World Acceptance (WRLD)

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World Acceptance (WRLD) - 2026 Q1 - Quarterly Report
2025-08-06 20:11
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________________________________ Form 10-Q __________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934 For the transition period from ______________ to ______________ Commission File Number: 000-19599 WORLD ACCEPTANCE CORPO ...
World Acceptance Posts Q1 Profit Drop
The Motley Fool· 2025-07-25 04:31
Core Insights - World Acceptance (WRLD) reported a significant decline in earnings per share (EPS) to $0.25, an 86% drop from the previous year and well below analysts' expectations of $1.25 [1][2] - Revenue increased to $132.5 million, surpassing the consensus estimate of $130.5 million and showing a 2.3% growth year-over-year [1][2] - The company faces ongoing challenges with rising operating expenses and provisions for credit losses, impacting profitability [1][5] Financial Performance - EPS (GAAP) fell to $0.25 from $1.79 a year ago, reflecting a substantial decline in profitability [2][5] - Revenue (GAAP) rose by 2.3% year-over-year to $132.5 million, exceeding expectations [2][5] - Provision for credit losses increased by 11.2% to $50.5 million compared to the same quarter last year [2][6] - General and administrative expenses surged by 14.6% to $70.4 million, now accounting for 53.1% of total revenue [2][5] - Net charge-offs rose to $44.8 million, representing 19.4% of average net loans annualized [2][6] Operational Insights - The company operates over 1,000 branches, primarily in the southern and midwestern U.S., focusing on small and medium-sized installment loans [3][4] - Loan portfolio trends indicate a slight year-over-year decrease in gross loans outstanding, but a sequential increase suggests stabilization [7] - Loan production for new customers increased by 30.8%, while later-stage loan delinquencies improved to 5.4% of the portfolio [7] Strategic Focus - World Acceptance is navigating a complex regulatory environment and managing competitive pressures from local lenders and digital fintech rivals [4] - The company has entered a new $640 million senior secured credit facility to enhance funding flexibility and support share buybacks [10] - The leadership expressed cautious optimism regarding stabilization in customer delinquencies and a shift towards smaller loan sizes [11] Other Income Sources - Fee and interest income rose by 3.7% to $115.3 million, while tax preparation revenues increased by 21.6% [8] - Insurance income, however, decreased by 10.8% year-over-year [8]
World Acceptance (WRLD) - 2026 Q1 - Earnings Call Transcript
2025-07-24 15:00
Financial Data and Key Metrics Changes - The company completed a new credit agreement increasing commitments to $640 million, allowing for stock repurchases of up to 100% of net income, an increase from 50% in the prior agreement [3] - The net income since January 1, 2025, is approximately $45 million [3] - The company has been repurchasing high yield notes issued in 2021, with around $170 million outstanding to be redeemed by August [4] - The first quarter is historically the lowest for earnings, contributing an average of only 5.6% to total annual net income over the past three years [5] Business Line Data and Key Metrics Changes - Refinance volume increased by 10% this quarter compared to the first quarter last year [5] - New originations increased by 12.6% year over year, marking the highest volume since fiscal year 2020 [6] - The dollar amount lent in new originations rose by 12.8% year over year [6] - The customer base increased by 4% this quarter, marking the first positive growth in three years [6] Market Data and Key Metrics Changes - The company began the year with a ledger down approximately 4% year over year, but grew around $40 million this quarter, ending down about 80 basis points [7] - Gross yields increased by over 230 basis points year over year [8] Company Strategy and Development Direction - The company aims to align yield with risk through the new Royal Finance Smile credit card, focusing on serving customers with minimal access to affordable credit [9] - The strategy includes maintaining a balance between new and returning customers, with no plans for dramatic growth in the portfolio [16] Management's Comments