Nelnet, Inc. (NNI) 2010 Q3 法說會逐字稿

Good day, everyone, and welcome to Nelnet's third-quarter 2010 conference call. Today's call is been recorded and broadcast live over the internet. At this time Phil Morgan, Nelnet's director of investor relations, will begin with opening remarks. Please go ahead, Sir.

大家好，歡迎參加Nelnet公司2010年第三季財報電話會議。本次會議將進行錄音並透過網路直播。現在，Nelnet公司投資者關係總監菲爾摩根先生將首先致開幕詞。請開始吧，先生。

Thanks, Mary. Good morning and welcome to Nelnet's 2010 third-quarter earnings conference call. On today's call we have Jeff Noordhoek, President, and Terry Heimes, Chief Financial Officer. Please note that during the conference call we may discuss predictions and expectations and may make other forward-looking statements. Actual results may differ from those discussed here based on a variety of factors. These factors are discussed in the Company's Form 10-K and other filings with the SEC. The Company does not intend to update any forward-looking statements made during the call. During the course of the call, we will refer to a non-GAAP financial measure, which the Company defines as base net income. A description of base net income and reconciliation of GAAP net income to base net income are included in our third-quarter 2010 supplemental earnings disclosure, which is posted on our investor relations website at Nelnetinvestors.com. After Terry and Jeff have concluded their formal remarks we will open up the call for questions.

謝謝，瑪麗。早安，歡迎參加Nelnet公司2010年第三季財報電話會議。今天出席會議的有總裁傑夫·諾德霍克(Jeff Noordhoek)和首席財務官特里·海姆斯(Terry Heimes)。請注意，在本次電話會議中，我們可能會討論預測和預期，並可能做出其他前瞻性陳述。實際結果可能因多種因素而與此處討論的內容有所不同。這些因素已在公司提交給美國證券交易委員會(SEC)的10-K表格和其他文件中進行了討論。本公司不打算更新本次電話會議中所做的任何前瞻性陳述。在會議過程中，我們將提及一項非GAAP財務指標，公司將其定義為基準淨利。基準淨利的說明以及GAAP淨利與基準淨利的調節表包含在我們2010年第三季補充收益揭露文件中，該文件已發佈在我們的投資者關係網站Nelnetinvestors.com上。特里和傑夫結束正式發言後，我們將開放問答環節。

Thank you. I will now turn the call over to Jeff.

謝謝。現在我將把電話轉給傑夫。

Thanks, Phil, and hello, everyone. We are pleased with our operating results for the third quarter of 2010. We reported base net income, excluding settlement and restructuring charges, of $1.23 per share compared with $1.01 a year ago. For the nine-month period base net income was $3.54 per share. Our strong performance is a direct result of the steps we have been taking to meet our key objectives for 2010. The first is growing and diversifying our fee-for-service businesses. For the quarter each of our fee-generating businesses reported revenue growth, with payment processing and enrollment services leading the way. Together revenue for these businesses grew 17%, or $7.3 million compared with last year. Loan servicing revenue also continued to increase with our contract with the Department of Education. At the end of October under this government contract we were servicing greater than $24 billion in loans for more than 2.6 million borrowers. We continue to add significant volume to our system while focusing on the quality of service we are providing to borrowers.

謝謝菲爾，大家好。我們對2010年第三季的經營業績感到滿意。扣除和解及重組費用後，我們的基本淨收入為每股1.23美元，去年同期為每股1.01美元。前九個月的基本淨收入為每股3.54美元。我們取得如此強勁的業績，直接得益於我們為實現2010年的關鍵目標所採取的各項措施。首先是發展和多元化我們的收費服務業務。本季度，我們所有收費業務的收入均實現成長，其中支付處理和註冊服務表現最為突出。這些業務的總收入年增17%，即730萬美元。此外，隨著與教育部簽訂合同，貸款服務收入也持續成長。截至10月底，根據這份政府合同，我們為超過260萬借款人提供超過240億美元的貸款服務。我們不斷大幅增加系統容量，同時專注於為借款人提供高品質的服務。

Maximizing the value of our existing portfolio is also a priority. In the current low interest environment we continue to generate significant cash flow from our student loan portfolio. Almost all of our student loans are financed for the life of loan at rates we believe will generate more than $1.7 billion of future cash flows. We are continuing to use our strong liquidity to capitalize on market opportunities by purchasing legacy loan portfolios and our outstanding debt. In the quarter we repurchased $121 million of outstanding debt for a pretax gain of $9.9 million. In addition, we successfully resolved the Oberg matter. Even with our strong case we wanted to alleviate any uncertainty for the Company and move forward.

