| | Contact: | Kelly M. Malson |
| | | Chief Financial Officer |
| | | (864) 298-9800 |
WORLD ACCEPTANCE CORPORATION REPORTS THIRD
QUARTER REVENUES AND NET INCOME PER SHARE
GREENVILLE, S.C. (January 24, 2008) - World Acceptance Corporation (NASDAQ: WRLD) today reported record third quarter revenues and net income per share.
Net income for the third quarter of fiscal 2008 increased to $7.3 million, or $0.43 per diluted share, compared with $7.0 million, or $0.39 per diluted share, for the same quarter last year. The fiscal 2008 results included an unusual increase in income taxes of $1.5 million, or $0.09 per dilutive share.
“We experienced record loan demand in the third fiscal quarter that contributed to a 22.3% jump in pre-tax income to $14.0 million, up from $11.5 million in the third quarter of last year,” stated Sandy McLean, CEO of World Acceptance Corporation. “Our gross loans outstanding rose 18.3% to $663.2 million, primarily due to increased demand during our busy holiday season and the strong performance of existing loan offices. We experienced double digit loan growth in 10 of our 11 state markets and five states reported loan growth exceeding 20%. In addition, our expansion into Mexico has been a solid contributor, both in terms of loan growth and loan quality.
“Our net income for the latest quarter was reduced by a $1.5 million addition to our third quarter tax provision as a result of a recent examination by a state that challenges the deductibility of certain inter-company interest payments. Although we intend to defend our position vigorously, it is too early at this time to predict the final resolution on this tax issue and any potential recovery of this extra tax provision made this quarter. We expect to add approximately $40,000 to our quarterly tax provision going forward until this tax issue is resolved,” continued Mr. McLean.
Total revenues for the quarter increased 18.8% to $88.0 million from $74.1 million for the quarter ended December 31, 2006. This increase resulted from the Company’s strong internal loan growth and higher sales of insurance and other products.
Provision for loan losses increased 26.5% to $23.2 million, up from $18.4 million in the third quarter of last year. Net charge-offs increased $3.9 million, or 26.2%, compared to the prior year quarter. Net charge-offs as a percentage of average net loans increased to 16.7% on an annualized basis during the most recent quarter from 15.6% in the same quarter last year. This quarter over quarter increase of 110 basis points on an annualized basis is very consistent with the Company’s experience during the first two quarters of the fiscal year and brings the current charge-off ratios more in-line with historical levels. The Company’s management continues to monitor the Company’s loan portfolio in light of the softening economy and believes that the allowance is adequate based on current expectations.
The Company’s growth in revenues and cost control programs had a positive effect in reducing general and administrative expenses as a percent of revenue to 53.9% in the third quarter of fiscal 2008 compared with 55.9% in same quarter of the prior year. General and administrative expenses were down 0.6% per office in the third quarter of fiscal 2008 compared with the prior year’s quarter.
WRLD Reports Revenues and Net Income per Share
Page 2
January 24, 2008
Other key return ratios for the third quarter included a 5.9% return on average assets (annualized) and an annualized return on average equity of 13.1%.
Nine-Month Results
For the first nine months of the fiscal year, net income was $28.6 million, or $1.63 per diluted share, representing a 6.5% increase in net earnings and an 12.8% increase in earnings per share over the $26.9 million, or $1.45 per diluted share, for the prior year nine-month period. The fiscal 2008 results included the additional tax provision of $1.5 million, or $0.09 per diluted share.
Total revenues for the first nine months of fiscal 2008 were $244.6 million, a 19.2% increase over the $205.1 million during the corresponding period of the previous year. Net charge-offs increased $10.8 million compared with the prior year first nine months. Net-charge-offs as a percent of average net loans were 15.0% compared to 13.8% during the prior year nine month period.
During the first nine months of the fiscal year, the Company opened 87 offices and acquired 13 offices, and merged one office into an existing location, resulting in a total of 831 offices at December 31, 2007.
About World Acceptance Corporation
World Acceptance Corporation is one of the largest small-loan consumer finance companies, operating 831 offices in eleven states and Mexico. It is also the parent company of ParaData Financial Systems, a provider of computer software solutions for the consumer finance industry.
Third 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. Interested parties may participate in this call by dialing 1-877-440-5787. A simulcast of the conference call is also available on the Internet at www.streetevents.com. The call will be available for replay on the Internet for approximately 30 days.
