relieved” by the court’s temporary injunction and the order will provide “some protection against frivolous lawsuits as litigation against this blatantly unconstitutional law continues,” Helene Krasnoff, vice president for policy litigation public and the right to the Planned Parenthood Federation of America, said in a statement Monday. “This temporary injunction is an important step, but it is not enough relief for our staff and the seven million women of childbearing age in Texas for whom abortion care remains virtually inaccessible.”

Chief critic

Texas Right to Life spokesperson Kim Schwartz dismissed the temporary injunction in a statement Monday, noting that it does not prevent other citizens from suing Planned Parenthood or Texas Right to Life from suing other providers abortion. “So today’s ruling ultimately has no effect on the Texas Heartbeat Act or the risk the abortion industry takes if it violates this life-saving law,” Schwartz said. She also noted that as part of their legal proceedings, the court blocked Planned Parenthood’s attempt to release the names of other anti-abortion advocates with whom Texas Right to Life worked to draft Texas law.

Key context

The Texas Abortion Act, known as Senate Bill 8 (SB 8), blocks abortions after detecting a “fetal heartbeat” – a term of medical experts criticize to be factually inaccurate, which is roughly six weeks pregnant. The law, which has only one exception for medical emergencies, is expected to block around 85% of abortions in the state because it stops abortions even before many people. realize they are pregnant. While similar state-level abortion bans were overturned by the courts before they could even come into effect, SB 8’s decision to use private litigation instead of government to enforce the ban was designed to escape legal scrutiny and make the law more difficult to challenge in court. , a tactic that other states are likely to copy. This strategy has already paid off in the Supreme Court, as the court ruled that it was too early to know whether the defendants in the case would even try to enforce the ban in a way that deserved a legal challenge. Texas Right to Life, which helped draft SB 8, is a key group expected to enforce the law through private prosecutions, launching a website designed to gather advice on abortion advocates who could be prosecuted under the law. GoDaddy web hosting company close the website, however, and the site URL currently redirects to the organization’s main website.

What to watch out for

How the litigation against SB 8 will end up playing out. While the Supreme Court refused to block the law because it said it was too early to challenge it, it did not rule on the constitutionality of the law itself and said its ruling did not block it. not future legal challenges. Any question about the constitutionality of the law could also arise whenever an anti-abortion complainant decides to prosecute someone who “aids and encourages” an abortion and the law is argued in court, which the legislative director said. from Texas Right to Life John Seago had previously Recount Forbes this is how he expects it to be ultimately determined whether or not the law can stand. While SB 8 presents more thorny legal issues than abortion bans imposed by other state governments, some legal experts still predict that the law will ultimately be easily overturned. “It is very likely that it will be found unconstitutional,” said Jonathan Turley, professor of constitutional law at George Washington University. Associated press. “Courts are likely to quickly enforce Texas law.”

What we don’t know

How a separate Supreme Court trial now going could affect Texas law. The Supreme Court will hear a case Mississippi’s upcoming 15-week abortion ban, which could potentially cause the conservative-leaning court to weaken or dramatically reverse its precedent on abortion rights in Roe v. Wade and to pave the way for the free entry into force of state-level abortion bans. The Supreme Court could “jump half a century of precedent and call on states to ban abortion altogether” if it sided with the Mississippi, the abortion providers wrote in a report. brief in court filed Monday, predicting that a ruling against abortion rights would result in a “cascade” of anti-abortion laws.

Further reading

Supreme Court refuses to overturn Texas abortion ban (Forbes)

Biden administration sues Texas over abortion ban (Forbes)

Texas Right to Life temporarily banned from enforcing 6-week abortion ban against Planned Parenthood (CBS News)


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Newtown Planning and Zoning says no to Dunkin Donuts drive-thru https://disturbmedia.com/newtown-planning-and-zoning-says-no-to-dunkin-donuts-drive-thru/ Thu, 11 Nov 2021 14:35:50 +0000 https://disturbmedia.com/newtown-planning-and-zoning-says-no-to-dunkin-donuts-drive-thru/ If you live in or commute to Newtown, don’t look to grab your coffee fix at a Dunkin Donuts drive-thru. If you know a little about Newtown’s zoning laws, you know the city is pretty strict when it comes to drive-thru businesses. Right now, there are no shopping malls, big box stores and no drive-through […]]]>

If you live in or commute to Newtown, don’t look to grab your coffee fix at a Dunkin Donuts drive-thru.

If you know a little about Newtown’s zoning laws, you know the city is pretty strict when it comes to drive-thru businesses.

Right now, there are no shopping malls, big box stores and no drive-through kiosks allowed in the city, and residents and political leaders all agree. According to newstimes.com, residents want to preserve the aesthetics of Newtown and small businesses, and convey a certain image to people who visit the city. This proposal to have a Dunkin Donuts drive-thru as part of the Mobile gas station on Route 6 (Church Hill Road), just off I-84, right next to the Blue Colony Diner did fly with none of the groups and was rejected.

