WRLD - Earnings call transcript Q2 2022 | World Acceptance Corporation

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Operator

Good morning, and welcome to the World Acceptance Fiscal 2022 Second Quarter Earnings Call. All participants will be in listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. is event this note, being recorded. Please now Chad Prashad, would like Officer. to to over conference the President turn I and Executive Chief Please go ahead.

Chad Prashad

quarter Good our you thank XXXX second morning, earnings for call. and fiscal joining

I'd up open are areas questions, Before like we highlight. to to a there few that

growth portfolio all, to grew or year-over-year. originations $XXX of most recent we experienced report million First this that quarter. I'm record pleased in The overall XX.X%

growth In moving quarter we're by was compared the to To new the number and to and most last $XXX more Refinance pre-pandemic we to largest than we loan single all with on the returning compared even tremendous growth or on types Further, when funding broad company's additional levels, pre-pandemic for bond of providing credit. volume capital. record comparison. the when issuance, it working pre-pandemic XX% as the years exceeded quarter in same the is particular, million diversifies increases completed to year growth, to experienced ago, record. both strength saw this fact, recent increasing fund this across applications customer a slightly volumes company in types stability our customer levels returned capital channel which volumes X In customer and help have provides loan first structure XXXA proud forward. origination of This customer well.

relative within In lower further, portfolio Delinquency interest continue on remains grow. addition, especially as basis our expectations. still we continues expect larger and loan, to a our diversifying structure to capital low

expectations. delinquency expect naturally grow net loan portfolio which continue real provision for and to to -- quarters. our highest historical compared loss change specific provisioning based positively XX.X% CECL depresses and of our the year, time year-over-year. the provisioning provisioning based corresponding model. as the base credit losses or future on The respect customer we should customer loan note, adapts quarter cohort the in revenue portfolio provision the as XXX% impact by temporarily With of and Of new earlier credit our has it customer CECL our we quarter's in should and expected losses, to This share impact and our to With income is on second our income growth grows, and increased provision. in last

several to attractive We expect quality the remain credit factors, overall option near most relatively cohort environment, to underwriting economic remain our in on the term for best products, consistent loan new to the our customers. changes based including and

to continue long-term incentive We expect year XXXX. to the hit EPS fiscal of our before targets end

ago a the access On -- front, customer excuse me. year sorry,

earnings. from from XX% the a up portfolio nearly a of over our XXXX Today, years increased XX% just increase result APR would open some portfolio I of Financial X/X of This and Chief Officer, this our of XX% to today, to like and XX% time, of ago. these dramatic ago. APR. is XX% quarter second below Johnny and As portfolio years our X our At is changes, below it about Calmes, questions Strategy just fiscal X is

Operator

Instructions]. [Operator

The from question Stephens. Vincent with first comes Caintic

Vincent Caintic

originations? book the it forward. big that think customers. of you new reserves. book know It a the jump an originations. split the customers How us quite you or because credit with of But about how question of effect might new a Any to credit change. between that the existing I kind a versus to credit additions versus you out that much big percent in a the about on provisioning to how Wondering talked guess provisions understand kind as the I been the customers? back was help have new can effect was existing of of help -- the provide the could if going

Chad Prashad

Good Yes. And you want anything you Johnny, in. if to start. else I'll add, have is this Yes. Vincent, Sure. Chad. morning, please jump

generalities, So is, rate. take be more the newer the is, expect tenure -- losses with we just we for account, CECL higher than is us. repeat losses with that newer customer's customers we higher those customers way for customer day overall the the risk in with X typically, and under credit into Typically future that loss the expected time The us. speaking, for to account or

was most XXX% this, customers in loan be former customers quarter, adjusted past base, who have accordingly we tremendous like a customers paid for with our in that's growth, I customer up of -- typically where provision year-over-year, These this going being have growth new losses, that of and XX.X% higher it XX% back, amount within the periods expected in and off will had year-over-year. especially past quarter. to the customers that so come Even are and So within are up, think new being these those.

