World Acceptance Corporation Reports Fiscal 2024 Fourth Quarter Results

World Acceptance Corporation (NASDAQ: WRLD) today reported financial results for its fourth quarter of fiscal 2024 and twelve months ended March 31, 2024.

Fourth fiscal quarter highlights

During its fourth fiscal quarter, World Acceptance Corporation continued to focus on credit quality and a conservative approach to its lending operations. Management believes that continuing to carefully invest in our best customers and closely monitoring performance has put the Company in a strong position throughout the fiscal year and should continue to well-position the Company for fiscal 2025.

Highlights from the fourth quarter include:

  • Net income of $35.1 million
  • Diluted net income per share of $6.09
  • Recency delinquency on accounts 90+ days past due improved to 3.1% at March 31, 2024, from 3.5% at March 31, 2023
  • Total revenues of $159.3 million, including a 34 basis point yield increase compared to the same quarter in the prior year

Portfolio results

Gross loans outstanding were $1.28 billion as of March 31, 2024, an 8.1% decrease from the $1.39 billion of gross loans outstanding as of March 31, 2023. Gross loans outstanding decreased 8.7% for the twelve months ended March 31, 2023. During the most recent quarter, gross loans outstanding decreased sequentially 8.8%, or $123.5 million, from $1.40 billion as of December 31, 2023, compared to a decrease of 10.6%, or $164.0 million, in the comparable quarter of the prior year.

During the most recent quarter, we did not see a significant change in borrowing from new and former customers compared to the same quarter of fiscal year 2023. Our customer base decreased by 1.5% during the twelve-month period ended March 31, 2024, compared to a decrease of 15.9% for the comparable period ended March 31, 2023. During the quarter ended March 31, 2024, the number of unique borrowers in the portfolio decreased by 6.2% compared to a decrease of 7.0% during the quarter ended March 31, 2023. We continued to improve the gross yield to expected loss ratio for all new, former, and refinance customer originations and will continue to monitor performance indicators and intend to adjust underwriting accordingly.

The following table includes the volume of gross loan origination balances, excluding tax advance loans, by customer type for the following comparative quarterly periods:

 

Q4 FY 2024

Q4 FY 2023

Q4 FY 2022

New Customers

$26,511,522

$25,669,834

$61,003,941

Former Customers

$58,583,919

$62,965,426

$79,531,181

Refinance Customers

$432,270,234

$449,571,142

$516,503,079

As of March 31, 2024, the Company had 1,048 open branches. For branches open at least twelve months, same store gross loans decreased 6.7% in the twelve-month period ended March 31, 2024, compared to a decrease of 2.3% for the twelve-month period ended March 31, 2023. For branches open throughout both periods, the customer base over the twelve-month period ended March 31, 2024, decreased 0.2% compared to a decrease of 10.1% for the twelve-month period ended March 31, 2023.

Three-month financial results

Net income for the fourth quarter of fiscal 2024 increased to $35.1 million compared to $24.6 million for the same quarter of the prior year. Net income per diluted share increased to $6.09 per share in the fourth quarter of fiscal 2024 compared to $4.20 per share for the same quarter of the prior year.

Total revenues for the fourth quarter of fiscal 2024 decreased to $159.3 million, a 1.0% decrease from $160.8 million for the same quarter of the prior year. Interest and fee income declined 4.3%, from $121.5 million in the fourth quarter of fiscal 2023 to $116.3 million in the fourth quarter of fiscal 2024. Insurance income decreased by 17.8% to $13.2 million in the fourth quarter of fiscal 2024 compared to $16.0 million in the fourth quarter of fiscal 2023. The large loan portfolio decreased from 58.1% of the overall portfolio as of March 31, 2023, to 55.8% as of March 31, 2024. Interest and insurance yields increased 34 basis points for the quarter ended March 31, 2024, relative to the quarter ended March 31, 2023. Other income increased by 27.7% to $29.8 million in the fourth quarter of fiscal 2024 compared to $23.3 million in the fourth quarter of fiscal 2023. Revenues from our tax return preparation business increased by $6.2 million or 30.5%. This was the result of a 13.6% increase in the number of tax returns prepared as well as an increase in the average preparation fee per return.