最大化現有投資組合的價值也是我們的首要任務。在當前低利率環境下，我們的學生貸款組合持續產生可觀的現金流。我們幾乎所有的學生貸款都以我們認為能夠產生超過17億美元未來現金流的利率進行全額融資。我們正繼續利用我們強大的流動性，透過收購歷史貸款組合和未償債務來掌握市場機會。本季度，我們回購了1.21億美元的未償債務，稅前收益為990萬美元。此外，我們成功解決了奧伯格事件。儘管我們勝券在握，但我們仍希望消除公司的任何不確定性，並繼續向前發展。

Lastly, we are maintaining a robust capital base. We continue to evaluate all possible uses for deployment of capital, including additional investment into our existing business lines, portfolio acquisitions, debt and stock repurchases and dividends. To this end, we announced in our earnings release a fourth-quarter dividend of $0.49 per share. This consists of our standard dividend of $0.07 and an additional $0.42 to make up for the six quarters in 2008 and 2009 during which we did not pay a dividend. For now we anticipate paying our usual dividend of $0.07 per quarter on an ongoing basis. We were also more aggressive in buying back stock in the third quarter. During the quarter we repurchased more than 1.1 million shares of stock for more than $26 million, or an average price of $22.45 per share(Sic-see press release).

最後，我們維持穩健的資本基礎。我們持續評估所有可能的資本部署用途，包括對現有業務線的額外投資、投資組合收購、債務和股票回購以及分紅。為此，我們在獲利報告中宣布第四季每股分紅0.49美元。這包括每股0.07美元的常規分紅，以及為彌補2008年和2009年六個季度未派發股息而額外派發的0.42美元。目前，我們預計將持續發放每季0.07美元的常規分紅。此外，我們在第三季加大了股票回購力道。該季度，我們回購了超過110萬股股票，總金額超過2600萬美元，平均每股價格為22.45美元（原文如此，詳見新聞稿）。

Now I'll turn the call over to Terry to discuss in detail our financial results. Terry?

現在我把電話交給特里，讓他詳細討論我們的財務表現。特里？

Thanks, Jeff. We continue to be encouraged by our strong operating results and are confident in our ability to achieve long-term success. Our base net income, excluding settlement and restructuring charges, was $1.23 per share for the third quarter and $3.54 per share for the first nine months. This compares to $1.01 per share and $2.30 per share for the same periods in 2009. Base net income for the third quarter does exclude a pretax charge of $55 million, or $0.70 per share after tax to resolve the Oberg lawsuit. With the settlement charge and an unrealized mark-to-market loss in derivatives we reported a small GAAP loss in the third quarter of $0.01 per share. We were able to repurchase an additional $121 million of debt in the third quarter, generating a gain of $9.9 million, or $0.12 per share after tax. In the third quarter of 2009 the Company recorded a gain of $5.2 million, or $0.07 per share from the repurchase of debt.

謝謝傑夫。我們持續受到強勁經營業績的鼓舞，並對實現長期成功充滿信心。第三季不計和解及重組費用，我們的基本淨利為每股1.23美元，前九個月為每股3.54美元。相較之下，2009年同期分別為每股1.01美元及每股2.30美元。第三季的基本淨利潤不包括用於解決奧伯格訴訟的5,500萬美元稅前費用（稅後每股0.70美元）。在計入和解費用和衍生性商品未實現的按市值計價損失後，我們第三季報告了每股0.01美元的小幅GAAP虧損。第三季度，我們回購了1.21億美元的額外債務，產生了990萬美元的收益（稅後每股0.12美元）。 2009 年第三季度，公司透過回購債務獲得 520 萬美元收益，即每股 0.07 美元。

We are encouraged with the growth of our total fee-based revenues. Compared with the prior year they've increased 19%. Each of our three primary education product lines -- loan servicing, payment processing and enrollment services -- are growing. They're adding new products and giving us reasons to be optimistic. We continued to see significant volume added to our system from the Department of Education contract and strong results from our guaranty servicing operations.

我們對總收費收入的成長感到鼓舞。與上年相比，成長了19%。我們的三大主要教育產品線——貸款服務、支付處理和入學服務——均呈現成長態勢。這些產品線不斷推出新產品，讓我們對未來充滿信心。教育部合約持續為我們的系統帶來顯著的業務量成長，擔保服務業務也取得了強勁的業績。

Total revenue from student loan and guaranty servicing segment increased $7 million, or 22% compared with last year. Our payment processing and enrollment services revenue grew 12% and 19% respectively compared to the same period a year ago. Our core student loan spread contracted from 154-basis points in the second quarter to 141-basis points in the third quarter. After several quarters in which the difference between CP and LIBOR tightened it widened slightly in the third quarter, decreasing spread. We do not expect the CP LIBOR disparity to worsen significantly in the fourth quarter and as a result we would anticipate spread will improve slightly.