Zoning commission board members cite the already overcrowded location, and adding drive-thru at this particular location would only add to the congestion due to traffic driving, cars driving get gas and use the station’s convenience store and traffic from other local businesses in this bustling neighborhood. Add to that the road, Route 6 is right next to the freeway and is normally crowded, especially during the morning commute.

The other main concerns of the Zoning and Planning Board were that, if approved, it could set a precedent that would eventually lead other companies to submit proposals behind the wheel in areas where gas stations and convenience stores exist. already.

Meanwhile, the Zoning and Planning Board gives gas station owners a chance to rework their plans and come back with a more closely matched solution that would make it more difficult for another gas station or convenience stores to follow the example of Mobil stations.

LOOK: What are the chances that these 50 Totally Random Events will happen to you?

Stacker took the guesswork out of 50 random events to determine the likelihood of them actually occurring. They drew their information from government statistics, scientific articles and other primary documents. Read on to find out why expectant parents shouldn’t rely on due dates – and why you should be more worried about dying on your birthday than living to 100.

LOOK: What important laws were passed in the year you were born?

The data in this list was obtained from reliable online sources and media. Read on to find out which major law was passed in the year you were born, and learn its name, vote count (if any), impact, and meaning.


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Joint auto loans and repossession https://disturbmedia.com/joint-auto-loans-and-repossession/ Thu, 11 Nov 2021 14:35:50 +0000 https://disturbmedia.com/joint-auto-loans-and-repossession/ A joint auto loan is when two people are equally responsible for the vehicle and the loan. If this vehicle is repossessed, it could mean a lot of headache for both of you. Joint auto loans and vehicle repossession A joint car loan is when two borrowers, called co-borrowers, share the responsibility for a car […]]]>

A joint auto loan is when two people are equally responsible for the vehicle and the loan. If this vehicle is repossessed, it could mean a lot of headache for both of you.

Joint auto loans and vehicle repossession

A joint car loan is when two borrowers, called co-borrowers, share the responsibility for a car loan and the vehicle itself. The co-borrowers are also responsible for the maintenance of the vehicle, pay the insurance and make the loan repayments. Both parties also have their names written on the vehicle title.

Often the co-borrowers are married couples or life partners. However, just because a couple is breaking up and they have a joint car loan, doesn’t mean a co-borrower is off the hook. If both names remain on the car loan agreement and the vehicle title, both are responsible for the loan whether they are married or not. If your co-borrower owns the car, but your name is still on the contract and it is repossessed, the lender may still ask you to pay off the loan.

If the vehicle is repossessed, both parties suffer consequences which may include:

  • Damage to credit scores
  • Liability for any deficit balance after auction
  • Responsible for paying the accrued storage and retrieval costs
  • May struggle to get a car loan for about 12 months

If you and your co-borrower have an arrangement where only one of you is responsible for the monthly payments, it has no effect on the loan. In a co-borrower situation, you are both responsible for everything related to the loan and the car as far as the lender is concerned.

In other words: the two co-borrowers must do everything to avoid default and repossession. Not only does this mean losing the vehicle, it can also mean that you can both be sued for the loan balance after repossession.

Damage and headaches after a car drop-off

A repossession can cause significant damage to your credit reports and lower your credit score. If your credit score has always been good, you may experience a greater drop in points than a borrower with average or poor credit.

The exact number of points you could lose after repoing varies a lot, but it can go up to 100 points (or more!). Additionally, most lenders cannot work with borrowers who have repossessed their credit reports for less than a year. After a year, however, sub-repo lenders may be able to help a borrower who has already taken a repo.

And don’t forget a possible deficit! Just because the lender took over the car doesn’t mean you no longer owe the loan balance. Most lenders prepare the repossessed vehicle for auction, and the proceeds are applied to your remaining balance. If there is any balance left after the auction, you are responsible for it – this is the deficit balance. All other charges such as storage charges and recovery company charges are usually included in this total as well.

For co-borrowers, you are both responsible for the deficit if there is one, and you both suffer repossession damage on your credit reports.

Withdraw a co-borrower from a joint auto loan

Since the co-borrower shares the rights to the vehicle under a joint car loan, the two must agree to any change in the loan agreement or a sale of the car. If either of you can no longer take on this responsibility, you may be better off trying to remove the co-borrower from the loan rather than losing the vehicle to default.

A die the easiest ways to remove a co-borrower (or co-signer) is to refinance the auto loan. Refinancing consists of replacing the old contract with a new one. If you want to withdraw your co-borrower but keep the vehicle, this is a good avenue to explore. Keep in mind that you still need permission from your co-borrowers to do this, and you must benefit from refinancing.

If refinancing isn’t an option, selling the vehicle and paying off the loan may remove both of your names from the contract and from the title. Most joint car loans require both borrowers to sign the title, so both of you will likely be needed in the sale.

Another option is to repay the loan naturally in monthly installments or in a single payment. However, unless you refinance or sell the car, both borrowers have rights to the vehicle because repayment of the loan does not remove the names of the co-borrowers from the title – it simply terminates the loan.

At the next loan!