The Company accrues for expected losses with a current expected credit loss ("CECL") methodology. This accounting methodology requires us to create a provision for credit losses on the day we originate the loan. The provision for credit losses decreased $16.1 million to $29.3 million from $45.4 million when comparing the fourth quarter of fiscal 2024 to the fourth quarter of fiscal 2023. The table below itemizes the key components of the CECL allowance and provision impact during the quarter.

CECL Allowance and Provision (Dollars in millions)

 

Q4 FY 2024

 

Q4 FY 2023

 

Difference

 

Reconciliation

Beginning Allowance - December 31

 

$121.1

 

$144.5

 

$(23.4)

 

 

Change due to Growth

 

$(10.7)

 

$(15.3)

 

$4.6

 

$4.6

Change due to Expected Loss Rate on Performing Loans

 

$(3.0)

 

$7.8

 

$(10.8)

 

$(10.8)

Change due to 90 day past due

 

$(4.4)

 

$(11.5)

 

$7.1

 

$7.1

Ending Allowance - March 31

 

$103.0

 

$125.5

 

$(22.5)

 

$0.9

Net Charge-offs

 

$47.4

 

$64.4

 

$(17.0)

 

$(17.0)

Provision

 

$29.3

 

$45.4

 

$(16.1)

 

$(16.1)

Note: The change in allowance for the quarter plus net charge-offs for the quarter equals the provision for the quarter (see above reconciliation).

The provision benefited from substantially lower charge-offs during the quarter.

Net charge-offs for the quarter decreased $17.0 million, from $64.4 million in the fourth quarter of fiscal 2023 to $47.4 million in the fourth quarter of fiscal 2024. Net charge-offs as a percentage of average net loan receivables on an annualized basis decreased to 18.8% in the fourth quarter of fiscal 2024 from 23.9% in the fourth quarter of fiscal 2023.

Accounts 61 days or more past due decreased to 5.0% on a recency basis at March 31, 2024, compared to 5.5% at March 31, 2023. Our allowance for credit losses as a percent of net loans receivable was 10.8% at March 31, 2024, compared to 12.4% at March 31, 2023. We experienced significant improvement in recency delinquency on accounts at least 90 days past due, improving from 3.5% at March 31, 2023, to 3.1% at March 31, 2024.

The table below is updated to use the customer tenure-based methodology that aligns with our CECL methodology. After experiencing rapid portfolio growth during fiscal years 2019 and 2020, primarily in new customers, our gross loan balance experienced pandemic related declines in fiscal 2021 before rebounding during fiscal 2022. Over the last two years we have tightened our lending to new customers substantially. The tables below illustrate the changes in the portfolio weighting.

Gross Loan Balance By Customer Tenure at Origination

As of

Less Than 2 Years

More Than 2 Years

Total

03/31/2019

$375,272,969

$752,683,977

$1,127,956,946

03/31/2020

$417,601,494

$792,663,099

$1,210,264,593

03/31/2021

$342,202,779

$762,610,487

$1,104,813,266

03/31/2022

$482,248,578

$1,040,695,747

$1,522,944,325

03/31/2023

$348,513,335

$1,041,619,563

$1,390,132,898

03/31/2024

$270,069,839

$1,007,164,462

$1,277,234,301

Year-Over-Year Growth (Decline) in Gross Loan Balance by Customer Tenure at Origination

12 Month Period Ended

Less Than 2 Years

More Than 2 Years

Total

03/31/2019

$86,680,933

$37,042,854

$123,723,787

03/31/2020

$42,328,525

$39,979,122

$82,307,647

03/31/2021

$(75,398,715)

$(30,052,612)

$(105,451,327)

03/31/2022

$140,045,799

$278,085,260

$418,131,059

03/31/2023

$(133,735,243)