學生貸款及擔保服務業務總收入年增700萬美元，增幅達22%。支付處理和註冊服務收入分別較去年同期成長12%和19%。核心學生貸款利差從第二季的154個基點收窄至第三季的141個基點。先前幾季CP與LIBOR之間的利差有所收窄，但在第三季略有擴大，導致利差下降。我們預期第四季CP與LIBOR之間的利差不會顯著惡化，因此預期利差將略有改善。

Given the sustained low interest rate environment, we expect to continue to see significant floor income and we will continue to evaluate opportunities to add hedges to our portfolio. In the third quarter we added fixed-rate swaps to hedge a greater portion of our loans. At September 30, 2010 net student loan assets were $24.4 billion. This excludes $2.1 billion of federal student loans classified as held for sale. The loans held for sale were sold to the Department under its loan purchase program in October of 2010 and generated a pretax gain of $33.8 million. This will be recorded in the fourth quarter of 2010. This compares to pretax gains of $36.6 million for loans sold to the Department in 2009. Of this, $9.7 million was recognized in the third quarter of 2009.

鑑於持續的低利率環境，我們預計將繼續獲得可觀的最低收益，並將繼續評估增加對沖投資組合的機會。第三季度，我們增加了固定利率互換，以對沖更大比例的貸款。截至2010年9月30日，學生貸款淨資產為244億美元。這不包括21億美元的聯邦學生貸款，這些貸款被歸類為持有待售。這些持有待售的貸款已於2010年10月根據貸款購買計劃出售給教育部，並產生了3,380萬美元的稅前收益。該收益將在2010年第四季確認。相較之下，2009年出售給教育部的貸款稅前收益為3,660萬美元。其中，970萬美元已在2009年第三季確認。

So as we look forward, we expect to recognize significant value from our portfolio and our operations. Our strong business model focusing on diversification is working. Fee-based revenues are growing. Specifically we will see growth in our three core business lines; servicing, payment processing and enrollment services. And finally, we are well positioned to leverage our infrastructure for continued growth.

展望未來，我們預期將從我們的投資組合和營運中獲得顯著價值。我們以多元化為核心的穩健商業模式正在發揮作用。費用收入正在成長。具體而言，我們將在三大核心業務領域——服務、支付處理和註冊服務——看到成長。最後，我們已做好充分準備，利用我們的基礎設施來實現持續成長。

With that I'll turn it over to the operator for questions.

接下來，我將把電話交給接線員，回答他們的問題。

(Operator Instructions) And our first question comes from the line of Sameer Gokhale from KBW.

（操作說明）我們的第一個問題來自 KBW 的 Sameer Gokhale。

Hello, good morning, and again, the performance during the quarter was quite good. Just had a few questions and clarifications. First, given this -- on these rehabilitation loans or the income from rehab loans could you explain again when you -- at what point do you generate the income? It seems like it has to do with the point at which these loans are somehow sold and you recognize income at that point in time. But again, if you could just explain how that works?

您好，早安。本季的業績相當不錯。我有一些問題需要澄清。首先，關於這些房屋翻新貸款或翻新貸款收入，您能否再次解釋一下，您是在什麼時間點確認收入的？這似乎與這些貸款被出售以及您在那個時間點確認收入有關。能否請您解釋一下這其中的具體運作方式？

And also, the trend line, how should we model -- think about modeling this income going forward. Should we assume this goes away sometime next year or declining trend, growing trend, some color there would be helpful?

另外，關於趨勢線，我們應該如何建模——考慮如何對未來的收入進行建模。我們應該假設這種情況明年某個時候消失，還是呈現下降趨勢，或呈現成長趨勢？如果能用一些圖表來說明就更好了。

Sure, Sameer, this is Terry. First of all, their rehabilitation loan represents a collection activity for guarantee agencies, and so for our outsourcing that we do for guarantee agencies it generates revenue there and that's when we earn the revenue. So, we earn it when that rehabilitation loan is sold by the guarantee agencies. It so happens that we are able to purchase those so we will earn revenue on those rehabilitation loans over the life of the loan.

當然，薩米爾，我是特里。首先，他們的房屋翻新貸款對擔保機構來說是一項催收活動，因此，我們為擔保機構提供的外包服務會產生收入，而這正是我們獲得收入的途徑。也就是說，當擔保機構出售這些房屋翻新貸款時，我們就能獲得收入。恰好我們能夠購買這些貸款，因此我們會在貸款期限內從中獲得收入。

The timing of the generation of those loans will be somewhat sporadic. It is not going to be a smooth trend. We will continue to see rehabilitation loans and would expect to continue to see those rehabilitation loans generate collection revenue at guarantee agencies into the future. As the loans in the guarantee agency, or Federal Family Education Loan program run off, we would expect to see that decline. But understand that the rehabilitation loan is on defaulted loan, so it will have a much longer tail on it as opposed to a short-term or immediate contraction of that revenue.