expected stay customers or those a provision likely if they down us would lower. be to level, refinance with quarters, that As come open would the therefore, very and at future it's losses their customer into were even loan, new especially individual

growth So large experience typically, -- rapid of is, what on the happens should the new a we'll former very to we provision. and in customer in especially growth, periods side, expect

actual either losses. go towards we that release perform, customers it those will As or

quarters, For very how released the to typically a we very books grow nature more January, seasonality. amount in in the variation just is in is provision seasonal. which just We that business CECL, third provisions grown to expect quarter, our Typically, it's on fourth of lowered. losses the remain see our the future fair in and fair amount December. then we quarter, customers the to Under March, November, the just loans. typically paydowns short-term those is due and October, should who fiscal typically, are likely have due expected And a February, of

day as grow those we quarter, see expect X. into will to expect we third So and/or past second pay to it's as then grow, releases. perform fourth quarter, the should the provision in this And again, see customers should off, larger because, in especially and we quarter accordingly,

swing makes little a a more -- they each direction. things just in it So little

John Calmes

thing add The we tenure appreciate right? to performing when our the loss levels, relative steep by that But buckets, are I is, how our cohorts, very One expected well right? curve. at I'll some still don't historical look base customer right? rates is, people think loss curve expected So

really But we're to XX-month XX% glad thing, new return, bucket customers on to almost the versus when from So X-month right? that is to XX% provisioning to to a positive tenure you to customers, right? the see it X- higher bucket, is move pretty X- does the X- higher XX-month So bucket X-month as that loss bucket, expected rate in X- on the of a add we periods. impact these the those significant which new have or

Vincent Caintic

Okay. maybe that That's and on guess building just commentary. helpful. I --

so -- maybe you're this growth seeing to guess I is So what continues new the in far accelerate quarter customers.

percent drop? So that all else likely about after And the here. after provisions originations Am higher of a right? that that, quarter then the equal, I the as the go ratio would thinking season, will holiday

John Calmes

Right.

in see within provision, had drop, So drop, you the smaller So QX right? volatility in just the volatility we've ratio portfolio a that, the both magnifies as in like sort see always of portfolio QX can see but -- large -- the you seasonal also but provisions you'll the the even of it's lot QX, provision CECL, right? and portfolio So With and provisions ratio and grows it then drops. you'll as decreases. see

Chad Prashad

a our in So our types, investment. customer through existing like customers thing new situation the heavily growing Johnny's just customers. very as in That's our I'd But this customers well, former not for They thinking rest So customer new we're right. repeat our customers where returning portfolio growth as our customers we right? feed it's seeing you're of think good the a growth positive We out our dependent of is occurring And and point throughout are of and Vincent, relation a portfolio overall or right? business, to one point, those base. the health provision. the on all to substantial the in new thing to different that are we're very just

this from of portfolio customer making see grow the X we those in as good a of the -- all health as relative perspective that to sure continue in overall so types is is our And to investment, other. each

Vincent Caintic

to Okay. mean, just just That's put point helpful. fine on maybe it. a -- Maybe I

over So the quarters? the if past losses fairly portfolio you changed any of expected is And consistent? can help there's give like the them, couple new for that a that has portfolio? been has Or existing what like versus

John Calmes

with us. the the buckets, and consistent So It's buckets, are that then tenure within X- customers tenure to into in been stay going new the longer they our obviously, longer right? to bucket X-month fall migrate fairly

in So buckets cases performing -- even yes, and a so of the consistently than levels. tenure historical very lot are with better

this So a lot information of release. in earnings is the

than Obviously, from the are pretty the more granular loss have But So X-year, expected our different less as more expected from drops -- X-year. in buckets, rate get dramatically. is is of right? information the model But an of as can those release. than they the loss tenure rates you We idea earnings steep, kind the that. much curve the again, the than migrate how early other very migrate customers CECL

Vincent Caintic

Okay.

yields the And going about me, queue. Sorry. into think hop you this? with then for I'll portfolio that forward? what expect the and we compressing. interplay the yields, for I that does also should have been How kind and the Last think so when one But so -- of yields

John Calmes

Yes.

