World Acceptance Corporation Reports Fiscal 2025 First Quarter Results

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 [phone]