on Operating Environment and Future Outlook - Management noted that there has not been an increase in risk from newer customers, indicating tight underwriting practices [18] - The company is not looking for double-digit growth in the portfolio and aims to maintain a stable mix of new and returning customers [17] Other Important Information - The company is in the process of redeeming remaining bonds issued in 2021, which will allow for accelerated stock repurchases [4] - The company has a strong focus on improving customer retention and managing credit risk [16] Q&A Session Summary Question: What is driving the improvement in delinquencies this quarter? - Management indicated that the proportion of new customers in the portfolio has decreased, reducing overall risk [13] Question: What is the current strategy regarding smaller loans and higher yields? - Management expressed satisfaction with the current mix and does not expect dramatic increases in investments into new customers [14][16] Question: Have there been any changes in consumer behavior since the last update? - Management reported no significant increase in risk from newer customers, maintaining tight underwriting standards [18]
World Acceptance (WRLD) Q1 Earnings Lag Estimates
ZACKS· 2025-07-24 14:05
World Acceptance (WRLD) came out with quarterly earnings of $0.25 per share, missing the Zacks Consensus Estimate of $2.44 per share. This compares to earnings of $1.79 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -89.75%. A quarter ago, it was expected that this subprime consumer lender would post earnings of $6.42 per share when it actually produced earnings of $8.13, delivering a surprise of +26.64%.Over the last four qu ...
World Acceptance (WRLD) - 2026 Q1 - Quarterly Results
2025-07-24 11:35
[Revolving Credit Agreement Overview](index=1&type=section&id=Revolving%20Credit%20Agreement) This section introduces the Revolving Credit Agreement, outlining its key parties and purpose [Agreement Parties and Purpose](index=1&type=section&id=Agreement%20Parties%20and%20Purpose) This Revolving Credit Agreement, dated July 22, 2025, is established between World Acceptance Corporation as the Borrower, a group of financial institutions as Lenders, and Bank of Montreal serving as the Administrative and Collateral Agent. The agreement outlines the terms and conditions for a revolving credit facility requested by the Borrower and extended by the Lenders - The agreement is a **Revolving Credit Agreement dated July 22, 2025**[8](index=8&type=chunk) Key Parties to the Agreement | Role | Entity | | :--- | :--- | | **Borrower** | World Acceptance Corporation | | **Administrative & Collateral Agent** | Bank of Montreal (BMO) | | **Lenders** | Various financial institutions party to the agreement | | **Joint Lead Arrangers** | Bank of Montreal, Wells Fargo Bank, National Association, Axos Bank | | **Syndication Agent** | First Horizon Bank | - The purpose of the agreement is for the Lenders to extend credit facilities to the Borrower based on the specified terms and conditions[10](index=10&type=chunk) [SECTION 1. THE CREDIT](index=6&type=section&id=SECTION%201.%20THE%20CREDIT) This section details the revolving credit facility, including its maximum availability and lender obligations [The Credit Facility](index=6&type=section&id=Section%201.1.%20The%20Credit) The Lenders agree to provide a revolving credit facility to the Borrower. The maximum amount available at any time is the lesser of the total Commitments or the calculated Available Borrowing Base. The facility can be used for Loans and Letters of Credit, and the obligations of the Lenders are several, not joint. The Administrative Agent has the discretion to set reserves against the Available Borrowing Base - The credit facility is a revolving credit line, allowing the Borrower to borrow, repay, and re-borrow funds up to the **Termination Date**[10](index=10&type=chunk) - The maximum outstanding amount is limited to the lesser of the total Commitments from Lenders or the Available Borrowing Base[10](index=10&type=chunk) - The obligations of the Lenders are several, meaning each is responsible only for its own commitment percentage and not for the commitments of other lenders[10](index=10&type=chunk) [SECTION 2. GENERAL PROVISIONS APPLICABLE TO LOANS](index=7&type=section&id=SECTION%202.