WRLD - Earnings call transcript Q3 2020 | World Acceptance Corporation

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Operator

Good morning and welcome to the World Acceptance Corporation sponsored Third Quarter Press Release Conference Call. This call is being recorded. At this time, all participants have been placed on listen-only mode.

Before we begin, the corporation has requested that I make the following announcement. The comments made during this conference call may contain certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that represent the corporation's expectations and beliefs concerning future events.

about are are risks subject statements uncertainties. and forward-looking matters inherently that to Such those fact statements. plan, of those than similar any other Statements historical foregoing the the will, should and anticipate, variation may, of identified are as words estimate, believe, intend, forward-looking expect, expressions and or by as well

the Factors or results does section to differ in XXXX from Additional the and information most undertake update any to discussing and are performance not statements from furnished paragraph such factors that statements Form statements XXst, expectations in fiscal or press filed reports expressed XX-K implied SEC with statements or any makes. regarding obligation of for the forward-looking could in forward-looking corporation's subsequent forward-looking to cause the today's any actual and release forward-looking March corporation year the Risk it included The ended earnings the recent in time-to-time.

floor to At this Officer. time, the Chief and Prashad, it your pleasure Executive is turn Chad President host over my to

Chad Prashad

morning the third all call. time John review joined by hope this release Financial quarter our Officer. had welcome our Chief Good I'm Calmes, you've and to earnings Strategy to morning. press and I

within growth -- to this additional continue in and bucket customers we our the quarter This portfolio new basket highlight information over specifically couple about include the our to of in risk years. of increase the this last corresponding

a are customer new return is really the expected our great the and for on over grow to portfolio continuing believe focused the investment We company we long-term.

questions like up that have. may for we'd call open any time, this to At you the

Operator

go your Rowan our take line with we is And Janney. question first Instructions] [Operator from you. open. John ahead, Please Thank

John Rowan

Good guys. morning

Chad Prashad

morning. Good

John Rowan

number from quarter? because just loss a shares the outstanding, GAAP in as is the a basic million that averaging down X.X that down because figure the quarter's repurchase or of prior The quarter-over-quarter is of

John Calmes

quarter, at the lower shares The Yes, amount the mean started outstanding? previous the right? just of the -- shares impact So, quarter a that. you outstanding it's than average

John Rowan

there was basic opposed I make Right. wanted loss using to to just GAAP as a it wasn't diluted shares. that because you're sure that shares

John Calmes

no. No. No,

John Rowan

I changed Okay. some fixed It it the the know ratio. charge you just quarter. debt And just looked coverage be worth exemption then next during covenants to with like that the for want again we value as changes -- to sure for year made say still adoption? CECL head net caused to you dilution have your into any don't covenants in an by book I

John Calmes

the be there to the So, any but we've with able those and expect it's so conversations amend had in to the to started yes, impact. But not impact banks yet agreement CECL from those and for adjust million as a $XX further to of the we be bit CECL. December between come million XXst, CECL. the when we and ran $XX of little implement the the We impact we've implementation with expect model XXXX and

adjust without to time, into to at coming we even fourth to still amendment for even we'll But -- we yes, we an So, the amendment, an that. amend the build the equity thought okay. same expect without ultimately agreement be have quarter

John Rowan

XX% So, than less goes little the you're by to $XXX that -- that. about you XX% because a bit so think or at even up million, allowance only XX%

$XX saying up million only you're million that goes $XX right? So, allowance to X/X/XXXX. the on Is

John Calmes

If change to $XX the little April December a down Well, a could actually $XX XX of X, we to to the number to million up by March that go yeah, methodology of as we our in portfolio. XX. due mix new so XX applied tend bit December or come

John Rowan

than lenders guiding other No, to. to Okay. just smaller much been I a build mean allowance that's have the

John Calmes

starting difference part in we're the in. and factor difference between where it's Right. – they're we it's starting we where where to – – a But have you're and

adjusts quickly under methodology losses our allowance of current methodology. current flow fairly allowance the So quickly customers for impact through our new the and pretty

significant wouldn't a to have So it expect we change.