這些貸款的產生時間會有些零散，不會呈現平穩的趨勢。我們將繼續看到房屋重組貸款，並預計這些貸款在未來仍會繼續為擔保機構帶來催收收入。隨著擔保機構或聯邦家庭教育貸款計劃中的貸款到期，我們預計催收收入會下降。但需要注意的是，房屋重組貸款屬於違約貸款，因此其催收收入的持續時間會更長，而不是像其他貸款那樣出現短期或即時的收入下降。

Okay. So you earn income on helping rehabilitate these loans and then when the guarantee agencies actually sell those loans you earn this income, but then you actually are able to buy these loans yourselves. So, over time you're able to benefit from the initial fee that you get, as well is earning the spread income from the loans over time. And gradually, as the existing FFELP loan from the portfolio that the guarantee agencies have also shrinks that revenue will go down, but it's going to be very gradual essentially?

好的。所以，你們的收入來自於幫助這些貸款重組，然後當擔保機構實際出售這些貸款時，你們也能獲得收入，但實際上你們自己也可以購買這些貸款。因此，隨著時間的推移，你們既能從最初收取的費用中獲益，也能從貸款的利差中長期獲利。而且，隨著擔保機構持有的現有聯邦家庭和就業貸款計劃（FFELP）貸款組合逐漸減少，這部分收入也會隨之下降，但這個過程基本上會非常緩慢，對嗎？

That's correct

沒錯

Okay, that's helpful. The other question I had was, on the software services part of the business -- I think you had $4.6 million in Q3. Is this revenue from existing contracts that you have with companies that were in the FFELP? Then, through what time period do these existing contracts run? In other words, how much of that is going to recur? And then I know recently your 5280 business, there was a -- you signed a contract with Edfinancial. How much would you expect that to add on top of what you currently are earning in this business?

好的，這很有幫助。我的另一個問題是，關於軟體服務業務——我記得你們第三季的收入是460萬美元。這筆收入是來自你們與參與聯邦家庭和就業援助計劃（FFELP）的公司簽訂的現有合約嗎？如果是，這些現有合約的有效期限是多久？換句話說，其中有多少是經常性收入？另外，我知道你們最近在5280業務方面——你們與Edfinancial公司簽訂了一份合約。您預計這份合約會為你們目前這項業務的收入增加多少？

Well -- and we are going to expect to see the software services revenue also have a tail, because the contracts that we have in place are for entities were servicing their loans. So, as those loans stay in place we're going to continue to earn revenues. We also see opportunities where organizations that are servicing their loans are looking for a more efficient platform, which is the case with the Edfinancial and we would expect to continue to see opportunities there. We're going to recognize revenue from the Edfinancial as we bring it on. It's too early for us to give any projections on that.

嗯——我們預計軟體服務收入也會有尾部成長，因為我們目前簽訂的合約是為那些負責貸款服務的機構提供的。所以，只要這些貸款還在，我們就能持續獲得收入。我們也看到，一些負責貸款服務的機構正在尋求更有效率的平台，Edfinancial 就是其中之一，我們預計未來還會有更多這樣的機會。 Edfinancial 的收入將在正式啟用後確認。現在就做出任何預測還為時過早。

Okay, and then just my last question. In terms of your fee -- your tuition payment plan business and your enrollment services business, first the tuition payment. It looks like there was year-over-year earnings growth of 9% or so, but there doesn't seem to be any improvement in the operating margin there year over year, like if we compare and nine months to nine months . So, how should we think about future earnings growth from that business, and margin improvement?

好的，最後一個問題。關於您的費用－包括學費分期付款業務和招生服務業務，先說學費分期付款業務。看起來該業務的年收益成長了9%左右，但營業利潤率似乎沒有年比改善，例如我們比較過去九個月的數據。那麼，我們該如何看待該業務未來的收益成長和利潤率提升呢？

And then also similar question on the enrollment services side. It looks like -- it seemed like for the nine months it's going to break even. I don't recall if there were any one timers in there, but certainly it just more or less looks like a breakeven business even though your revenues seem to be growing. So, some additional perspective there would also help.

