World Acceptance Corporation (NASDAQ: WRLD) today reported
financial results for its first quarter of fiscal 2025.
First fiscal quarter highlights
During its first fiscal quarter, World Acceptance Corporation
continued to focus on credit quality and a conservative approach to
its lending operations. Management believes that continuing to
carefully invest in our best customers and closely monitoring
performance has strengthened the Company's financial position and
positioned us well for the remainder of the fiscal year.
Highlights from the first quarter include:
- Net income of $9.9 million
- Diluted net income per share of $1.79
- Recency delinquency on accounts 90+ days past due improved to
3.4% at June 30, 2024, from 3.5% at June 30, 2023
- Total revenues of $129.5 million, including a 28 basis point
yield increase compared to the same quarter in the prior year
Portfolio results
Gross loans outstanding were $1.275 billion as of June 30, 2024,
an 8.8% decrease from the $1.398 billion of gross loans outstanding
as of June 30, 2023. During the most recent quarter, gross loans
outstanding decreased sequentially 0.2% from $1.277 billion as of
March 31, 2024, compared to an increase of 0.6%, or $8.0 million,
in the comparable quarter of the prior year.
During the most recent quarter, we did not see a significant
change in borrowing from new and former customers compared to the
same quarter of fiscal year 2024. Our customer base decreased by
2.6% during the twelve-month period ended June 30, 2024, compared
to a decrease of 14.8% for the comparable period ended June 30,
2023. During the quarter ended June 30, 2024, the number of unique
borrowers in the portfolio increased by 0.5% compared to an
increase of 1.5% during the quarter ended June 30, 2023. We
continued to improve the gross yield to expected loss ratio for all
new, former and refinance customer originations and will continue
to monitor performance indicators and intend to adjust underwriting
accordingly.
The following table includes the volume of gross loan
origination balances, excluding tax advance loans, by customer type
for the following comparative quarterly periods:
Q1 FY 2025
Q1 FY 2024
Q1 FY 2023
New Customers
$31,834,005
$34,647,578
$68,465,774
Former Customers
$90,318,862
$97,806,668
$117,241,356
Refinance Customers
$559,874,646
$588,767,136
$746,740,124
As of June 30, 2024, the Company had 1,047 open branches. For
branches open at least twelve months, same store gross loans
decreased 8.3% in the twelve-month period ended June 30, 2024,
compared to a decrease of 10.0% for the twelve-month period ended
June 30, 2023. For branches open throughout both periods, the
customer base over the twelve-month period ended June 30, 2024,
decreased 2.1% compared to a decrease of 10.3% for the twelve-month
period ended June 30, 2023.
Three-month financial results
Net income for the first quarter of fiscal 2025 increased to
$9.9 million compared to $9.5 million for the same quarter of the
prior year. Net income per diluted share increased to $1.79 per
share in the first quarter of fiscal 2025 compared to $1.62 per
share for the same quarter of the prior year.
Total revenues for the first quarter of fiscal 2025 decreased to
$129.5 million, a 7.0% decrease from $139.3 million for the same
quarter of the prior year. Interest and fee income declined 4.7%,
from $116.6 million in the first quarter of fiscal 2024 to $111.2
million in the first quarter of fiscal 2025. Insurance income
decreased by 19.4% to $12.9 million in the first quarter of fiscal
2025 compared to $16.0 million in the first quarter of fiscal 2024.
The large loan portfolio decreased from 57.4% of the overall
portfolio as of June 30, 2023, to 54.5% as of June 30, 2024.
Interest and insurance yields for the quarter ended June 30, 2024
increased 137 and 28 basis points compared to the quarters ended
March 31, 2024 and June 30, 2023, respectively. Other income
decreased by 18.5% to $5.4 million in the first quarter of fiscal
2025 compared to $6.7 million in the first quarter of fiscal
2024.