John Rowan

the given capital kind on of covenants covenant thinking settlement still – you just and back the to book CECL, into settled just tax-affected. we're people right? actually with countered. for your because I gets assume back excluded you still get then to – probably trying when DFT million. from they're quarter what's over is to Mexico tell above CECL right? And buy your drastically $XX wait was to consume But they not. have with consumptive countered goes CECL's know proposed $XX back fact number which higher all the your foot of we're just if guess that proposal stock, Okay. Do Mexico DOJ to your a in I'm you or CECL Because Because tied actually and question trigger. again, and can of million some value. going loss don't network me I much or above value, are the due this well, you're delta also you're all that – back the settlement there's that $XX than trading putting going of before $XX things, book stock, you understand, even and comfortable a buy in market not you've excluded? the and Because haven't back until $X less in allowance I if bigger to these covenant value but you is a – the million is coming step million sitting say book right? actually million a got water little also that next to bit they would let's that have be whether here SEC

John Calmes

Right.

Mexico, estimate elaborate settlement. but we much on the like, a So we ultimate from can't accrual we too feel the like reasonable feel it's for

that our is So that historically, earning – me – guessed coming in quarter. fourth around the and our you largest quarter

expect we the bit during equity add So to quarter. a quite fourth

John Rowan

Okay. Great. Thanks.

Operator

Stephens. from from Caintic Please we now go take And Vincent ahead. question our next

is Your line open.

Vincent Caintic

morning. and Thank Hey. you good

picture I'll question. – more Just step in take a bigger back

long-term of you that of I guidance press if release. five-year XXXX just So there, framework the on or your from sort appreciate fiscal highlighted four-year point envision framework the this guess discuss getting you could from where you how where when get And – EPS kind how you here it you that year-over-year long-term it have how today and does do to how And from inflect? we're it does seeing working. guidance? declines

Chad Prashad

growth morning, acquaints rate portfolio is of Chad. by that way we A the lot a this quarters EPS. increased Yeah. This investment this Good XX%. the both for years, of last new view grown current Vincent. into we the In little here our for is that only of and the customers, end. – a we've also the last two – company, is numbers of former over that instituted in but our also couple back of the reduces gained also increased an risk portfolio And and but future the customers customers we'd number the retention

And so customers our it's initial market investment new that this firm in belief gaining the and share. increasing

as it portfolio continue treat we we next they and long customers over so dividends. As fairly, retain a us them the stay and believe term them will couple into pay less-risky with to long years, we grow of

long-term is So our investment lump growth just expedite really taking this that an objectives. overall initial we're to

it worth fairly out I And from think has acquisitions. so in are again, this last acquisitions one They before, it's that a that come here years out but we the pointing thing half opportunistic. were of growth lot pointed few large of roughly

and when company. to as happy objectives that So the makes to sense of long-term we see they believe take accretive we down as price the the those them we are long are

lot a put we time, growing of same the organically. At work in

acquisitions the this growth So we of to quarter apples-to-apples more highlight some to tried without an just our of have organic comparison.

we head the as has and year, XX% acquisitions, been shoulders grew year, but years excluding this sorry acquisitions excluding -- of So what year-to-date is which in last past. year-over-year roughly same or it

that for we're as we portfolio size happen us. And that the not probably but quarter growth think So that growth customers to quickly. we're that of of as jump-start customers the to older fourth us new begin and this right of seeing will happen combination see current we'll within help rapid believe and well the only to in retention see beginning quarter, begin I it the

equation. that's side one the of So

earnings the reducing the The these other long-term target side share of equation of outstanding. is shares per number hitting for

go of the that lot to fairly aggressive within year repurchase this try do that out And earlier to a share quarters. program. continue We'll did the probably a and and of has is. we equity what begin the available So, with next couple that's price

our So as hit long-term, the cost to two coupled as really we're the show our all target to controlling that with And models years. service. five next this of there's over in on things simple it's

Vincent Caintic

expect fiscal made seen to those your growth got I models Okay, say type year XXXX EPS when should the event? -- like And we do guess, a of from the harvesting When year you more investments. you that we've so see you. this

which new the point. helpful really I guess years then about seems tendered your have is And when your charts, are customers two your and dividing like customers it versus you

year is -- new year customers. your accumulating So first -- and of it your this this is these past is

-- once growth. get I'm to trying the So is I inflection? harvesting just -- it we start mark see will the you guess like -- to of the EPS that when to more I just just guess I two-year wondering we see

Chad Prashad

Yes. That's question. a great

It's it customers chart it's looks into years years. a customers two less from substantial broken more subtle clip. than release, out that. actually much in than more and So the press And two fairly like the than

with And we types and new so CECL buckets fairly the rest for granular the of have. we going customers forward, have that methodology

that CECL play. reserves We'll the don't granted it dramatically portfolio So same. next large we'll the rapidly, see within the would we to begin remain portfolio will quarters within make see into basically as I distribution begin comes acquisitions the change that say of come couple down, to especially any more the the

customers begin XX-month those six-month, buckets age it nine-month, we'll to As rather in rapidly. see

Vincent Caintic

much. Okay, you. so Thanks got

Chad Prashad

you. Thank Yes.