另外，招生服務方面也有類似的問題。看起來——似乎未來九個月會收支平衡。我不記得期間是否有一次性客戶，但即便你們的收入看起來在成長，它看起來基本上也是收支平衡的業務。所以，如果能提供一些額外的分析就更好了。

Sure. In terms of the payment processing, we do expect to continue to have leverage opportunities there. We do expect to continue to see revenue growth there. It was -- it's not going to be a straight line in that regard, so we're going to have some investments in product and service development. And as we deploy those we'll get some operating margin in the future, operating improvement -- margin improvement, but that is not going to be a straight line. As it relates to NES or the enrollment services area, we have -- that, again, will also be based somewhat on our products that we develop and roll out. We will see some and have seen some pressure on some of the -- our client base in that area, specifically the for-profit schools rela--

當然。就支付處理而言，我們預期會繼續擁有利用該領域優勢的機會，也預期該領域的收入將持續成長。但這方面不會一帆風順，所以我們會在產品和服務開發方面進行一些投資。隨著這些投資的部署，我們未來會獲得一些營運利潤率的提升，也就是利潤率的提高，但這不會是一條直線。至於NES或招生服務領域，這同樣會在一定程度上取決於我們開發和推出的產品。我們已經看到，並且將會看到，我們在該領域的一些客戶群，特別是營利性學校客戶，面臨一些壓力。

Yes, primarily, Sameer, that would be relating to the new regulations that everyone's talking about. We're seeing some impact, not immediate but we're starting to see some impact within the industry and so as the industry adjust to those new regulations we'll have to adjust with our clients. So the good news is, with that, is that as with any time there's significant change in industry that means there's opportunity. So, we do see change coming, but we also see lots of opportunity.

是的，薩米爾，主要原因在於大家都在談論的新規。我們已經看到一些影響，雖然不是立竿見影，但我們開始感受到產業內部的一些變化。隨著產業調整以適應這些新規，我們也必須隨之調整，並配合客戶的需求。好消息是，正如任何產業重大變革都意味著機會一樣，我們預見到變革即將到來，同時也看到了許多機會。

So, in the short term I think you'll see -- you won't see significant margin expansion there as we look to take advantage of some of the opportunities that change within that business. So, that will be more of a long-term focus for us.

所以，短期內我認為你不會看到利潤率大幅提升，因為我們會著眼於抓住業務內部的一些變化機會。因此，這將是我們更長期的關注點。

Okay, thank you very much.

好的，非常感謝。

Thank you. Our next question comes from the line of Mike Taiano from Sandler O'Neill.

謝謝。我們的下一個問題來自桑德勒·奧尼爾的邁克·泰亞諾的台詞。

Hey, good morning. Terry, I just had a question on the trajectory of the student loan spread from here and I know you got a couple moving parts, but assuming the CP LIBOR stays relatively stable. Selling the $2.1 billion to the Department, as well as the hedges that you added in the quarter, do you expect the spread to change material from any of those things?

嗨，早安。特里，我有個關於學生貸款利差走勢的問題。我知道有很多因素在起作用，但假設商業票據LIBOR保持相對穩定，那麼賣給教育部21億美元的債券，以及你本季新增的對沖頭寸，你認為這些因素會對利差產生實質影響嗎？

No I really don't expect it to change materially there. The hedges that we've added will add a little bit of cost but what it will do is it will lock in that margin, so I would not expected to change materially.

不，我真的不認為情況會有實質的改變。我們新增的對沖策略會增加一些成本，但它的作用是鎖定利潤率，所以我預計不會產生實質的影響。

Okay. And the $3 billion in notional that you added subsequent to the end of the quarter that mature in 2012, just wanted to get a sense of your thinking there as to why not do longer-dated swaps given the view right now that the fed's going to be on hold for at least a year if not longer?

好的。關於您在季度末之後新增的30億美元名目本金（將於2012年到期），我想了解一下您的想法，鑑於目前普遍認為美聯儲至少會維持一年甚至更長時間的利率不變，為什麼不進行期限更長的互換交易呢？

As rates have come down significantly we've looked to opportunistically add those. We feel that it's -- the optimal range for us is out that two-year timeframe. Beyond that, it did not appear economic for us in terms of our existing portfolio and what else we had already layered in. So, that's why we chose the two-year timeframe and it made the -- we felt it made the most economic sense given our portfolio makeup.

隨著利率大幅下降，我們一直在尋找機會增加這些資產。我們認為，對我們而言，兩年期是最佳的投資期限。超過兩年，考慮到我們現有的投資組合以及其他已配置的資產，這樣做並不划算。因此，我們選擇了兩年期，我們認為這在我們目前的投資組合構成下是最經濟合理的。

And Mike, we're continually evaluating that on a go-forward basis literally every day.

麥克，我們每天都在持續評估這種情況。

Okay, and just maybe less question for you, Jeff. You guys have been pretty balanced in how you've decided to allocate your capital and excess cash. Just curious and I think most people have talked about on the acquisition front portfolios available for sale, but just curious. Are there other things, whether it's in some of your fee-based businesses or ancillaries to that, where you're seeing maybe some potential opportunity to invest, or in the majority of the opportunities. Do you see that more or less on the existing FFELP portfolios and servicing?