Many borrowers hire a co-borrower to help them get a car loan. But not everyone has the resources for a common auto loan, and some borrowers prefer to go it alone. It’s not always easy to go it alone if your credit isn’t perfect, so we want to help.

Here has Auto Express Credit, we strive to connect borrowers with special finance dealers who are equipped to handle many difficult credit situations. We will look for a dealer in your area who has bad credit loan resources once you complete our quick, free auto loan application form.


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Will a dealer reimburse my trade-in loan? https://disturbmedia.com/will-a-dealer-reimburse-my-trade-in-loan/ Thu, 11 Nov 2021 14:35:50 +0000 https://disturbmedia.com/will-a-dealer-reimburse-my-trade-in-loan/ When you trade in your vehicle, the dealership can send a check to the lender if you still have a loan on your trade-in. However, whether their offer is large enough to pay off your remaining balance is another thing. Here is what you need to know. Exchange of your vehicle Exchanges are extremely frequent. […]]]>

When you trade in your vehicle, the dealership can send a check to the lender if you still have a loan on your trade-in. However, whether their offer is large enough to pay off your remaining balance is another thing. Here is what you need to know.

Exchange of your vehicle

Exchanges are extremely frequent. Many borrowers – those who buy both new and used cars – often trade in their old wheels to reduce the sale price of their next trip. Out with the old and the new!

If you still have a loan on your vehicle, the dealership will usually take care of the paperwork and pay your lender themselves to release the lien so they can take ownership. Vehicles with a loan have a lien on the title, which prevents you from selling a car until the loan is paid off. In order to transfer ownership of a vehicle to someone else, this privilege must be removed for the transaction to be legitimate.

If you have a loan on your car, the trade-in process usually goes as follows:

  1. The dealership evaluates your trade-in.
  2. The dealer makes you an offer based on an appraisal if they want to buy it.
  3. If you accept the offer, the dealer contacts and pays the lender who holds your title.
  4. Your lender issues a “lien release” letter so that you can transfer the property to the dealer if the amount is sufficient to pay off your loan.
  5. You sign the title to the dealership to close the sale.

Getting enough money to pay off your current lender is one of your biggest priorities. If you get enough to pay off your loan from the dealer’s offer, things get a lot easier, and you might not have to pay anything out of pocket.

There may be times when your trade-in offer is not enough to pay off your lender. In such situations, you can pay the remaining balance yourself. But what if you can’t afford the rest?

Will a dealership repay my loan no matter what?

The dealer is not obligated to repay the full balance of your loan. They just have to offer you what they think your trade-in is worth, also known as your car’s actual cash value (ACV).

However, many borrowers have vehicles with negative equity. Negative equity is when the value of your vehicle is less than what you owe on your car loan. If you are in this situation, it can be difficult to get a deal large enough from a dealership to pay your lender.

However, some resellers may be able to work with you.

A dealer may be able to offer you the entire loan balance of your vehicle, even if the car has negative equity. Depending on your car’s negative equity level, you may be able to carry this amount over to your next car loan.

Let’s say your trade-in is worth $ 5,000, but you owe $ 9,000 on your car loan. The next car you want to buy costs $ 15,000. If your next lender allows it, you may be able to get $ 9,000 from the dealership to pay off your current car loan, then carry that $ 4,000 of negative equity back to your next loan. Your next car loan would be around $ 19,000 because you are now paying off the negative equity from the previous loan and the sale price of your next vehicle.

How much negative equity can I carry forward?

The amount of negative equity you can carry over to your next car loan depends a lot on the selling price of your next vehicle and the lender you work with.

Auto lenders usually have limits on the amount of a loan they can make on a car. This is called a loan to value (LTV) ratio. Lenders compare the sale price of your next car to the loan amount you are applying for – if the loan amount you want is much more than the value of the vehicle, they may not approve you.

Ideally, you want to buy a vehicle with a 100% LTV ratio. This would mean that you are buying the car for exactly what it is worth. Lenders usually do not approve loans if the LTV ratio is above 125%.

That being said, if you have thousands of dollars in negative equity, you may not be able to carry it over to your next car loan. It may be better to just pay off your current car loan for a while, as negative equity resolves over time.

How exchanges are useful

Trade-in equity can be very helpful for borrowers with bad credit. If you get more than enough to pay off your current lender on a trade-in, that remaining money can be used to lower the sale price of your next vehicle. This is also a form of down payment, which means your trade may help you meet a down payment requirement from a car lender.

When you have poor credit and apply for your next car loan, you are almost always expected to have a down payment. Most bad credit lenders, including subprime lenders, charge at least $ 1,000 or 10% of the vehicle’s selling price. If you don’t have the full amount in cash, your trade-in could help secure your next car loan.

Looking for a dealer?

You will probably find that almost all dealers are able to accept trade-ins. However, not all dealers can help borrowers who are facing credit problems. Special financing dealers can, however, and we want to help you find one.

Finding a lender who can work with less than perfect credit can be easy if you work with us at Auto Express Credit. We’ll do our best to find a dealer who’s signed up with subprime lenders so you can focus on the rest. Complete our free auto loan application form, and we will look for a reseller in your area without obligation.


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