Operator

question. Our Jefferies. go from And we'll Kyle Joseph [Operator next take our next Please is with question ahead. now Instructions]

is line open. Your

Kyle Joseph

my Hey, questions. morning taking thanks good for and

growth First I talk to storefronts been as pockets both environment? strong other very you competitive is have just Obviously talk found have but the as of and online? the from environment going wanted competitive well guys about about

Chad Prashad

Yeah.

adaption last of loans. we've growth couple biggest one customers in the with adoption awareness seen I sorry installment but the the of over So is or -- changes years, think not of only of industry

been in of also think tremendous. entire that credit with lot this has Over industry more the the online related product A do of but last the think I to recognition to within I the itself lenders, to reporting industry general. has five growth years, seven

benefits it's general, So, the right? more customers awareness alternative And and seen that's payday loans. in title as so. of one we've in raised I the of industry Rightfully just general. think And throughout an that see it to product all

for installment we've year that looking credit. specifically past in reflect with target company So, the more who the to said, marketplace. looking improve the loans and being ourselves in to us lot done are rebranded to differentiates customers We've accurately what a

years, thing seen their think success is that that lot here interested And last and yes, of viable in I with see histories we've the us a that customers couple in for seen that other we've as customers interesting rebuilding that who the are option is of credit a area.

we've continued if the see marketing also and you we've bringing think that from in funnel recognition we've here I So, customer the and of benefited of into customers and made product improvements soliciting to kind those that terms will. the them of

Kyle Joseph

to about day just touched impacts. very of your one so But matures, book and of of and -- day of earlier And along can day in then I be. on what tax-adjusted you factoring you CECL it. as reserve that and would That's the know the potential helpful. in be number thinking highlighted impact more walk through us CECL lines a would kind sort two? equity increase two how you're the you it your Got

John Calmes

Right.

it think losses some customer and neutral course project associated could will right? more fairly the of tenure but within what year, new volatility I the So, the we're over loss model be. the the the So, be year using create anticipating to should rates

drive a shorter-tenure like a of growth customers where quarter that and we could allowance they're in large up. the customers the of typically new add So, periods third lot

quarter will But or customers typically quarter. lower-tenured see the during fourth off those charge-off the fourth in we pay

on But be. over will So, of seasonality. that of as an to course it impact you believe see the or because swings should provision the year, as the far we it could throughout fairly the neutral be year due

Chad Prashad

Yes. And a to there I kind of highlight couple related things acquisitions. of to potential think

potentially in even up then earlier to -- acquisitions. we year fiscal this and in QX QX over And significant back go portfolios you began QX QX, If had in fairly those also in and and in see provision our we begin to those QX QX our rates loss age. some show as

if large case and on future were that having reserve the out to the over acquisition then take is dramatically on So, within a quarter, increase a there take would One spread we that we impact see in large dramatic EPS right? time. acquisition in quarter, you could that the the CECL it to of has differences be versus with the right, where

as think But, is again, that's we keep the something to for what in far potential best we think about the mind have long-term and as company. investment

Kyle Joseph

That's very helpful. questions. very the much answering Thanks for

Chad Prashad

Thank you.

Operator

[Operator I'd conference for closing back have like this additional no to at Instructions] time. We any Prashad, further you questions the to remarks. turn or Mr.

Chad Prashad

quarter guys third fourth the being call. earnings join All I call. right. of questions, earnings quarter to today to in able forward you If all appreciate there's no for look you. you spring for other We the to the Thank us speaking

Operator

participation. the Corporation for World Acceptance This teleconference. you quarterly your concludes Thank

You may now disconnect.

World Acceptance (WRLD) 30 Jan 202020 Q3 Earnings call transcript