好的，傑夫，可能這個問題比較少。你們在資本和盈餘現金的分配上一直都做得相當均衡。我只是好奇，雖然我覺得大多數人都已經討論過待售的收購投資組合了，但我還是想問問，除了你們的收費業務或相關業務之外，是否還有其他潛在的投資機會？或者說，在大多數投資機會中，你們是否更傾向於投資現有的聯邦家庭和就業貸款計劃（FFELP）投資組合和服務業務？

Yes, we look at that, obviously, frequently on how to best deploy capital that we are generating. So, I do see lots of opportunities out there in the market relating to the existing legacy FFELP business, legacy servicing business, legacy software business. That said, within the education space we see other opportunities out there, too. We're always evaluating them, looking for the right transaction.

是的，我們當然會經常考慮如何最有效地利用我們所產生的資金。因此，我確實看到市場上有很多機會，這些機會與現有的傳統家庭教育貸款計劃（FFELP）業務、傳統服務業務和傳統軟體業務相關。此外，在教育領域，我們也看到了其他機會。我們一直在評估這些機會，尋找合適的交易。

So, I guess in short, what I'd say is we've got a lot of capital, as everybody know. We're continually evaluating how to deploy the capital. It might be organic growth, investing in that, and investing in new business opportunities and acquisitions. We're continuing to look at dividend rates, debt repurchases and stock buybacks, too. So, whatever is the best use to get the highest return on the capital is how we're going to deploy over the long term.

簡而言之，正如大家所知，我們擁有大量資金。我們一直在評估如何部署這些資金。這可能包括內生成長、投資現有業務、投資新的業務機會和收購。我們也持續關注股利率、債務回購和股票回購。因此，從長遠來看，我們將採取能夠獲得最高資本回報的最佳方法來部署資金。

Great, thanks a lot.

太好了，非常感謝。

Thank you. Our next question comes from the line of Matt Snowling from FBR Capital Markets.

謝謝。我們的下一個問題來自FBR Capital Markets的Matt Snowling。

Yes, good morning, guys.

是的，各位早安。

Morning.

早晨。

Just -- going back on the acquisition front. Can you tell us if you had any discussions with [STU], or you took a look at the STU portfolio?

回到收購方面。您能否告訴我們您是否與[STU]進行過任何洽談，或者您是否曾考察過STU的投資組合？

We -- everybody -- we're an active acquirer of portfolios so we want our name in the hat for every one that's out there. So, yes, it's something that we obviously looked at.

我們——我們所有人——都是積極的投資組合收購者，所以我們希望參與每個待售項目的競標。因此，是的，這顯然是我們關注過的事情。

All right. I guess what I'm trying to get at is, why haven't we seen you be a little bit more aggressive on acquiring some (inaudible) portfolios? It has to be accretive for you at current prices, right?

好的。我想問的是，為什麼我們沒有看到您在收購一些（聽不清楚）投資組合方面更積極一些？以目前的價格來看，這應該能為您帶來收益，對吧？

Again, it goes back to the capital question and what's the greatest return we can get on our capital and we're really -- we're very disciplined on how we deploy the capital and the return rate that we want to achieve. And so, if the return rate's not there we won't bid on it and if it is we'll bid on it and stick to our -- to levels that hit the return that we want.

歸根結底，這又回到了資本問題，以及我們如何獲得最大的資本回報。我們對資本的運用和預期報酬率有著非常嚴格的把控。因此，如果回報率達不到，我們就不會參與競標；如果回報率達到預期，我們就會參與競標，並堅持我們的投入水平，確保達到我們期望的回報。

And we will continue to look for opportunities and we expect to continue to see opportunities for portfolio acquisitions as they come available. Our focus will continue to be on the guaranteed student loan asset and that's where our -- the majority of our attention will be, which didn't necessarily line up with the STU component.

我們將繼續尋找機會，並預計未來將會有更多投資組合收購的機會出現。我們將繼續專注於擔保學生貸款資產，並將大部分精力投入其中，但這與STU部分並不完全一致。

Let me ask you then, is there something from a seller's perspective that is holding them up? One has to imagine with the declining servicing portfolios they'd be incentivized to sell now rather than later.

那我想問您，從賣家的角度來看，是什麼原因導致他們遲遲不願意出售？可以想像，隨著服務型資產組合的減少，他們應該更有動力現在就出售而不是以後再賣。

I think each one of the organizations will periodically go through a different evaluation, and they don't all come to the same conclusion in the same timeframe. We were able to acquire $1.5 billion earlier this year from a Colorado secondary market. We will continue to look for those opportunities, but the organizations will often be driven by different objectives and they come to that conclusion differently.