The Company accrues for expected losses with a current expected
credit loss ("CECL") methodology, which requires us to create a
provision for credit losses on the day we originate the loan. The
provision for credit losses decreased $1.2 million to $45.4 million
from $46.6 million when comparing the first quarter of fiscal 2025
to the first quarter of fiscal 2024. The table below itemizes the
key components of the CECL allowance and provision impact during
the quarter.
CECL Allowance and Provision (Dollars
in millions)
Q1 FY 2025
Q1 FY 2024
Difference
Reconciliation
Beginning Allowance - March 31
$103.0
$125.5
$(22.5)
Change due to Growth
$(0.2)
$0.7
$(0.9)
$(0.9)
Change due to Expected Loss Rate on
Performing Loans
$6.8
$3.5
$3.3
$3.3
Change due to 90 day past due
$0.1
$(0.4)
$0.5
$0.5
Ending Allowance - June 30
$109.7
$129.3
$(19.6)
$2.9
Net Charge-offs
$38.7
$42.8
$(4.1)
$(4.1)
Provision
$45.4
$46.6
$(1.2)
$(1.2)
Note: The change in allowance for the
quarter plus net charge-offs for the quarter equals the provision
for the quarter (see above reconciliation).
The provision benefited from lower charge-offs during the
quarter. This was partially offset by a seasonally driven increase
of expected loss rates.
Net charge-offs for the quarter decreased $4.1 million, from
$42.8 million in the first quarter of fiscal 2024 to $38.7 million
in the first quarter of fiscal 2025. Net charge-offs as a
percentage of average net loan receivables on an annualized basis
decreased to 16.4% in the first quarter of fiscal 2025 from 16.9%
in the first quarter of fiscal 2024.
Accounts 61 days or more past due remained flat at 5.6% on a
recency basis at June 30, 2024 and June 30, 2023. Our allowance for
credit losses as a percent of net loans receivable was 11.6% at
June 30, 2024, compared to 12.7% at June 30, 2023. We experienced
slight improvement in recency delinquency on accounts at least 90
days past due, improving from 3.5% at June 30, 2023, to 3.4% at
June 30, 2024.
The table below is updated to use the customer tenure-based
methodology that aligns with our CECL methodology. After
experiencing rapid portfolio growth during fiscal years 2019 and
2020, primarily in new customers, our gross loan balance
experienced pandemic related declines in fiscal 2021 before
rebounding during fiscal 2022. Over the last two years we have
tightened our lending to new customers substantially. The tables
below illustrate the changes in the portfolio weighting.
Gross Loan Balance By Customer
Tenure at Origination
As of
Less Than 2 Years
More Than 2 Years
Total
06/30/2019
$429,461,205
$793,297,330
$1,222,758,535
06/30/2020
$355,437,073
$712,516,701
$1,067,953,774
06/30/2021
$382,753,073
$840,444,842
$1,223,197,915
06/30/2022
$522,860,576
$1,119,072,168
$1,641,932,744
06/30/2023
$342,360,417
$1,055,724,428
$1,398,084,845
06/30/2024
$255,485,267
$1,019,396,030
$1,274,881,297
Year-Over-Year Growth
(Decline) in Gross Loan Balance by Customer Tenure at
Origination
12 Month Period Ended
Less Than 2 Years
More Than 2 Years
Total
06/30/2019
$109,633,241
$50,451,343
$160,084,584
06/30/2020
$(74,024,132)
$(80,780,629)
$(154,804,761)
06/30/2021
$27,316,000
$127,928,141
$155,244,141
06/30/2022
$140,107,503
$278,627,326
$418,734,829
06/30/2023
$(180,500,159)
$(63,347,740)
$(243,847,899)
06/30/2024
$(86,875,150)
$(36,328,398)
$(123,203,548)
Portfolio Mix by Customer
Tenure at Origination
As of
Less Than 2 Years
More Than 2 Years
06/30/2019
35.1%
64.9%
06/30/2020
33.3%
66.7%
06/30/2021
31.3%
68.7%
06/30/2022
31.8%
68.2%
06/30/2023
24.5%
75.5%
06/30/2024
20.0%
80.0%
General and administrative (“G&A”) expenses decreased $6.7
million, or 9.9%, to $61.4 million in the first quarter of fiscal
2025 compared to $68.1 million in the same quarter of the prior
fiscal year. As a percentage of revenues, G&A expenses
decreased from 48.9% during the first quarter of fiscal 2024 to
47.4% during the first quarter of fiscal 2025. G&A expenses per
average open branch decreased by 8.6% when comparing the first
quarter of fiscal 2025 to the first quarter of fiscal 2024.