we've longer-tenured in into that we're back yields yes, those longer-tenured risk is yield of loans, And loans So customers. large book, expected. come moved the lower have where lot that's customers, a the So right? as the is growing on larger lower as that

an as with investment, So that as happy well. far we're as

Operator

The of Janney. from Rowan John comes next question

John Rowan

if guess much in wonder we them I'm normal these rely shift It's that your back credit getting time speaking, -- in to what since I not a I environment. from are. don't you'd long credit sure, been we're a been given normal the historically credit commentary as to a environment. hear venture can company. normalized the lot you've a of And if on the we calls losses

So is what I'm rates the model in just picture actual of of loss curious are? top-down kind World the what the for

John Calmes

expected they time, don't growth really add them and go But move expect back expected the it's generally and to portfolio, period between the from lot But loss in are as were if as customers, was So rates going a of new right? At So speaking, as large back and expect and and rate, is not again, high was it we the we somewhere period are to where more We kind 'XX we Again, as very right? dramatic as the for give it where to adding difference former as a shift period of We're more been loss to between an are right? rates recently, loss dramatic that now, upward where that back that's new they customers, then, right? would delinquencies kind we but Sure. right? bars as also was. 'XX not as right, helpful. same be fiscal we're a have and bars they the fiscal in to isn't where we were to this in that our -- 'XX, mix expect don't it range, 'XX. current

Chad Prashad

during fiscal more 'XX into related operations. underwriting and well new is our advantage -- between around change fiscal ingrained the And to is especially color other second that. underwriting. customers. that And little changes is we with last John, tighten today major the our One process then board, across One really to X 'XX took year is there's pandemic and a

expect loss even increase So record from applications, order for the up So right? long larger on not new retention for loans end. environment we another But with We're to we term, making number of a yet we're said, that -- and new products today, back where being the but rates we we decisions customer as believe levels quality to this also macroeconomic certainly had we whole. in is on overall all exceeding is to be competitive So selective, smarter past move today, remain right? customer we're to the pre-pandemic major the change reach would credit pre-pandemic, due quarter, end lower a have attractive more are rates to had we improving. front what

John Rowan

under not CECL? you're guess what that basically way. I So just question tell in to you're losses me you a lifetime expected I'm different won't same the writing the -- So asking

Chad Prashad

get That's of Yes. that it. right. won't We to specific

John Rowan

CECL expense allowance that about with Okay. there's loan a number, ratio the very quarter-over-quarter. portfolio was up creates And I -- And the lot World per quarter. like happens a a appreciate provision with of volatility has. little up that in The allowance then lot seasonal obviously the bit especially talk was excess what of

I'm is me. flat Or it you would delinquencies we What like little because added expect a for assume we So can Should up. the that's are ratio quarter? assuming increase? next looks versus for bit look another more. we it this quarter? that And that's

John Calmes

Yes. Yes.

seasonally, typically CECL, we move delinquency typically we prior see increase an we I think to third -- as into even the quarter. in

so we'll typically and and think allowance QX, QX. see impact was we -- move that loss fair that will And bit allowance CECL. it bars back in little higher true And ratio also in again, the prior QX. is down. it reverses a in ratio add to -- new QX, I But historically, And hopefully, the could the expect add as in more that be again, to that's -- that

Operator

Excuse the the to I some that apologize. is read of There top me. failed I information call. at

variation like before I the of inherently believe, is to that read should historical Mr. forward-looking contain I'd statements the Such Exchange that the over words and forward-looking plan, Statements Act that fact those subject identified the So meaning turn any and may represent that matters forward-looking or are similar certain estimate, of comments are the concerning those by well of as foregoing risks and Corporation's of conference uncertainties. to anticipate, made Securities expressions call the XXE about of events. will this call and as other are beliefs expect, expectations future And intend, may, within during now Section XXXX statements. the Prashad. back statements to than

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

Chad Prashad

Thank you.

putting and who've want the first. just I thank tremendous to branch years those them], really job needs [who’ve and safety a X.X our remarks. closing their joined few our navigating teams last customers a Just done their and in and

really We also prouder really earnings us continue the team our fiscal second you. family concludes for year joining XXXX to And quarter win top be This I created. workplaces them. awards you across incredible our the couldn't has Thank Thank today. country, reflects which that call. work of

Operator

presentation. Thank The conference concluded. you. attending you now today's Thank has for

now may your You disconnect line.

World Acceptance (WRLD) 26 Oct 212022 Q2 Earnings call transcript