%20GENERAL%20PROVISIONS%20APPLICABLE%20TO%20LOANS) This section covers general provisions for loans, including interest rates, borrowing procedures, and prepayment terms [Applicable Interest Rates](index=7&type=section&id=Section%202.1.%20Applicable%20Interest%20Rates) The interest rate on outstanding loans is calculated as the Adjusted Term SOFR plus the Applicable Margin. Interest is payable monthly in arrears on the first day of each month. A late charge of $500 applies to interest and fee payments not received within ten days of the due date - The interest rate is variable, based on the **Adjusted Term SOFR plus the Applicable Margin**[12](index=12&type=chunk) - Interest payments are due monthly on the first day of the month. Unpaid interest and fees may be automatically added to the principal balance as a new borrowing[13](index=13&type=chunk) - **A late fee of $500** is charged for payments of interest and fees that are more than ten days overdue[14](index=14&type=chunk) [Minimum Borrowing Amounts](index=7&type=section&id=Section%202.2.%20Minimum%20Borrowing%20Amounts) Each borrowing of loans must be for a minimum amount of $50,000 or a larger integral multiple of $50,000 - The minimum amount for each loan borrowing is **$50,000**[14](index=14&type=chunk) [Borrowing Procedures](index=7&type=section&id=Section%2.3.%20Borrowing%20Procedures) The Borrower must notify the Administrative Agent in writing by 12:00 Noon (Central time) on the day of a requested borrowing. The Administrative Agent then notifies the Lenders, who are required to make their share of the funds available. The section also details procedures for handling fund transfers, settlements between lenders, and situations where a lender defaults on its funding obligation - Borrowing requests must be submitted in writing to the Administrative Agent by **12:00 Noon (Central time)** on the date of the requested borrowing[15](index=15&type=chunk) - The Administrative Agent may, at its discretion, advance the full borrowing amount on behalf of the Lenders and settle the amounts with individual Lenders on a weekly or more frequent basis[18](index=18&type=chunk) - If a Lender fails to provide its portion of a loan (a **"Defaulting Lender"**), the Administrative Agent can recover the amount from that lender, or if not, from the Borrower, along with interest and costs[19](index=19&type=chunk)[20](index=20&type=chunk) [Maturity of Loans](index=10&type=section&id=Section%2.5.%20Maturity%20of%20Loans) All loans, including principal and any unpaid interest, are due and payable in full on the Termination Date - The entire outstanding balance of all loans matures and must be repaid on the **Termination Date**[22](index=22&type=chunk) [Prepayments](index=10&type=section&id=Section%2.6.%20Prepayments) The Borrower can make voluntary prepayments in increments of at least $50,000. A prepayment fee of 0.50% of the total Commitments applies if the loans are repaid in full before the Termination Date. Mandatory prepayments are required if the outstanding loan balance exceeds the Commitments or the Available Borrowing Base - Voluntary prepayments are permitted in **minimum amounts of $50,000**[23](index=23&type=chunk) - **A prepayment fee of 0.50% of the aggregate Commitments** is due if the loan is repaid in full or accelerated before the Maturity Date[23](index=23&type=chunk) - Mandatory prepayments are required if the total outstanding loans and L/C Obligations exceed either the total Commitments or the Available Borrowing Base[24](index=24&type=chunk)[25](index=25&type=chunk) [Default Rate](index=11&type=section&id=Section%2.7.%20Default%20Rate) Upon an Event of Default or after the Termination Date, the interest rate on all outstanding obligations increases by 2.0% per annum above the otherwise applicable rate - In case of default or after maturity, a default interest rate of **2.0% per annum** is added to the standard interest rate for all obligations[28](index=28&type=chunk) [Commitment Terminations](index=12&type=section&id=Section%2.9.