World Acceptance Corporation (NASDAQ:WRLD) Q3 2024 Earnings Call Transcript January 19, 2024
World Acceptance Corporation beats earnings expectations. Reported EPS is $2.84, expectations were $1.62. WRLD isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, and welcome to the World Acceptance Corporation’s Third Quarter 2024 Earnings Conference Call. This call is being recorded. At this time, all participants have been placed in a listen-only mode. Before we begin, the Corporation has requested that I make the following announcement. The comments made during this conference call may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that represent Corporation’s expectations and beliefs concerning future events. Such forward-looking statements are about matters that are inherently subject to risks and uncertainties. Statements other than those historically fact, as well as those identified by the words anticipate, estimate, intend, plan, expect, believe, may, will, and should or any variation of these foregoing and similar expressions are forward-looking statements.
Additional information regarding forward-looking statements and any factors that could cause actual results or performance to differ from these expectations expressed or implied in such forward-looking statements are included in the paragraph discussing forward-looking statements in today’s earnings press release and in the risk factors section of the Corporation’s most recent Form 10-K for the fiscal year ending March 31st of 2023 and subsequent reports filed with the — with or furnished to the SEC from time to time. The Corporation does not undertake any obligation to update any forward-looking statement it makes. And at this time, it is my pleasure to turn the floor over to your host, Mr. Chad Prashad, President and Chief Executive Officer.
Please go ahead, sir.
Chad Prashad: Good morning, and thank you for joining our Fiscal 2024 Third Quarter Earnings Call. Before we open up to questions, there are few areas I’d like to highlight. Earlier this year, we signaled a tightening of credit and slower portfolio growth pace for this year. Our new customer loan volume increased about 22% sequentially this quarter from the prior quarter and about 56% compared to last year’s third quarter. But the percent of new customers relative to our customer base was around 30% lower than the prior normal third quarters, especially pre-COVID. Our credit quality performance continues to improve and remain near historical norms or even higher. While our approval and booking rates have improved significantly from our low in August of this year, through the end of this calendar year, our first pay defaults remain at or below historical norms.
New loan application volume increased around 30% this quarter when compared to last third quarter. The earlier stat that I mentioned on the resulting loan comparison was a 56% increase of new customer loan volume for the same quarter. New applications increased only 1% sequentially over the prior quarter, second quarter compared to the third quarter, as we shifted marketing and underwriting strategies that resulted in higher approval and booking rates, which earlier I shared is a 22% increase in booked new customer lines sequentially. And those new customers continue to perform well with first pay default rates that are significantly better than fiscal year 2022 and in line with last year and our pre-COVID comparisons. Further, our overall new customer application volume has increased back to within 1% of our pre-COVID application volumes after increasing over 30% in the third quarter when compared to last year’s third quarter.
We believe we have been able to successfully increase our approval rates without sacrificing credit quality or yields and are focused on continually improving in both our underwriting and marketing strategies. Return of former customers increased around 6% sequentially in the third quarter compared to the second quarter and 17% compared to last year’s third quarter. And the percent of former customers relative to the customer base continues to be higher than the prior normal comparable periods, especially pre-COVID. For new customers and the whole portfolio, our yields continue to improve. This is a result of improved gross yields and reduced delinquency. While we are pleased with our current progress in delinquency improvement and the trending of the underlying portfolio, we believe there is still room for improvement in the current and upcoming quarters.
With the expectations of economic stability increasing and the decreasing likelihood of major unemployment impacts, management continues to accrue for the long-term incentive plan with vesting tiers of $16.35 and $20.45 earnings per share due to the much-improved credit quality, yields, and operating conditions. Finally, I’d like to thank all of our wonderful team members who have helped so many customers from our communities during the calendar year of 2023, helping to establish and rebuild credit as well as meeting immediate financial needs. We have an absolutely amazing team and I’m very grateful for their commitment to their customers and to each other. At this time, Johnny Calmes, our Chief Financial and Strategy Officer and I would like to open up to any questions you have.
Thank you.
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