WRLD - Earnings call transcript Q3 2022 | World Acceptance Corporation

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Operator

0:05 Good morning, and welcome to the World Acceptance Corporation’s Sponsored Third Quarter Press Release Conference Call. This call is being recorded. At this time, all participants have been placed on a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. the requested begin, the I we announcement. following Before Corporation that has make X:XX during call of this forward-looking made concerning represent comments The conference and expectations the Act XXXX beliefs of the Exchange Corporation's statements events. may meaning Section Securities XXE the future of that within certain contain matters are Such inherently to forward-looking about statements risks subject are that and uncertainties. anticipate, or may, of as foregoing expressions those variation the words Statements will the well identified believe, expect, should as other estimate, historical than and plan, fact are any those of forward-looking and intend, by similar statements. Factors with discussing regarding release and such statements results in the from to the fiscal XX:XX forward-looking Additional year in cause time-to-time. differ today's expressed could and expectations factors of forward-looking recent XX-K actual and statements Risk XXXX, information performance or filed XX, from the in forward-looking subsequent to for statements paragraph section any are Form press implied reports furnished that ended included the or most or Corporation's SEC the earnings the March in undertake obligation The not statements any does to forward-looking update it Corporation makes. any Executive host, is Prashad, And to this over turn President your go please X:XX the at and floor to pleasure ahead. it time, Chief Officer, Chad

Chad Prashad

you quarter joining third Good morning. X:XX And thank earnings XXXX for call. our fiscal

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

quarter quarter, surpassing portfolio see broad which report experienced XX% compared increases largest prior pleased million quarter’s in overall and When largest in quarter to time XXXX. fiscal year, customer the customer continue on expectations. across growth grows a revenue $XXX returning for experienced during consecutive During new this million to remains was levels. all pre this or CECL model, $XXX portfolio provisioning X:XX to loan rapid provision as volume. and as temporarily tax in with low Further, types last the reduce and third record real and within second runoff loan and we XX.X% CECL last based million, is in quarter to I'm tremendous year grow seasonal our of year-over-year. important and and expect our It's that delinquency growth, we note all, expansion of First and record, the $XXX year, compared $XXX growth the and million, in during to with single future growth the provision This grew pandemic portfolio and or portfolio this our that on time even real X:XX we net our last periods change of quarters. income our season. positively earlier depresses impact historical Delinquency our to growth, should provisioning provisioning relative to basis income the the growth

term, remain option relatively of on credit over including performance to year for origination several the increase expect loans in an the the customers. to the We our economic retain overall factors, best cohort and based underwriting near of to consistent – increases environment, most our larger attractive last changes

our them of safety customers and tremendous needs of have World much have XXXX, this incentive term below portfolio retention at attractive their calendar of EPS before our pandemic. we for offer done the the last team be and in APR XX% below a fiscal these our is XXXX. those over loan we closed As who year to year customers. target XX% out XX:XX today, two to increase portfolio support long job X:XX our of first. to APR. of their terms expect our end continue changes, thankful our our XX% branch and the as ability is COVID navigating best years first, Demonstrating We Finally, during hit Putting of result XX% to

place four country, this Oklahoma, top including year. win Carolina most Mexico Tennessee, awards to South and continue recently across New (ph) the We

In being be our is reflecting prouder the XX:XX XXXX, top earnings. At this of only Chief Johnny it our them. Strategy Carolina incredible We truly could our questions XXXX winter work time, creating, in USA workplace about team Financial third South to (ph) Calmes, Officer. I open would fiscal is addition up and to and to like family that quarter

Operator

you. Thank XX:XX

question-and-answer Janney. question first And will John Please We from go session. the now our ahead. Rowan be from begin Instructions] will [Operator

John Rowan

X:XX Good morning, guys.

Chad Prashad

Good morning. X:XX

Johnny Calmes

Good morning. X:XX

John Rowan

you just made. to that XX:XX suppose two Chad, I just just want comments

you provisioning I'm comments like those that those abating, presume So, if sense to two benefit lot we and P&L? in forward, from trends. it just start benefit for doesn't have recently how going about as to It we're origination time origination strong But the benefit provisioning seem is bit, and ease alluded about then in a to growth or correctly going little line presumably down provisioning see lined to up are of a back all right? the net forward, that talked you also growth from we're being right? this when when into get the figure was growth of similar to trying a that who income trying out, the So, you up, volume just talked is somewhere from growth I'm upfront going about abate to income, a what the this there going to net I'd come

Chad Prashad

question. it's great Yeah, X:XX a

think I number things play that a there's So, of here.