%20Commitment%20Terminations) The Borrower has the right to terminate the Commitments, in whole or in part, with five business days' notice. Partial terminations must be in minimums of $2,000,000. A fee of 0.50% of the reduced commitment amount is payable upon any partial termination. Terminated commitments cannot be reinstated - The Borrower may terminate commitments with five business days' notice, in **minimum increments of $2,000,000**[34](index=34&type=chunk) - **A fee of 0.50% of the aggregate commitment reduction amount** is required for any partial termination[34](index=34&type=chunk) - Commitments are automatically reduced by the amount of proceeds from the sale of Collateral that are applied to the Obligations[35](index=35&type=chunk) [Benchmark Replacement Setting](index=12&type=section&id=Section%2.10.%20Benchmark%20Replacement%20Setting) This section outlines the procedures for replacing the current interest rate benchmark (initially Term SOFR) if a "Benchmark Transition Event" occurs. It grants the Administrative Agent the authority to select a replacement benchmark, such as Daily Simple SOFR, and make necessary conforming changes to the agreement without requiring an amendment, subject to the Required Lenders not objecting - If the current benchmark rate (Term SOFR) becomes unavailable or non-representative, a predetermined process is triggered to replace it[38](index=38&type=chunk) - The replacement benchmark will be determined by the Administrative Agent, with the first alternative being **Daily Simple SOFR**[48](index=48&type=chunk) - The Administrative Agent has the right to make technical and administrative changes (**"Conforming Changes"**) to implement the new benchmark without further consent from other parties[39](index=39&type=chunk)[57](index=57&type=chunk) [Substitution of Lenders](index=17&type=section&id=Section%2.11.%20Substitution%20of%20Lenders) The Borrower has the right to require an "Affected Lender" to assign its entire interest to another eligible institution. This can be triggered if a lender requests special compensation, claims illegality, becomes a Defaulting Lender, or fails to consent to an amendment approved by the Required Lenders - The Borrower can force the assignment of a Lender's commitment under specific circumstances, such as if the Lender defaults or dissents from a required amendment[64](index=64&type=chunk) [Defaulting Lenders](index=18&type=section&id=Section%2.12.%20Defaulting%20Lenders) This section details the treatment of a Lender that fails to meet its funding obligations. A Defaulting Lender loses its voting rights on most matters, is not entitled to commitment fees, and may have its letter of credit fees redirected. The Borrower may be required to provide cash collateral to cover the Defaulting Lender's share of letter of credit obligations - A **Defaulting Lender** is excluded from voting for purposes of determining **"Required Lenders"**[66](index=66&type=chunk) - Defaulting Lenders are not eligible to receive commitment fees and their letter of credit fees are paid to the Issuing Bank[66](index=66&type=chunk) [Letters of Credit](index=18&type=section&id=Section%2.13.%20Letters%20of%20Credit) As part of the overall commitment, the Issuing Bank can issue standby letters of credit (L/Cs) for the Borrower up to an aggregate amount of the L/C Sublimit. Each Lender is obligated to participate pro-rata in each L/C. The section covers the application process, reimbursement obligations (which are absolute and unconditional), and the indemnification of the Issuing Bank by other Lenders - The facility includes a **sublimit for issuing standby letters of credit**, with each Lender participating based on its **Commitment Percentage**[67](index=67&type=chunk) - The Borrower's obligation to reimburse the Issuing Bank for any drawings under an L/C is **absolute, unconditional, and irrevocable**[72](index=72&type=chunk) - If the Borrower fails to reimburse a drawing, each other Lender must purchase its participating interest in the drawn amount from the Issuing Bank[74](index=74&type=chunk) [Accordion Facility](index=22&type=section&id=Section%2.14.