$923,816

$(132,811,427)

03/31/2024

$(78,443,496)

$(34,455,101)

$(112,898,597)

Portfolio Mix by Customer Tenure at Origination

As of

Less Than 2 Years

More Than 2 Years

03/31/2019

33.3%

66.7%

03/31/2020

34.5%

65.5%

03/31/2021

31.0%

69.0%

03/31/2022

31.7%

68.3%

03/31/2023

25.1%

74.9%

03/31/2024

21.1%

78.9%

General and administrative (“G&A”) expenses decreased $1.6 million, or 2.1%, to $71.6 million in the fourth quarter of fiscal 2024 compared to $73.2 million in the same quarter of the prior fiscal year. As a percentage of revenues, G&A expenses decreased from 45.5% during the fourth quarter of fiscal 2023 to 45.0% during the fourth quarter of fiscal 2024. G&A expenses per average open branch increased by 0.5% when comparing the fourth quarter of fiscal 2024 to the fourth quarter fiscal 2023.

Personnel expense decreased $2.2 million, or 4.7%, during the fourth quarter of fiscal 2024 as compared to the fourth quarter of fiscal 2023. Salary expense totaled $31.1 million for the quarter ended March 31, 2024, remaining relatively flat compared to the quarter ended March 31, 2023. Our headcount as of March 31, 2024, decreased 6.6% compared to March 31, 2023. Benefit expense decreased approximately $0.3 million, or 3.6%, when comparing the quarterly periods ended March 31, 2024 and 2023. Incentive expense decreased $1.3 million, or 14.1%, in the fourth quarter of fiscal 2024 compared to the fourth quarter of fiscal 2023.

Occupancy and equipment expense increased $0.2 million, or 1.5%, when comparing the quarterly periods ended March 31, 2024 and 2023.

Advertising expense decreased $0.3 million, or 21.5%, in the fourth quarter of fiscal 2024 compared to the fourth quarter of fiscal 2023 due to decreased spending on customer acquisition programs.

Interest expense for the quarter ended March 31, 2024, decreased by $0.4 million, or 3.5%, from the corresponding quarter of the previous year. Interest expense decreased due to a 17.2% decrease in average debt outstanding for the quarter offset by a 5.7% increase in the effective interest rate from 8.23% to 8.70%. The average debt outstanding decreased from $674.5 million to $558.3 million when comparing the quarters ended March 31, 2024 and 2023. The Company’s debt to equity ratio decreased to 1.2:1 at March 31, 2024, compared to 1.6:1 at March 31, 2023. As of March 31, 2024, the Company had $496.0 million of debt outstanding, net of unamortized debt issuance costs related to the unsecured senior notes payable. The Company repurchased and canceled $7.6 million of its previously issued bonds for a purchase price of $7.1 million during the quarter.

Other key return ratios for the fourth quarter of fiscal 2024 included a 7.0% return on average assets and a return on average equity of 19.1% (both on a trailing twelve-month basis).

The Company repurchased 146,436 shares of its common stock on the open market at an aggregate purchase price of approximately $19.0 million during the fourth quarter of fiscal 2024. This is in addition to repurchases of 148,765 shares during the first three quarters of fiscal 2024 at an aggregate purchase price of approximately $17.2 million. The Company repurchased 73,643 shares of its common stock on the open market at an aggregate purchase price of approximately $14.3 million during fiscal 2023. This is in addition to the repurchase of 589,533 shares in fiscal 2022 at an aggregate purchase price of approximately $111.1 million. The Company had approximately 5.6 million common shares outstanding, excluding approximately 388,500 unvested restricted shares, as of March 31, 2024.

Twelve-Month Results

Net income for the year ended March 31, 2024, increased $56.1 million to $77.3 million compared to $21.2 million for the prior year. This resulted in a net income of $13.19 per diluted share for the year ended March 31, 2024, compared to $3.60 per diluted share in the prior year. Total revenues for fiscal 2024 decreased 7.0% to $573.2 million, compared to $616.5 million for fiscal year 2023 due to a decrease in loans outstanding. Annualized net charge-offs as a percent of average net loans decreased from 23.7% during fiscal 2023 to 17.7% for fiscal 2024.

