World Acceptance Corporation Reports Fiscal 2024 Fourth Quarter Results

Rhea-AI Summary

World Acceptance (NASDAQ: WRLD) reported strong financial results for the fourth quarter of fiscal 2024, showcasing net income of $35.1 million and diluted net income per share of $6.09. The company focused on credit quality and conservative lending practices, resulting in improved recency delinquency rates and total revenues of $159.3 million. Gross loans outstanding decreased by 8.1% to $1.28 billion compared to the prior year. Despite a decrease in the customer base, the company saw an increase in unique borrowers and improved gross loan origination balances. CECL allowance and provision impact decreased, leading to lower net charge-offs and improved recency delinquency rates. G&A expenses and personnel expenses decreased, while the company's debt to equity ratio improved. World Acceptance also repurchased shares and reported a return on average assets and equity of 7.0% and 19.1%, respectively.

Positive

• Strong financial performance with net income of $35.1 million and diluted net income per share of $6.09.

• Focus on credit quality and conservative lending practices led to improved recency delinquency rates.

• Total revenues of $159.3 million with a 34 basis point yield increase compared to the previous year.

• Improvement in unique borrowers and gross loan origination balances despite a decrease in the customer base.

• Decrease in CECL allowance and provision impact, resulting in lower net charge-offs and improved recency delinquency rates.

• Reduction in G&A and personnel expenses, along with improved debt to equity ratio.

• Share repurchases and positive return on average assets and equity of 7.0% and 19.1%, respectively.

Negative

• Decline in gross loans outstanding by 8.1% to $1.28 billion compared to the previous year.

• Reduction in total revenues for fiscal 2024 by 7.0% due to a decrease in loans outstanding.

• Decrease in interest and fee income, insurance income, and large loan portfolio percentage.

• Reduction in the customer base and branches open at least twelve months.

GREENVILLE, S.C.--(BUSINESS WIRE)-- 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.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240502323830/en/

John L. Calmes, Jr.

Executive VP, Chief Financial & Strategy Officer, and Treasurer

(864) 298-9800

Source: World Acceptance Corporation

FAQ

What is the net income reported by World Acceptance for the fourth quarter of fiscal 2024?

World Acceptance reported a net income of $35.1 million for the fourth quarter of fiscal 2024.

What is the stock symbol of World Acceptance ?

The stock symbol of World Acceptance is NASDAQ: WRLD.

How did the gross loans outstanding change for World Acceptance compared to the previous year?

Gross loans outstanding for World Acceptance decreased by 8.1% to $1.28 billion compared to the previous year.

What is the change in total revenues for fiscal 2024 for World Acceptance ?

Total revenues for fiscal 2024 decreased by 7.0% to $573.2 million compared to the previous fiscal year.

Where is World Acceptance headquartered?

World Acceptance is headquartered in Greenville, South Carolina.