%20Accordion%20Facility) The Borrower has the right to request an increase in the total Commitments (an "Accordion Increase"), provided the total amount does not exceed $790,000,000. This increase is subject to several conditions, including the absence of any default, pro forma compliance with financial covenants, and the Administrative Agent's ability to syndicate the increase. Existing lenders have the first option to participate - The Borrower may request to increase the total credit facility commitments[79](index=79&type=chunk) Accordion Facility Limits | Metric | Amount | | :--- | :--- | | **Current Aggregate Commitment** | $640,000,000 | | **Maximum Aggregate Commitment after Accordion** | $790,000,000 | - The increase is conditional upon no existing defaults, continued compliance with financial covenants, and successful syndication by the Administrative Agent[80](index=80&type=chunk) [SECTION 3. FEES, EXTENSIONS AND APPLICATIONS](index=23&type=section&id=SECTION%203.%20FEES%2C%20EXTENSIONS%20AND%20APPLICATIONS) This section outlines various fees, payment application rules, and the Administrative Agent's debit authorization [Fees](index=23&type=section&id=Section%203.1.%20Commitment%20Fee%2FClosing%20Fee%2FLetter%20of%20Credit%20Fee) This section specifies the various fees payable by the Borrower. This includes a commitment fee on the unused portion of the credit line, a one-time closing fee, and fees related to letters of credit, including a participation fee and a fronting fee Fee Structure | Fee Type | Rate/Amount | | :--- | :--- | | **Commitment Fee** | 0.50% per annum on the average daily unused portion of the Commitments | | **Closing Fee** | Non-refundable amount as set forth in Schedule 1.2 | | **Letter of Credit Participation Fee** | 2.50% per annum on the daily average face amount of outstanding L/Cs | | **Letter of Credit Fronting Fee** | 0.125% of the face amount of each L/C, paid to the Issuing Bank | [Place and Application of Payments](index=24&type=section&id=Section%203.4.%20Place%20and%20Application%20of%20Payments) All payments are to be made to the Administrative Agent's office in Chicago by 2:00 p.m. (Chicago time). The section also details the payment application waterfall in the event of a default and subsequent acceleration of the obligations, prioritizing agent expenses, then interest and fees, then principal, and finally other secured obligations - All payments must be made in U.S. dollars to the Administrative Agent in Chicago by **2:00 p.m. Chicago time**[88](index=88&type=chunk) - After an Event of Default, all payments and collections are distributed in a specific order (waterfall): **first to Agent/Collateral Agent expenses, second to interest and fees, third to principal and L/C collateral, fourth to other secured obligations (like Bank Products), and finally any surplus to the Borrower**[90](index=90&type=chunk) [Account Debit / Loan Account](index=26&type=section&id=Section%203.5.%20Account%20Debit%20%2F%20Loan%20Account) The Borrower authorizes the Administrative Agent to directly debit its deposit accounts for any due obligations. The Agent is also authorized to charge interest, fees, and other expenses directly to the Borrower's loan account, which then become part of the outstanding loan principal - The Administrative Agent is authorized to automatically debit the Borrower's deposit accounts to pay for due obligations and to charge accrued interest and fees to the loan account, thereby increasing the principal balance[92](index=92&type=chunk) [SECTION 4. THE COLLATERAL AND GUARANTIES](index=26&type=section&id=SECTION%204.%20THE%20COLLATERAL%20AND%20GUARANTIES) This section describes the collateral securing the obligations and the subsidiary guaranties [The Collateral](index=26&type=section&id=Section%204.1.%20The%20Collateral) The credit obligations are secured by a valid and perfected first priority lien on the property of the Borrower and its Restricted Subsidiaries (excluding the Insurance Subsidiary and SPV Subsidiaries). The rights and remedies related to collateral in Master Collection Accounts are governed by the Permitted Facility Intercreditor Agreement - The obligations are secured by a **first priority lien** on the assets of the Borrower and its Restricted Subsidiaries, as detailed in the Security Agreements[95](index=95&type=chunk) - The **Permitted Facility Intercreditor Agreement** will control in case of any conflict with this agreement regarding shared collateral like **Master Collection Accounts**[97](index=97&type=chunk) [Subsidiary Guaranties](index=27&type=section&id=Section%204.2.%20Subsidiary%20Guaranties) Payment of all obligations under the credit agreement must be guaranteed by each of the Borrower's Restricted Subsidiaries, with the exception of the Insurance Subsidiary - All Restricted Subsidiaries (except the **Insurance Subsidiary**) are required to guarantee the payment of the Obligations[98](index=98&type=chunk) [Further Assurances](index=27&type=section&id=Section%204.3.