Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- World Acceptance Corp (WRLD, Financial) experienced a 350 basis point increase in its customer base in the second quarter of 2025, showing significant growth compared to previous periods.
- The company has successfully regrown its customer base with high credit quality customers, improving yields and long-term customer profitability.
- Non-refinance volume rebounded in the second quarter, surpassing prior years except for fiscal year 2022, indicating strong growth in new customer acquisition.
- Approval rates for new customers have improved, reaching over 50% while maintaining low first payment default rates, reflecting enhanced credit quality.
- The company completed an acquisition of around $20 million in performing loans, contributing to its growth strategy and improving its ledger position.
Negative Points
- The average balance has decreased by almost 6% from September 30, 2023, which may indicate a shift in portfolio composition or customer borrowing behavior.
- Despite improvements, delinquency and charge-off rates, particularly in the large loan portfolio, remain areas for potential improvement.
- Management is no longer accruing for the second tier of the performance plan, indicating challenges in meeting certain performance targets.
- The company experienced high first payment default rates in previous years, which led to reduced approval rates and adjustments in underwriting practices.
- There is a strategic shift away from large loans as a primary growth channel, focusing instead on small loans, which may impact future growth dynamics.
Q & A Highlights
Q: Are you still vesting for $16.35 EPS for fiscal 2025, and does this include the $18.5 million reversal?
A: Yes, we are using the GAAP number, which includes the $18.5 million reversal, so it would be the $399.
Q: Is the company moving away from its historical focus on small loans and refinancing towards larger loans?
A: Historically, we increased our large loan portfolio primarily for customer retention and new customer growth. However, our primary focus remains on small loans, with large loans being secondary and mainly used for customer retention.
Q: When do you typically renew your revolving credit facility, and how much is available under it?
A: We have about two years left on the current facility, and we might look to extend it in the spring of next year. Currently, we have approximately $300 million available on the revolver.
Q: Do you usually refinance the revolving credit facility before it becomes current within a year?
A: Yes, we typically refinance before it becomes current, but we still have some time before reaching that point.
Q: Can you provide an overview of the company's strategy regarding loan portfolio composition?
A: Our strategy focuses primarily on small loans, with large loans serving as a retention tool rather than a primary growth channel. We aim to maintain a balanced portfolio that supports customer retention and growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