foremost, well. come last year, year. demand back began was compared was this XX In we into fiscal XXXX fall in of XX:XX depressed to we've abated. Coming the pandemic, pretty greatly during over to of spring as XXXX, stimulus and round and winter, for to First rapidly terms demand last back rapidly the snap year seen tremendous in pretty growth XX then the calendar once during months really demand, see the and we

so the So one I going rapid portfolio in our demand we fiscal we think fair of and other that's fourth tax to runoff portfolio is during during prior back which quarter, thing in one depressed currently about in we're is, quarter the that think about year the mapping think, season. due amount is, the the experienced growth forward the to thing to from from typically have, now,

put you if during unprecedented quarter. we things portfolio, quarters, last the those this kind together, two So an ramp-up past in the especially experienced, of two

statements. row just and company. substantial, provision. a doesn't growth, the at in increased One build demand don’t will begins is, And growth which we also we terms necessarily I we’ve but with back portfolio begin two second and on continue continues quarters, the same to growth a – So, be. what we getting of into rate matter about It's provision think two when when reconciling last really especially then of then for we've accelerate not that's payoff question unprecedented But along forecasting our are the think in substantial in seen as this the we what of pretty would the be quarter, to when provision acceleration to kind – set ready historical When these does our we to to that what typically be in that we're had fourth runoff. is pull accordingly. mentioned, that, going to we've about quarter have enter that our of growth and forward to thing slow, it we'll

John Rowan

record of lot when anniversarying to that obviously maybe that targeted difficult. quarters a to the up? kind historic XX:XX of growth track be see this two Would Those just last ease on keeping start range once growth, fair heavy optics of mechanically that of you start are of is say kind the more the we substantial provisioning

Chad Prashad

And still decelerate, right? Certainly, that see whenever to begin we'll be begins growth X:XX yet decelerate, substantially that.

when the so to also, again begin view So, think to there that I and that, that's where quarters. it there's we the in runoff where last typically annualized substantial two you’d lap have portfolio, begin fourth pretty the we rapidly. of see quarter is But

John Rowan

I loans rate, expect question. see dollars. up, you. at between a and all then credit, X:XX this obviously, to was charge-offs small charge-offs COVID, and On the higher guess numbers were Charge-offs to loans charge-offs large composition just a were large asymmetric but not versus or can back our mature simple the not on relative charge-offs real prior portfolio comfortably Okay. where And and on pre-COVID to small there Thank really you we turning different portfolio composition pre-COVID, then that look pool, be with loans? lower just, to

Chad Prashad

XX:XX Yeah.

me answer let So first. first, that the last question

perspective, past have see than your smaller from we CECL provision and loan, So each made, compared we from typically, charge-off at rate loans. going a customer your same look rate it's in you're way of cohort credit quality/tenure loans that the to and yeah, larger how provisioning individual that to lower of the

quality credit highly charge-off of More And going and XX:XX lower have you right? credit your provisioning And typically smaller customers lower loan very higher you're to customers, are see the two with those thing same terms expected we experienced substantially your quality is in than rate terms in and importantly, new even of things like have this, correlated, what record are looks whole a balance customers, third again, of within and the again, we roughly up portfolio growth of portfolio. terms customers the But provisioned each in year-over-year, quarter, new grew new today, the customer accordingly. those customers.

look them, forward is like right? the going what So you to provision. with to the to the continue depends in mix the attractive it is, we'll to extent market, to and is A what lot and like, the well. of that continue continue look retain demand than we and products credit see and we customers. rates to this does opportunity also what So the customers on XX:XX do that corresponding extent as our expand to opportunity can We'll with more best good continue

what in like the product So terms it's anything It's in opportunistic mix, else. say tough more than of to this future looks

John Rowan

the XX:XX just rate tax low rate and was question, so is in the going tax correct forward? Okay. the why what last And quarter

Johnny Calmes

John. I can Yes. answer XX:XX that,

we a the price the as under – that lot would some still quarter that exercises, saw of exercise, share that. That during a driving share that tax much We normal higher and right So was. what option net of than was we had stock the is lot benefits value circumstances. windfall fair investing

the thinking so had We is, XX% that elevated, large one XX%, reality if three ago. are stays still grant price we to share years the

So You'd just benefits be. – as well, it's very to those, what of to see that's tax some you not expect still that those the in right? was windfall predictable going not future

John Rowan

XX:XX you much. Okay. very Thank

Operator

Caintic Please from from will question Stephens. next Vincent go The ahead. be XX:XX

Vincent Caintic

could you loan your, Thanks that? have so reiterated XX:XX the Hey of forth just taking to us you. and the wondering comments question. you I target and you In the I XXXX growth if understand to credit and help you how your view, if was EPS my maybe Thank for then performance meet terms the expectation fiscal get there morning. us, Good help the walk medium in just guess term you through thanks.