我認為每個機構都會定期進行不同的評估，而且它們不會在同一時間段內得出相同的結論。今年早些時候，我們透過科羅拉多州的二級市場收購了15億美元。我們將繼續尋找此類機會，但各個機構的目標往往不同，因此它們的結論也各不相同。

Okay, and just one question on enrollment services . Under the new incentive compensation rules, is it your understanding you can still sell a lead without violating the incentive compensation rule to a school?

好的，關於招生服務還有一個問題。根據新的激勵性薪酬規則，您是否理解仍然可以向學校出售潛在客戶資訊而不違反該規則？

Sure, you can still sell the lead, you just have to be very compliant in how you obtained it.

當然可以，你仍然可以出售這條線索，但你必須嚴格遵守獲取線索的方式。

In how you obtained it?

你是如何獲得的？

Yes. So you need to go through -- there's a whole set of rules and regulations on the process of obtaining the lead and certifying that you went through the right marketing requirements to obtain it.

是的。所以你需要遵循一整套規則和條例，才能獲得銷售線索並證明你已滿足獲得該線索所需的行銷要求。

Right. Okay, I may follow up with you on that. Thanks

好的。我可能會就此事與您聯繫。謝謝。

No problem.

沒問題。

Thank you. (Operator Instructions) Our next question comes from the line of Mike Grondahl from Northland Capital.

謝謝。 （操作員說明）我們的下一個問題來自 Northland Capital 的 Mike Grondahl。

Hello, guys, this is Thomas actually filling in for Mike. Can you hear me okay?

大家好，我是托馬斯，今天代替麥克來。你們能聽清楚我說話嗎？

Yes.

是的。

Sure

當然

Just generally speaking -- you kind of touched on this a little bit, but the student loan spread, how can we gauge that for the fourth quarter? How has it performed in October and so far in November?

總的來說——您剛才也稍微提到了這一點——學生貸款利差，我們如何評估第四季度的情況？它在10月份和11月份的表現如何？

It hasn't moved significantly in October. We would expect to continue to see a relatively stable spread through the fourth quarter at this point.

自10月份以來，該價差並未出現顯著變化。目前來看，我們預期第四季價差將持續保持相對穩定。

Okay, so pretty stable from this quarter's level?

好的，所以和本季的水平相比相當穩定？

Yes. CP LIBOR I think has even tightened a little bit. We've added some hedges there, so it's going to -- we've not seen-- anticipate significant change there.

是的。我認為加拿大倫敦銀行間同業拆借利率（CP LIBOR）甚至略微收緊了。我們已經增加了一些對沖措施，所以——我們尚未看到——預計它不會有重大變化。

Okay. A little bit more on the portfolio acquisition front. Are you guys seeing that -- are there more or less opportunities, now and in the near term, that in your opinion, than there has been as of late and all of this year? What do you guys think about that?

好的。再談談投資組合收購方面。你們覺得現在以及短期內，相較於最近和今年全年，收購機會是更多還是更少？你們怎麼看？

It's been sporadic but I don't -- it's has been fairly consistent in its sporadicness. If that makes sense. But we do -- we are seeing portfolios out there for bid of varying size, and hopefully our name is in the hat for every one that comes due. And I think there's a pretty established market at this point in time and it fluctuates -- the prices fluctuate based on what's happening in the capital markets

雖然時有發生，但這種時有發生的情況其實相當穩定。如果我這麼說你能理解的話。我們確實看到市面上有許多規模不一的投資組合待售，希望我們的名字能出現在每個待售投資組合的候選名單上。我認為目前市場已經相當成熟，價格也會波動──價格會根據資本市場的動態而波動。

I think we're going to continue to see organizations evaluate how they continue to hold or what they do with those assets. And again, I don't think there's going to -- there's not a -- all of a sudden a switch is going to be flipped and everybody is going to have to get rid of their portfolios by year end or something like that. You're going to see organizations continue to evaluate what they do with their portfolios. Some they may hold for a period of time, some they may strategically sell portions of it, some you may see bleeded out over time. So I think you're going to see different organizations evaluate their options differently. Unfortunately, what that means is that there's not going to be a consistency to what happens.

