Earnings call transcript Q4 2023

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Operator

Good morning, and welcome to World Acceptance Corporation's Fourth Quarter 2023 Earnings Conference Call. This call is being recorded. And at this time, all participants have been placed on listen-only mode.

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

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

Chad Prashad

joining and fiscal you for quarter our morning Good fourth XXXX year-end earnings call. thank and

early highlight. there made we like and business up pleased I'd the few several very believe with to have that XXXX Before results. areas impact open changes that a are on our we questions, to in would fiscal significant We a we've been

key economic earnings uncertainty during drivers were of changes. discussed normalization inflationary prior and portfolio period we growing ago delinquency calls, At was concerns strategic the increasing. recessionary extraordinary tightened XX the as a we after As about about for pressure underwriting months concerns growth time,

highest to customers. we Rather dramatically than uncertainty, the lend reduced risk our exposure into our economic

third by it credit in work fourth between new and to we the significantly increased second, improve quarters during XX% first volume by While our this of as X% fiscal loan year year-over-year, quarter XX% and quality. declined customer

before we second still XX% new originations fourth When XX% fiscal slowly and volume to low quarter. in extraordinary we're in customer time, through fourth ratio decreased XXX% pre-pandemic a third periods, the to to excluding XX% quarter in the book-to-look that recent growth during quarters compare in XXXX. During of the our quarter of XX% the comparable loan improving most credit around tightening this to

charge-offs Today, in continues significant and our we the to book-to-look stage upcoming delinquency has the expect late-stage as next Early quarter. to show from the in ratio XX% quarter, delinquency fourth XX% fiscal even the improvement fiscal which and fewer decreased to into third year. significantly in delinquency decreased quarter increased throughout result

rates have More booking specifically have approval first our increased. loan our even year, pay the default rates remained throughout in low as

new had first originations pay quarter year-over-year. rate customer XX% default First lower a

default rates XX% fell quarter year-over-year. XX% Second around quarter rates first year-over-year. are pay the and third pay first default fourth And lower

and credit expect into We continue default first-pay to low XXXX in rates new customer XXXX. the we year experienced quality fiscal

than the To than has the underscore COVID pay line to They're we experienced or how are that on low pre-pandemic in default recent rates of first quarters comparison. even the pay that lower or by with are strong are most recent the performance rates positively been, lower three comparable stimulus. impacted first vintages default credit

gross sides as both losses well of profit yields. equation, as the on focused we're decreasing increasing Finally,

vintages. In improve gross mentioned addition credit on to to yields the that steadily we continue we same positive earlier, performance the

default yields higher rates. around again had of yields year-over-year. gross XX% New higher were first originations had fourth the reduction same gross customer quarter in X% third both the the this time second year-over-year, new vintages year that customer in at quarter as And and a pay

and for have adjustments focus stabilization quality as overall customers former in on credit with customer returning volume, well. we made a similar increasing and As loan normalization see portfolio and the yield been refinanced

especially installment an when several industry. XXXX, reports are we the credit outcomes during increasing consider personal across and great calendar these of including delinquency loan industries of the team rates default accomplishment All

operating and fiscal as yields assuming stable remains conditions. economic plan $XX.XX anticipate still the share and much While quality, into vesting quality uncertainty of credit accrue We $XX.XX, end to the tier incentive and of unemployment with long-term first exists the and per low. $XX.XX of due tiers to this continues improved for the year, credit as early remains this vesting year performance management

a in of ensure of negative marketing fiscal could would do market position started that weather grow well a -- of it stated the show pressures. this opportunities managing that the goal year we economic And as We of with it. way in the are to quarter's to as results portfolio stress that advantage this take

fiscal hard the as of members portfolio proud a year customer incredibly analytics, very We're are success and of trainers as from operation work team and beginning support, resources our corporate position and their from a challenging IT, human and branch supporting environment navigating I'm XXXX capital teams. leaders department, and strength. our marketing successfully well

time, any I Johnny up our Financial Chief to questions. and to this Strategy and At open like Officer Calmes, would