Chad Prashad

if you please, please John, and well. start as want to I'll join Sure, XX:XX in do

Johnny Calmes

Sure. Yes. XX:XX

Chad Prashad

XX:XX Yes.

portfolio be to terms to we in we expect with go of determined. So, growth, continue is overall this certainly to continue still grow. rate Whether

We've grow add, past for retention in As base of terms number that a that John a branches, things of our in XX:XX of to the servicing the before enable service that customer Rowan side. cost a way of couple helps us introduced our a without versus lot increase of in a and customers accounts, goal. how to marginal structured so I and the customer are we servicing and terms terms more portfolio significant and options, move of that today channels a in to done model it's and of the and towards and that the having in certainly towards there. opportunistic terms cost can grow portfolio to lot of and the our continue and dramatically amount on they also access of model. customer terms of the base their fixed then us cost We've can also mentioned Meaning cost self-service grow years customer reduce substantially number of things in

close the customers, quality credit what especially perspective, seeing the while tabs reduce we've our kind in are done monitor to over cost, provision. new on continue portfolio. is – that the grow number the corresponding a at and our can losses from side. of Continuing last to So keep reduce in seek in here expected future, And things that, to customer do highest the then the a math to we our cost so of credit the servicing year level proactively we that, we're high

on three And with the so by those of firmly or time, we've repurchase years. over last of XXXX. that made that plan amount We believe especially can the over repurchases hit the two stock, end targets

Vincent Caintic

Great. Okay. XX:XX

Chad Prashad

right. think I covers XX:XX I it,

Johnny Calmes

Yep. XX:XX

Vincent Caintic

the have, that you but those medium customers existing especially maybe so the thinking – just, question I And guess credit guess when and lower the eventually have of indexed that usually of go quarter, I I we you could like new wondering you kind lowest seasonality of, you're and charge-offs just you. John with to just, guess hard, of X.X provisions new and continue become you that growing Thank of rate times follow-up a And customer the seems at the if index. that XX:XX it’s from out great. get to Okay, it's credit a I is understand of, Rowan’s in there look the next expect view returning kind the to medium-term, customers but quickly. customers, year, think lot we XX% of I delinquencies it's I term your charge-off rate provisions climbing, should is

rate are So medium-term, drop I you once the matured to (ph) business? guess significantly MCL are with your expecting you

Johnny Calmes

XX:XX ahead. Go

Chad Prashad

John. ahead, Go XX:XX

Johnny Calmes

XX:XX levels. is you to right, true, charge-offs X.X% lower But set the see earnings and are Long grow tenured but yes, already since in just down, there of be grown will portfolio right? right? and like over – It has those historical mature But, that audits year, that, right? than charge-off last the months grew XX.X% that still short-medium-term, backlog from delinquencies that to ease So, we to the having release probably that in as to the think continue and So substantially customers impact I and on five that, rate term customer, delinquency we follow right? long-term longer right having needs short-term. normalization, the that's customers. Yes, zero to normalize

Vincent Caintic

in queue. XX:XX And get Okay. one the Great. last Thank me I'll you. for and

the, in what that kind Just forward? drove funding I costs about talk what higher you points. more we in the and the wondering trending if Thank script, I so basis you should you. climb that was noticed mentioned could of going levels detail, expect XXX

Chad Prashad

sure. XX:XX Yeah,

recall, bonds believe the I it quarter very you in right quarter as at the in So we second XX, second issued end of was. some September

we've actually debt rate at So X% quarter. of swapped the for variable debt fixed end the X.X% rate right

driving and the expense just rate buybacks is So driving growth well up the combination the that droves of the up, as up. interest the during this as outstandings the, the what quarter,

rate We that haven't seen an the increase yet. on in the web rate

X% which month on priced significantly that is to we're at still floor So the is one to Libor, the below floor.

before – of to we debt. several be the impact there'll that need rate to start hikes So on interest see the portion

Vincent Caintic

XX:XX Great. Thank you.

Operator

from XX:XX from [Operator go Instructions] And we have a Caintic follow-up Vincent again Stephens. ahead. Please

Vincent Caintic

thank Yeah, you that. Okay. XX:XX for

me. just So one last for

So purchase you been strong. has pretty are sure activity

Your debt at equity times. leverage is X.X already

wondering ability of I'm thinking level, so you. what your elevated continue about what in you're talk could if and your is? target repurchases the you to terms So Thank share

Johnny Calmes

growth the And of happens that historically a we've to we have is Yes. the ratio XX:XX that sir. Yes, leverage two always QX. all Sure, just always debt target one equity. said, of because quarter, funding highest our that December at in

as have release, to portfolio periods. XX:XX natural million $XX debt under the in But to deleveraging said build we as to and we off. the expect continue agreements some that'll quarter over runs we'd income fiscal as fourth only the in we net have continue the repurchase add future the to earnings see we So shares available

repurchase shares I continue to and learn that. think with we'll

Vincent Caintic

all That’s much. I Great. have. very Okay. Thanks XX:XX

Operator

concludes over to would question-and-answer any to our this like gentlemen, XX:XX remarks. and for the closing conference turn back Ladies session. Prashad I Chad

Chad Prashad

chatting you. concludes Thank Thank you. We forward us third And earnings next our quarter. guys look Thank joining you XX:XX today. quarter for call. to this

Operator

sir. concluded. today's Thank you attending you, XX:XX now has Thank The presentation. conference for

disconnect. now may You

World Acceptance (WRLD) 25 Jan 222022 Q3 Earnings call transcript