我認為我們將繼續看到各機構評估如何繼續持有或處置這些資產。而且，我認為不會突然發生什麼事——不會突然間一切都變了，所有人都必須在年底前拋售所有投資組合之類的。你會看到各機構繼續評估其投資組合的處置方式。有些機構可能會持有一段時間，有些可能會策略性地出售部分資產，有些則可能會隨著時間的推移逐步減持。所以我認為你會看到不同的機構以不同的方式評估他們的選擇。遺憾的是，這意味著最終的結果不會有統一的標準。

And so, we feel really good about our position, because we've got capital to take advantage of opportunities. We are well positioned with our existing portfolio to continue to earn revenue, because we don't use gain on sale. We're going to continue to earn that value and our existing portfolios going to generate in excess of $1.7 billion over its life and our servicing portfolios is well positioned to take advantage of infrastructure. We're actually growing our servicing base. So, we feel very good about our position to opportunistically take advantage of the portfolio acquisitions when they come available.

因此，我們對目前的狀況非常有信心，因為我們擁有充足的資金來把握機會。憑藉我們現有的投資組合，我們能夠持續創造收益，因為我們不使用出售收益。我們將繼續創造價值，現有投資組合在其生命週期內將產生超過17億美元的收益，而我們的服務型投資組合也已做好充分準備，能夠充分利用基礎設施優勢。事實上，我們的服務基礎正在不斷擴大。因此，我們對自身處境非常有信心，能夠在適當的時機抓住收購機會。

Okay, great, and that's kind of a lead into my last question. With regard to the fee-based businesses, it sounds like obviously the servicing, there's a ladder potential upside there in revenue-- in top-line growth with the contract with the DOE. What else are you guys excited with tuition payment and the enrollment services fee-based businesses?

好的，太好了，這正好引出了我的最後一個問題。關於收費業務，聽起來服務方面顯然有很大的收入成長空間——尤其是與教育部簽訂的合同，有望帶來營收的全面成長。除了這些，你們對學費支付和招生服務收費業務還有哪些方面感到興奮呢？

We see opportunities in both of those businesses. We see growth in enrollment. We see the system becoming more and more complex with regulation, and every time that happens, throughout time, it's always been an opportunity that we can deploy our services and products. So, overall, we're really encourage about what we're seeing in the market and the various opportunities to be successful.

我們看到這兩個業務領域都蘊藏著機會。我們看到招生人數在增加。我們看到監管日益複雜，而每一次監管的加強，都為我們提供了部署自身服務和產品的機會。因此，總的來說，我們對當前的市場狀況以及各種成功機會都感到非常鼓舞。

Specifically, as you look at the payment processing and tuition payment plan area, historically we have worked with 30% to 35% of the families when we work with an individual -- work with a school. We are developing products and services that will allow us to work with 100% of the families. So, what that will allow us to do is effectively increase our same-school sales.

具體來說，在支付處理和學費支付計畫方面，以往我們與學校合作時，通常只服務30%到35%的家庭。我們正在開發能夠服務100%家庭的產品和服務。這將有效提升我們同校學生的銷售額。

So we're going to have opportunities for growth in that area without necessarily just adding new schools. In addition, in the higher ed space we're expanding our product service offering there. So, what that's going to allow us to do is work with more schools. So, we've got different opportunities in each one of those fee-based areas to grow our revenues.

因此，我們在這個領域將有機會實現成長，而無需僅僅增加新的學校。此外，在高等教育領域，我們正在拓展產品和服務範圍。這將使我們能夠與更多學校合作。所以，在這些收費領域，我們都有不同的機會增加收入。

Got you, great. Okay, thanks, guys. Appreciate it.

明白了，太好了。好的，謝謝各位。感激不盡。

Thank you, Thomas.

謝謝你，托馬斯。

Thank you. I show no further questions in the queue and would like to turn the conference back to Jeff Noordhoek for closing remarks.

謝謝。隊列中沒有其他問題了，現在請傑夫·諾德霍克先生作閉幕致詞。

Our strong business model focused on diversification is working and our fee-for-service revenues are growing. We have the capacity and customer service focus to quickly and successfully increase our servicing volume. We have significant value related to our portfolio, which is not yet recognized in our financial statements. Our strong liquidity position is providing opportunities for growth, both from portfolio acquisitions and servicing rights, and we have significant cash flow from operations and from our legacy portfolio. So, I just want to thank you for your participation in today's call and thank you for trusting us with your investment in our Company and have a great day

我們以多元化為核心的穩健商業模式正在發揮作用，我們的按服務收費收入也在不斷增長。我們擁有足夠的產能和以客戶服務為中心的理念，能夠快速有效地提升服務量。我們的投資組合蘊藏著龐大的價值，但尚未在財務報表中反映出來。我們充裕的流動性為成長提供了機遇，包括投資組合收購和服務權，同時我們也擁有來自營運和現有投資組合的豐厚現金流。因此，我衷心感謝各位參加今天的電話會議，感謝各位對我們公司的信任與投資，祝您一切順利！

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may all disconnect at this time.

女士們、先生們，感謝各位參加今天的會議。會議到此結束，各位可以斷開連線了。