Operator

the Vincent Please [Operator with ahead your go And with will our questions. Caintic begin Instructions] question question-and-answer Stephens. now will We first session. come from

Vincent Caintic

Good Thanks. my question. morning. for taking Thanks

sort underwriting. you shrinking portfolio The land? tightening conditions? is expect of -- the Thank underwriting on first where Any terms your more cost just current is you. And of your in kind sense what's assumed expect? that one comments now the macro portfolio the sort for in of tightening there are to you on it And and where of,

Chad Prashad

Great Good Hi. question. morning.

forward. will So this the experience forward, that from experienced we've I think I point think, maximum going tightening we

underwriting, especially, already we've of our quarter begun year. into this fourth and past quarter So the third loosening

up the well. quarter bit as we've a little new current our of customers into first on also the begun year Even loosening

We to somewhat prior what So we portfolio range don't anticipate to shrink X% compared have to the is we this likely would year. the to tamed growth years in do X% expect. expect

general. on now in is profitability over focus Our growth quality and higher credit portfolio

Johnny Calmes

Yes.

frame tighter than year, relative we've fall X.X August, October, was underwriting so loosened but clarify November that still to of X ago. years sort Just it's last it two years to time September,

So we're still just macro the cautious given environment.

Vincent Caintic

when the yield that great go about point? to how continue? expect And of which to that see sort you you or it do Thank is underwriting maybe and expect to you into so a about to Perfect. that this you're to -- it's price do able spoke Where is to talking loans or at price Okay. -- you. able yields be starting maybe Thank that these is increasing. you. the bit you're loosen -- where And in put

Chad Prashad

Yes.

loosening more pricing. of new terms for tickets So the of up when originations. loosening talk I slightly opening it's really about not It's in

pretty mentioned increased past couple As of yields dramatically in have the quarters. the I

We especially, to portfolio. new customers for expect coming stay yields continue to those the very into high, our

net expect next yields well. year grow yields overall growing is quality those In portfolio's terms to both of and credit the our gross as yields. And net on maintain yields we into focus as gross we

Johnny Calmes

to And interest we right? loans. those year. a past little that that that accrued don't Obviously, add XX I to we contractually today's some months are yields of loans on those point on can more the to due. accrue also have due, So than loans last reverse roll three that there's interest days been bit And when to past accounting impacts contractually

obviously, due due contractually yields a and contractual yields. and with year. now year And a headwind now has to of be higher that rolling that to to number large loans this the loans should past XX-day tailwind last reversed obviously, past So, today's the

creep would yields the we little the portfolio on year. see So, bit to expect overall up during a

Vincent Caintic

last Okay. the Great. me. That's for super one helpful. And

past your funding conversations could with maybe of you just been about that And month. has talk industry them The partners people. over been lines your the talk about tightening if difficulty the to there's providing Just broadly. banks and they're some in

kind your any of sense you funding conversations Thank with maybe update you us any could you your to if and of update needs. if have you. us on So kind need if lenders

Johnny Calmes

on as paid over we've down quarter credit facility fourth of substantial well. we've bonds and amount some obviously, Yes, a during debt months, the six last actually repurchased the Sure. our

place group, far that levels moment. indications be but really There from debt just we'd at as case, getting we the shape to we're good if any tightening have of the outstanding this were as in good the in So, pretty of credit hasn't be at point. been a the funding low

Vincent Caintic

Thanks so much. helpful. Very Great. Okay.

Operator

Our will Instructions] Rowan John Please question. your from with question ahead with come go Janney. [Operator next here

John Rowan

morning Good guys.

Chad Prashad

Good morning.