Personnel expense decreased $4.8 million, or 11.5%, during the
first quarter of fiscal 2025 as compared to the first quarter of
fiscal 2024. Salary expense decreased approximately $0.3 million,
or 0.9%, during the quarter ended June 30, 2024, compared to the
quarter ended June 30, 2023. Our headcount as of June 30, 2024,
decreased 5.4% compared to June 30, 2023. Benefit expense decreased
approximately $0.9 million, or 11.1%, when comparing the quarterly
periods ended June 30, 2024 and 2023. Incentive expense decreased
$3.5 million, or 54.8%, in the first quarter of fiscal 2025
compared to the first quarter of fiscal 2024. The decrease in
incentive expense is mostly due to a decrease in share-based
compensation.
Occupancy and equipment expense decreased $0.5 million, or 3.6%,
when comparing the quarterly periods ended June 30, 2024 and
2023.
Advertising expense decreased $1.1 million, or 39.8%, in the
first quarter of fiscal 2025 compared to the first quarter of
fiscal 2024 due to decreased spending on customer acquisition
programs.
Interest expense for the quarter ended June 30, 2024, decreased
by $2.5 million, or 20.2%, from the corresponding quarter of the
previous year. Interest expense decreased due to a 17.5% decrease
in average debt outstanding for the quarter offset by a 1.4%
increase in the effective interest rate from 8.5% to 8.6%. The
average debt outstanding decreased from $593.2 million to $489.2
million when comparing the quarters ended June 30, 2024 and 2023.
The Company’s debt to equity ratio decreased to 1.2:1 at June 30,
2024, compared to 1.5:1 at June 30, 2023. As of June 30, 2024, the
Company had $492.7 million of debt outstanding, net of unamortized
debt issuance costs related to the unsecured senior notes payable.
The Company repurchased and canceled $22.0 million of its
previously issued bonds for a purchase price of $21.0 million
during the first quarter of fiscal 2025.
Other key return ratios for the first quarter of fiscal 2025
included a 7.1% return on average assets and a return on average
equity of 18.9% (both on a trailing twelve-month basis).
The Company repurchased 79,324 shares of its common stock on the
open market at an aggregate purchase price of approximately $11.1
million during the first quarter of fiscal 2025. As of June 30,
2024, the Company had $20.0 million in aggregate remaining
repurchase capacity under its current share repurchase program and
approximately $23.6 million under the terms of our debt facilities.
The Company repurchased 295,201 shares during fiscal 2024 at an
aggregate purchase price of approximately $36.2 million. The
Company had approximately 5.5 million common shares outstanding,
excluding approximately 367,500 unvested restricted shares, as of
June 30, 2024.
About World Acceptance Corporation (World Finance)
Founded in 1962, World Acceptance Corporation (NASDAQ: WRLD), is
a people-focused finance company that provides personal installment
loan solutions and personal tax preparation and filing services to
over one million customers each year. Headquartered in Greenville,
South Carolina, the Company operates more than 1,000
community-based World Finance branches across 16 states. The
Company primarily serves a segment of the population that does not
have ready access to credit; however, unlike many other lenders in
this segment, we strive to work with our customers to understand
their broader financial pictures, ensure they have the ability and
stability to make payments, and help them achieve their financial
goals. For more information, visit www.loansbyworld.com.
