Marlin Does Not Disclose Possible Loss Of Evergreen Payments

Art Post (Guest)

Should the State of California declare Evergreen non-notification of the original term of the lease illegal, it will be a serious blow to Marlin Business Services (MRLN). Evergreen clauses are illegal in four states, meaning automatic payments cannot continue, especially prevalent in ACH payments. Marlin's collection of these payments exceed their reported net income. The majority of business, especially copier leases, are in the State of California, according to Marlin's SEC filings, where Evergreen leases are legal.

If the Evergreen income ends, it will dramatically affect Marlin's income. This renewal income continually exceeds Marlin's reported net income, which the last quarter saw a company net income of $1.6 million compared to $754,000 for the first quarter in 2011. Renewal income, net of depreciation, totaled approximately $1.9 million and $2 0 million for the three-month periods ended March 31, 2012 and March 31, 2011, respectively.

At this time, these four states require the lender or lessor to inform the borrower or lessee regarding the termination of the initial lease contract: New York, Rhode Island, Texas and Illinois.

What it did not disclose in its press or SEC filing was the profit was from the Evergreen clause where the lessee is not reminded of how many payments they have made to date, thus it makes an additional profit, as noted in the SEC filing:

There were $32.7 million of residual assets retained on our Consolidated Balance Sheet, of which $26.5 million, or 80.9%, were related to copiers. No other group of equipment represented more than 10% of equipment residuals as of March 31, 2012 and December 31, 2011, respectively. Improvements in technology and other market changes, particularly in copiers, could adversely impact our ability to realize the recorded residual values of this equipment."

Marlin should disclose in their SEC filings that should Evergreen Clause be declared illegal in more states, it will greatly affect their collection of additional lease payments.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

http://seekingalpha.com/articl...f-evergreen-payments

5/13/127:12 PM

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Old GloryMaven VIP

Anybody who uses Marlin or buys their stock deserves what they get. My past experiences with tese scum suckers are chronicled in old p4photel posts if you care to get the details.

However, this article comes from a blogger site called Seeking Alpha which is also known for holding short positions in public company stock and then exagerating or outright falsifying information so as to cause a downturn of the stock value thus creating a profit for those who have short positions. This article suggests that Marlin's profits are at risk if states ban the practise of evergreening which isn't likely to happen any time soon.

5/14/1210:06 AM

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Kevin CluneSenior P4P'er

I’m surprised that there isn’t more leasing chatter because there seems to be a growing awareness of how most leasing companies make their money. The member who correctly analyzed Marlin’s profits was right on the mark. Not many leasing companies are public entities but when they are one can glean a lot of info from their 10Q’s and 10K’s.

The leasing industry vigorously defends evergreen to its detriment. Whenever a state bill is introduced to restrict or outlaw evergreens they send someone from DC to the state to try to knock it out and they are very successful.

If evergreen were to be declared illegal in all or even most states, rate factors (but not overall yields) would go up and they’d have to dream up new unethical revenue sources. I don’t see a widespread prohibition of evergreens happening any time soon but we are pleased to see that the general public is better educated than in years past.

5/30/1212:36 PM

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Old GloryMaven VIP

There isn't more chatter on this forum because most salespeople don't consider it their responsibility to care. Many sales people will go to the ends of the earth to make their equipment perform for the customer but consider the lease contract the customer's problem...their the ones who signed the contract, right? Never mind that we are the ones that shoved it under their nose and it is because of their trust in us that they sign it without questioning.

I suppose I shouldn't put all of this on the salespeople because most of them work for dealerships that dictate to them which lease company they can use. It is just a shame that it is all about what is best for the dealership without regard to what is best for the customer.

5/30/122:39 PM

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Art Post (Guest)

quote:

I suppose I shouldn't put all of this on the salespeople because most of them work for dealerships that dictate to them which lease company they can use. It is just a shame that it is all about what is best for the dealership without regard to what is best for the customer.

Old Glory: Could not have stated it better, most dealerships could not give a rats ass about what's best for the customer, if that was the case we'd all be selling 10% leases (remember them, they are a thing of the past) or the $1.00 buy out.

Not only what I mentioned above, what I'm seeing is that dealerships are letting the leasing companies now add additional fees to return the equipment early, these fee's were NOT a part of the original dealer agreement and dealer ownership is allowing this to happen because they would rather close the lease and return the equipment right away. Now returning the equipment early and closing out the lease early is a GOOD thing, however why is it always as the salespersons expense? Why does the dealership not kick in half? I tell you after 33 years I growing old of the games that are played and how under appreciated good reps are handled in this business!

Art

5/30/1210:19 PM

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