About World Acceptance Corporation (World Finance)

Founded in 1962, World Acceptance Corporation (NASDAQ: WRLD), is a people-focused finance company that provides personal installment loan solutions and personal tax preparation and filing services to over one million customers each year. Headquartered in Greenville, South Carolina, the Company operates more than 1,000 community-based World Finance branches across 16 states. The Company primarily serves a segment of the population that does not have ready access to credit; however, unlike many other lenders in this segment, we strive to work with our customers to understand their broader financial pictures, ensure they have the ability and stability to make payments, and help them achieve their financial goals. For more information, visit www.loansbyworld.com.

Fourth quarter conference call

The senior management of World Acceptance Corporation will be discussing these results in its quarterly conference call to be held at 10:00 a.m. Eastern Time today. A simulcast of the conference call will be available on the Internet at https://event.choruscall.com/mediaframe/webcast.html?webcastid=jzCjKJe2. The call will be available for replay on the Internet for approximately 30 days.

During the conference call, the Company may discuss and answer questions concerning business and financial developments and trends that have occurred after quarter-end. The Company’s responses to questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been disclosed previously.

Cautionary Note Regarding Forward-looking Information

This press release may contain various “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, that represent the Company’s current expectations or beliefs concerning future events. Statements other than those of historical fact, as well as those identified by words such as “anticipate,” “estimate,” intend,” “plan,” “expect,” “project,” “believe,” “may,” “will,” “should,” “would,” “could,” “probable” and any variation of the foregoing and similar expressions are forward-looking statements. Such forward-looking statements are inherently subject to risks and uncertainties. The Company’s actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause actual results or performance to differ from the expectations expressed or implied in such forward-looking statements include the following: recently enacted, proposed or future legislation and the manner in which it is implemented; changes in the U.S. tax code; the nature and scope of regulatory authority, particularly discretionary authority, that is or may be exercised by regulators, including, but not limited to, U.S. Consumer Financial Protection Bureau, and individual state regulators having jurisdiction over the Company; the unpredictable nature of regulatory proceedings and litigation; employee misconduct or misconduct by third parties; uncertainties associated with management turnover and the effective succession of senior management; media and public characterization of consumer installment loans; labor unrest; the impact of changes in accounting rules and regulations, or their interpretation or application, which could materially and adversely affect the Company’s reported consolidated financial statements or necessitate material delays or changes in the issuance of the Company’s audited consolidated financial statements; the Company's assessment of its internal control over financial reporting; changes in interest rates; the impact of inflation; risks relating to the acquisition or sale of assets or businesses or other strategic initiatives, including increased loan delinquencies or net charge-offs, the loss of key personnel, integration or migration issues, the failure to achieve anticipated synergies, increased costs of servicing, incomplete records, and retention of customers; risks inherent in making loans, including repayment risks and value of collateral; cybersecurity threats or incidents, including the potential or actual misappropriation of assets or sensitive information, corruption of data or operational disruption and the cost of the associated response thereto; our dependence on debt and the potential impact of limitations in the Company’s amended revolving credit facility or other impacts on the Company's ability to borrow money on favorable terms, or at all; the timing and amount of revenues that may be recognized by the Company; changes in current revenue and expense trends (including trends affecting delinquency and charge-offs); the impact of extreme weather events and natural disasters; changes in the Company’s markets and general changes in the economy (particularly in the markets served by the Company).

These and other factors are discussed in greater detail in Part I, Item 1A,“Risk Factors” in the Company’s most recent annual report on Form 10-K for the fiscal year ended March 31, 2023, as filed with the SEC and the Company’s other reports filed with, or furnished to, the SEC from time to time. World Acceptance Corporation does not undertake any obligation to update any forward-looking statements it makes. The Company is also not responsible for updating the information contained in this press release beyond the publication date, or for changes made to this document by wire services or Internet services.

WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share amounts)

 

 

Three months ended March 31,

 

Twelve months ended March 31,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

Revenues:

 

 

 

 

 

 

 

Interest and fee income

$

116,291

 

$

121,468

 

$

468,528

 

$

508,336

Insurance and other income, net

 

42,974

 

 

39,369

 

 

104,686

 

 

108,210

Total revenues

 

159,265

 

 

160,837

 

 

573,214

 

 

616,546

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

Provision for credit losses

 

29,276

 

 

45,412

 

 

156,973

 

 

259,463

General and administrative expenses:

 

 

 

 

 

 

 

Personnel

 

44,335

 

 

46,517

 

 

164,454

 

 

177,691

Occupancy and equipment

 

12,638

 

 

12,449

 

 

49,776

 

 

52,107

Advertising

 

1,220

 

 

1,554

 

 

9,932

 

 

6,096

Amortization of intangible assets

 

1,037

 

 

1,114

 

 

4,220

 

 

4,467

Other

 

12,389

 

 

11,544

 

 

40,218

 

 

39,114

Total general and administrative expenses

 

71,619

 

 

73,178

 

 

268,600

 

 

279,475

 

 

 

 

 

 

 

 

Interest expense

 

11,757

 

 

12,185

 

 

48,232

 

 

50,463

Total expenses

 

112,652

 

 

130,775

 

 

473,805

 

 

589,401

 

 

 

 

 

 

 

 

Income before income taxes

 

46,613

 

 

30,062

 

 

99,409

 

 

27,145

 

 

 

 

 

 

 

 

Income tax expense

 

11,555

 

 

5,430

 

 

22,063

 

 

5,914

 

 

 

 

 

 

 

 

Net income

$

35,058

 

$

24,632

 

$

77,346

 

$

21,231

 

 

 

 

 

 

 

 

Net income per common share, diluted

$

6.09

 

$

4.20

 

$

13.19

 

$

3.60

 

 

 

 

 

 

 

Weighted average diluted shares outstanding

 

5,754

 

 

5,865

 

 

5,862

 

 

5,899

WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)

 

 

March 31, 2024

 

March 31, 2023

 

March 31, 2022

ASSETS

 

 

 

 

 

Cash and cash equivalents

$

11,839

 

 

$

16,509

 

 

$

19,236

 

Gross loans receivable

 

1,277,149

 

 

 

1,390,016

 

 

 

1,522,789

 

Less:

 

 

 

 

 

Unearned interest, insurance and fees

 

(326,746

)

 

 

(376,675

)

 

 

(403,031

)

Allowance for credit losses

 

(102,963

)

 

 

(125,553

)

 

 

(134,243

)

Loans receivable, net

 

847,440

 

 

 

887,788

 

 

 

985,515

 

Income taxes receivable

 

3,091

 

 

 

 

 

 

 

Operating lease right-of-use assets, net

 

79,501

 

 

 

81,289

 

 

 

85,631

 

Finance lease right-of-use assets, net

 

 

 

 

 

 

 

608

 

Property and equipment, net

 

22,897

 

 

 

23,926

 

 

 

24,476

 

Deferred income taxes, net

 

30,943

 

 

 

41,722

 

 

 

39,801

 

Other assets, net

 

42,199

 

 

 

43,423

 

 

 

35,902

 

Goodwill

 

7,371

 

 

 

7,371

 

 

 

7,371

 

Intangible assets, net

 

11,070

 

 

 

15,291

 

 

 

19,756

 

Total assets

$

1,056,351

 

 

$

1,117,319

 

 

$

1,218,296

 

 

 

 

 

 

 

LIABILITIES & SHAREHOLDERS' EQUITY

 

 

 

 

 

Liabilities:

 

 

 

 

 

Senior notes payable

$

223,419

 

 

$

307,911

 

 

$

396,973

 

Senior unsecured notes payable, net

 

272,610

 

 

 

287,353

 

 

 

295,394

 