First quarter conference call
The senior management of World Acceptance Corporation will be
discussing these results in its quarterly conference call to be
held at 10:00 a.m. Eastern Time today. A simulcast of the
conference call will be available on the Internet at
https://event.choruscall.com/mediaframe/webcast.html?webcastid=JEZwWpCc.
The call will be available for replay on the Internet for
approximately 30 days.
During the conference call, the Company may discuss and answer
questions concerning business and financial developments and trends
that have occurred after quarter-end. The Company’s responses to
questions, as well as other matters discussed during the conference
call, may contain or constitute information that has not been
disclosed previously.
Cautionary Note Regarding Forward-looking Information
This press release may contain various “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, that represent the Company’s current
expectations or beliefs concerning future events. Statements other
than those of historical fact, as well as those identified by words
such as “anticipate,” “estimate,” intend,” “plan,” “expect,”
“project,” “believe,” “may,” “will,” “should,” “would,” “could,”
“probable” and any variation of the foregoing and similar
expressions are forward-looking statements. Such forward-looking
statements are inherently subject to risks and uncertainties. The
Company’s actual results and financial condition may differ
materially from those indicated in the forward-looking statements.
Therefore, you should not rely on any of these forward-looking
statements. Important factors that could cause actual results or
performance to differ from the expectations expressed or implied in
such forward-looking statements include the following: recently
enacted, proposed or future legislation and the manner in which it
is implemented; changes in the U.S. tax code; the nature and scope
of regulatory authority, particularly discretionary authority, that
is or may be exercised by regulators, including, but not limited
to, U.S. Consumer Financial Protection Bureau, and individual state
regulators having jurisdiction over the Company; the unpredictable
nature of regulatory proceedings and litigation; employee
misconduct or misconduct by third parties; uncertainties associated
with management turnover and the effective succession of senior
management; media and public characterization of consumer
installment loans; labor unrest; the impact of changes in
accounting rules and regulations, or their interpretation or
application, which could materially and adversely affect the
Company’s reported consolidated financial statements or necessitate
material delays or changes in the issuance of the Company’s audited
consolidated financial statements; the Company's assessment of its
internal control over financial reporting; changes in interest
rates; the impact of inflation; risks relating to the acquisition
or sale of assets or businesses or other strategic initiatives,
including increased loan delinquencies or net charge-offs, the loss
of key personnel, integration or migration issues, the failure to
achieve anticipated synergies, increased costs of servicing,
incomplete records, and retention of customers; risks inherent in
making loans, including repayment risks and value of collateral;
cybersecurity threats or incidents, including the potential or
actual misappropriation of assets or sensitive information,
corruption of data or operational disruption and the cost of the
associated response thereto; our dependence on debt and the
potential impact of limitations in the Company’s amended revolving
credit facility or other impacts on the Company's ability to borrow
money on favorable terms, or at all; the timing and amount of
revenues that may be recognized by the Company; changes in current
revenue and expense trends (including trends affecting delinquency
and charge-offs); the impact of extreme weather events and natural
disasters; changes in the Company’s markets and general changes in
the economy (particularly in the markets served by the
Company).
These and other factors are discussed in greater detail in Part
I, Item 1A,“Risk Factors” in the Company’s most recent annual
report on Form 10-K for the fiscal year ended March 31, 2024, as
filed with the SEC and the Company’s other reports filed with, or
furnished to, the SEC from time to time. World Acceptance
Corporation does not undertake any obligation to update any
forward-looking statements it makes. The Company is also not
responsible for updating the information contained in this press
release beyond the publication date, or for changes made to this
document by wire services or Internet services.
WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited and in thousands,
except per share amounts)
Three months ended June 30,
2024
2023
Revenues:
Interest and fee income
$
111,161
$
116,619
Insurance and other income, net
18,366
22,705
Total revenues
129,527
139,324
Expenses:
Provision for credit losses
45,419
46,602
General and administrative expenses:
Personnel
36,976
41,792
Occupancy and equipment
12,164
12,620
Advertising
1,656
2,750
Amortization of intangible assets
1,006
1,069
Other
9,610
9,894
Total general and administrative
expenses
61,412
68,125
Interest expense
9,769
12,242
Total expenses
116,600
126,969
Income before income taxes
12,927
12,355
Income tax expense
2,980
2,816
Net income
$
9,947
$
9,539
Net income per common share, diluted
$
1.79
$
1.62
Weighted average diluted shares
outstanding
5,568
5,891
WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(unaudited and in thousands)
June 30, 2024
March 31, 2024
June 30, 2023
ASSETS
Cash and cash equivalents
$
11,119
$
11,839
$
15,989
Gross loans receivable
1,274,819
1,277,149
1,397,966
Less:
Unearned interest, insurance and fees
(330,334
)
(326,746
)
(379,967
)
Allowance for credit losses
(109,643
)
(102,963
)
(129,343
)
Loans receivable, net
834,842
847,440
888,656
Income taxes receivable
3,951
3,091
—
Operating lease right-of-use assets,
net
80,866
79,501
79,462
Property and equipment, net
22,199
22,897
23,856
Deferred income taxes, net
32,425
30,943
43,272
Other assets, net
45,599
42,199
41,148
Goodwill
7,371
7,371
7,371
Intangible assets, net
10,064
11,070
14,220
Total assets
$
1,048,436
$
1,056,351
$
1,113,974
LIABILITIES &
SHAREHOLDERS' EQUITY
Liabilities:
Senior notes payable
$
241,728
$
223,419
$
299,776
Senior unsecured notes payable, net
251,014
272,610
285,620
Income taxes payable
—
—
3,812
Operating lease liability
83,136
81,921
81,989
Accounts payable and accrued expenses
49,947
53,974
45,889
Total liabilities
625,825
631,924
717,086
Shareholders' equity
422,611
424,427
396,888
Total liabilities and shareholders'
equity
$
1,048,436
$
1,056,351
$
1,113,974
WORLD ACCEPTANCE CORPORATION
AND SUBSIDIARIES
SELECTED CONSOLIDATED
STATISTICS
(unaudited and in thousands,
except percentages and branches)
Three months ended June 30,
2024
2023
Gross loans receivable
$
1,274,819
$
1,397,966
Average gross loans receivable (1)
1,270,677
1,388,662
Net loans receivable (2)
944,485
1,017,999
Average net loans receivable (3)
942,603
1,013,007
Expenses as a percentage of total
revenue:
Provision for credit losses
35.1
%
33.4
%
General and administrative
47.4
%
48.9
%
Interest expense
7.5
%
8.8
%
Operating income as a % of total revenue
(4)
17.5
%
17.7
%
Loan volume (5)
682,197
721,234
Net charge-offs as percent of average net
loans receivable on an annualized basis
16.4
%
16.9
%
Return on average assets (trailing 12
months)
7.1
%
3.3
%
Return on average equity (trailing 12
months)
18.9
%
10.7
%
Branches opened or acquired (merged or
closed), net
(1
)
(18
)
Branches open (at period end)
1,047
1,055
_______________________________________________________
(1) Average gross loans receivable is determined by averaging
month-end gross loans receivable over the indicated period,
excluding tax advances. (2) Net loans receivable is defined as
gross loans receivable less unearned interest and deferred fees.
(3) Average net loans receivable is determined by averaging
month-end gross loans receivable less unearned interest and
deferred fees over the indicated period, excluding tax advances.
(4) Operating income is computed as total revenues less provision
for credit losses and general and administrative expenses. (5) Loan
volume includes all loan balances originated by the Company. It
does not include loans purchased through acquisitions.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240726269263/en/
John L. Calmes, Jr. Executive VP, Chief Financial & Strategy
Officer, and Treasurer (864) 298-9800
World Acceptance (NASDAQ:WRLD)
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