John Rowan

could is I facility. whether renewal a want to time of in little an we this where bit not a where or change the discussions year regarding credit base follow-up stand, we can announcement we think liquidity. if address those a not this typically get Vincent's rate. of not, to spread the should there's Obviously, here. question really your I'm wondering guys But provide the a you and expect there prior from renegotiation or or whether at rate information be the the Obviously, you address in you rate the change I wondering time. any question just whether if or didn't potentially question, base maybe

Johnny Calmes

Yes.

discussions yet. those in haven't So started earnest

So that out happens -- be typically year in June. a we'll

have that's typically bank meeting. we'll when So our

we those summer. So in until start earnest this won't really discussions

John Rowan

it usually go renew right? about about don't is right You a -- renew current, -- mean, you you to year it's… it it I -- usually let prior

Johnny Calmes

That's right.

John Rowan

Okay.

any an types expect guys facility summer. you would to this in we regarding June or -- we expect of from announcement changes So should that

Johnny Calmes

Around there, yes. right. That's

John Rowan

comp expectations can I agreement? it, -- were for repeat, accruals saying get then about around because And what you your Okay. didn't quite you your the just the

Chad Prashad

Yes.

Sorry. Yes.

They plan. for at three And share early So for the tiers for of $XX.XX as vest year. year last second the fiscal our first continue the anticipate vesting incentive for $XX.XX and and to long-term accrue the those as the we vesting this end we year. tier of year first $XX.XX per have within we

unemployment that that remains assumes and quality performance and low. remains credit Again, stable

put like early we've off portfolio coming the this up the So hit a of delinquency G&A targets, and have fiscal as controlled those year. place well where the to targets at as revenue we as yields feel we enough enough achieve those end to as can

John Rowan

Okay. Thank you.

Johnny Calmes

fiscal add been. our end. is to to with on customer year obviously so the this back lower that the and it into we're five-month, end both substantially delinquency just than lower yes, XX-year And front zero substantially And coming has

certainly our – So a any end substantive at a just we'd charge-offs macro taken the risky is it's event XX.X% compared but right? of substantially customer, delinquency going So we've where out the a was it's portfolio. to amount that's the March, risk it And given in term. year barring of right? expect of X.X% forward near at obviously sort of So most ago, lower

Chad Prashad

more a Yes. And clarity I is to saying. Johnny little what add

lower the XX-year So our customers riskier as not last the lower-tenured those to year. well. less today also is – that much lower in are it's actually customer just base relative It's portfolio

much a matter a on its that more in more investment both portfolio new expected to loss the also investment targeted which a much quality bucket as this does result It's much shrinking our in new being So own. rightsize of we're credit within being isn't lower rates of order with and in customers combination well. in But higher lower seeing customers. selective

John Rowan

– many how then how much And you bonds Okay. buy? did

Johnny Calmes

We And repurchased at face and around $X in in value QX then... a XX% discount. million

John Rowan

par XX% correct? discount to

Johnny Calmes

Yes. another million And April. in Correct. $X

John Rowan

a a – book quarter in for... was you gain there Did booked gain this

Johnny Calmes

Yes.

up So gain will that – interest show in the expense.

John Rowan

That's the quarter? expense is included interest number. the that much How gain in interest in expense for

Johnny Calmes

a than – little around was It million. $X less

John Rowan

regarding million. technical $X agencies to of XX% you Is its a rating par discussion did roughly default? buying with their bonds there to at prior It's have a the – discount assessment

Johnny Calmes

default. there shares bond the prevent Well, a buying wouldn't us nothing back from technical agreement in that a at There's discount. be

our buying called concept pretty healthy We're right? these anonymously, selling we're in we're a a any have bondholders obviously but and So bonds spot way into a pressuring in balance in market in right? So the selective bonds, their – they not sheet. of open terms default

distressed a it – we right? not pressuring into comfortable doesn't we're fall that distressed bondholders bucket. we're So feel selling, into not bonds So

John Rowan

Okay. All right. Thank you.

Operator

to this conclude Prashad over turn session. And question-and-answer will back conference Instructions] to remarks. any for our closing Mr. like I'd [Operator the

Chad Prashad

year-end Thank our today. you the time earnings Corporation. us Thank for concludes taking for This Acceptance you. call to all join XXXX World

Operator

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

disconnect now may lines. You your

World Acceptance (WRLD) 4 May 232023 Q4 Earnings call transcript