Income taxes payable

 

 

 

 

2,533

 

 

 

7,384

 

Operating lease liability

 

81,921

 

 

 

83,735

 

 

 

87,399

 

Finance lease liability

 

 

 

 

 

 

 

80

 

Accounts payable and accrued expenses

 

53,974

 

 

 

50,560

 

 

 

58,042

 

Total liabilities

 

631,924

 

 

 

732,092

 

 

 

845,272

 

 

 

 

 

 

 

Shareholders' equity

 

424,427

 

 

 

385,227

 

 

 

373,024

 

Total liabilities and shareholders' equity

$

1,056,351

 

 

$

1,117,319

 

 

$

1,218,296

 

WORLD ACCEPTANCE CORPORATION AND SUBSIDIARIES

 

SELECTED CONSOLIDATED STATISTICS

(unaudited and in thousands, except percentages and branches

 

 

 

Three months ended March 31,

Twelve months ended March 31,

 

 

 

2024

 

 

 

2023

 

 

2024

 

 

 

2023

 

 

 

 

 

 

 

 

 

Gross loans receivable

 

$

1,277,149

 

 

$

1,390,016

 

$

1,277,149

 

 

$

1,390,016

 

Average gross loans receivable (1)

 

 

1,357,845

 

 

 

1,481,111

 

 

1,378,329

 

 

 

1,555,655

 

Net loans receivable (2)

 

 

950,403

 

 

 

1,013,341

 

 

950,403

 

 

 

1,013,341

 

Average net loans receivable (3)

 

 

1,009,753

 

 

 

1,079,479

 

 

1,012,544

 

 

 

1,133,051

 

 

 

 

 

 

 

 

 

Expenses as a percentage of total revenue:

 

 

 

 

 

 

 

Provision for credit losses

 

 

18.4

%

 

 

28.2

%

 

27.4

%

 

 

42.1

%

General and administrative

 

 

45.0

%

 

 

45.5

%

 

46.9

%

 

 

45.3

%

Interest expense

 

 

7.4

%

 

 

7.6

%

 

8.4

%

 

 

8.2

%

Operating income as a % of total revenue (4)

 

 

36.7

%

 

 

26.3

%

 

25.8

%

 

 

12.6

%

 

 

 

 

 

 

 

 

Loan volume (5)

 

 

624,618

 

 

 

602,041

 

 

2,758,260

 

 

 

3,078,672

 

 

 

 

 

 

 

 

 

Net charge-offs as percent of average net loans receivable on an annualized basis

 

 

18.8

%

 

 

23.9

%

 

17.7

%

 

 

23.7

%

 

 

 

 

 

 

 

 

Return on average assets (trailing 12 months)

 

 

7.0

%

 

 

1.7

%

 

7.0

%

 

 

1.7

%

 

 

 

 

 

 

 

 

Return on average equity (trailing 12 months)

 

 

19.1

%

 

 

5.8

%

 

19.1

%

 

 

5.8

%

 

 

 

 

 

 

 

 

Branches opened or acquired (merged or closed), net

 

 

(4

)

 

 

(11

)

 

(25

)

 

 

(94

)

 

 

 

 

 

 

 

 

Branches open (at period end)

 

 

1,048

 

 

 

1,073

 

 

1,048

 

 

 

1,073

 

_______________________________________________________

(1) Average gross loans receivable is determined by averaging month-end gross loans receivable over the indicated period, excluding tax advances.

(2) Net loans receivable is defined as gross loans receivable less unearned interest and deferred fees.

(3) Average net loans receivable is determined by averaging month-end gross loans receivable less unearned interest and deferred fees over the indicated period, excluding tax advances.

(4) Operating income is computed as total revenues less provision for credit losses and general and administrative expenses.

(5) Loan volume includes all loan balances originated by the Company. It does not include loans purchased through acquisitions.

 

Contacts

John L. Calmes, Jr.

Executive VP, Chief Financial & Strategy Officer, and Treasurer

(864) 298-9800

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