This press release may contain various “forward-looking statements” within the meaning of Section 27A of the Securities Exchange Act of 1934, as amended, that represent the Company’s expectations or beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties. Factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include changes in the timing and amount of revenues that may be recognized by the Company, changes in current revenue and expense trends (including trends affecting charge-offs), changes in the Company’s markets and changes in the economy (particular in the markets served by the Company). Such factors are discussed in greater detail in the Company’s filings with the Securities and Exchange Commission. World Acceptance Corporation is 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.
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WRLD Reports Revenues and Net Income per Share
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January 24, 2008
World Acceptance Corporation |
| |
Consolidated Statements of Operations |
| (unaudited and in thousands, except per share amounts) |
| | | Three Months Ended | | Nine Months Ended | |
| | | December 31, | | December 31, | |
| | | 2007 | | 2006 | | 2007 | | 2006 | |
| | | | | | | | | | |
| Interest & fees | | $ | 75,208 | | $ | 63,509 | | $ | 210,303 | | $ | 176,795 | |
| Insurance & other | | | 12,835 | | | 10,593 | | | 34,327 | | | 28,352 | |
| Total revenues | | | 88,043 | | | 74,102 | | | 244,630 | | | 205,147 | |
| Expenses: | | | | | | | | | | | | | |
| Provision for loan losses | | | 23,224 | | | 18,365 | | | 55,856 | | | 43,345 | |
| General and administrative expenses | | | | | | | | | | | | | |
| Personnel | | | 29,280 | | | 25,778 | | | 86,028 | | | 73,044 | |
| Occupancy & equipment | | | 5,555 | | | 4,439 | | | 15,856 | | | 12,769 | |
| Data processing | | | 344 | | | 571 | | | 1,533 | | | 1,621 | |
| Advertising | | | 6,023 | | | 4,734 | | | 10,753 | | | 8,418 | |
| Intangible amortization | | | 622 | | | 683 | | | 1,875 | | | 2,219 | |
| Other | | | 5,646 | | | 5,254 | | | 15,547 | | | 13,524 | |
| | | | 47,470 | | | 41,459 | | | 131,592 | | | 111,595 | |
| Interest expense | | | 3,338 | | | 2,823 | | | 8,606 | | | 6,994 | |
| Total expenses | | | 74,032 | | | 62,647 | | | 196,054 | | | 161,934 | |
| Income before taxes | | | 14,011 | | | 11,455 | | | 48,576 | | | 43,213 | |
| Income taxes | | | 6,723 | | | 4,444 | | | 19,972 | | | 16,354 | |
| Net income | | $ | 7,288 | | $ | 7,011 | | $ | 28,604 | | $ | 26,859 | |
| Diluted earnings per share | | $ | 0.43 | | $ | 0.39 | | $ | 1.63 | | $ | 1.45 | |
| Diluted weighted average shares outstanding | | | 17,148 | | | 17,950 | | | 17,511 | | | 18,547 | |
Consolidated Balance Sheets |
| (unaudited and in thousands) |
| | | December 31, | | March 31, | | December 31, | |
| | | 2007 | | 2007 | | 2006 | |
ASSETS | | | | | | | |
| Cash | | $ | 7,728 | | $ | 5,779 | | $ | 7,121 | |
| Gross loans receivable | | | 663,217 | | | 505,788 | | | 560,742 | |
| Less: Unearned interest & fees | | | (175,152 | ) | | (127,750 | ) | | (144,522 | ) |
| Allowance for loan losses | | | (36,790 | ) | | (27,840 | ) | | (30,715 | ) |
| Loans receivable, net | | | 451,275 | | | 350,198 | | | 385,505 | |
| Property and equipment, net | | | 17,835 | | | 14,310 | | | 13,880 | |
| Deferred taxes | | | 20,825 | | | 14,507 | | | 11,847 | |
| Goodwill | | | 5,353 | | | 5,040 | | | 5,021 | |
| Intangibles | | | 10,510 | | | 11,060 | | | 11,624 | |
| Other assets | | | 8,994 | | | 10,222 | | | 11,481 | |
| | | $ | 522,520 | | $ | 411,116 | | $ | 446,479 | |
| | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | | |
| Liabilities: | | | | | | | | | | |
| Notes payable | | | 273,450 | | | 171,200 | | | 236,900 | |
| Income tax payable | | | 3,504 | | | 8,015 | | | - | |
| Accounts payable and accrued expenses | | | 17,528 | | | 16,408 | | | 15,468 | |
| Total liabilities | | | 294,482 | | | 195,623 | | | 252,368 | |
| Shareholders' equity | | | 228,038 | | | 215,493 | | | 194,111 | |
| | | $ | 522,520 | | $ | 411,116 | | $ | 446,479 | |