%20Further%20Assurances) The Borrower and its Restricted Subsidiaries are obligated to execute any additional documents and take necessary actions as requested by the Administrative or Collateral Agent to perfect and protect the liens on the Collateral. Any newly formed or acquired subsidiaries (other than SPV Subsidiaries) must join the guaranty and provide necessary security documents - The Borrower must provide any additional documentation needed to ensure the security interest in the Collateral is perfected and protected[99](index=99&type=chunk) [Release of Collateral](index=28&type=section&id=Section%204.4.%20Release%20of%20Collateral) This section outlines the process for releasing the security interest in specific receivables. The Administrative Agent will release its lien upon request, provided there is no default, a written sale contract exists, and if Excess Availability is not greater than zero, the Borrower either pledges additional collateral or pays down the loan by an amount equal to the sale price. Liens on receivables sold in a Permitted Charged Off Contracts Sale are released automatically - Collateral can be released for sale under specific conditions, including no existing default and, if necessary, a corresponding paydown of the loan or pledge of new collateral[101](index=101&type=chunk) - For sales of charged-off contracts, the lien is released automatically upon the Borrower's receipt of the purchase price[101](index=101&type=chunk) [SECTION 5. Definitions; Interpretation](index=28&type=section&id=Section%205.%20Definitions%3B%20Interpretation) This section provides comprehensive definitions for key terms and concepts used throughout the agreement [Definitions](index=28&type=section&id=Section%205.1.%20Definitions) This section provides definitions for capitalized terms used throughout the agreement, establishing precise meanings for critical concepts such as Borrowing Base, Eligible Finance Receivables, financial covenants, and various types of subsidiaries and debt Advance Rate Table | Collateral Performance Indicator | Advance Rate | | :--- | :--- | | Less than or equal to 18% | 80% | | > 18% but <= 19% | 79% | | > 19% but <= 20% | 78% | | > 20% but <= 21% | 77% | | > 21% but <= 22% | 76% | | > 22% but <= 23% | 75% | | > 23% but <= 24% | 74% | | > 24% but <= 25% | 72% | | Greater than 25% | 70% | - **Borrowing Base:** Defined as the Advance Rate multiplied by the outstanding amount of Eligible Finance Receivables (net of unearned charges and premiums)[125](index=125&type=chunk) - **Eligible Finance Receivables:** Specifies numerous criteria for a receivable to be included in the borrowing base, such as being a US-originated loan, not being past due by **60+ days**, having a **principal balance under $12,000**, and not being secured by real estate[162](index=162&type=chunk)[163](index=163&type=chunk)[166](index=166&type=chunk) - **Maturity Date:** Defined as the earlier of **July 22, 2028**, or **90 days prior to the maturity of the 2021 Unsecured Bond Debt**[207](index=207&type=chunk) [SECTION 6. Representations and Warranties](index=55&type=section&id=SECTION%206%20REPRESENTATIONS%20AND%20WARRANTIES) This section details the Borrower's factual statements regarding its legal, financial, and operational status [Representations and Warranties Overview](index=55&type=section&id=Representations%20and%20Warranties%20Overview) The Borrower provides a series of representations and warranties to the Lenders, which are statements of fact about its legal, financial, and operational status. These include its proper organization, authority to enter the agreement, accuracy of financial reports, absence of material adverse changes, compliance with laws (including anti-corruption and sanctions laws), and the validity of its electronic contracts - The Borrower confirms its legal organization, corporate authority, and the validity of its obligations under the loan documents[284](index=284&type=chunk)[287](index=287&type=chunk) - The proceeds of the loans will be used for general working capital purposes and will not be used in violation of **Margin Stock regulations, Sanctions, Anti-Money Laundering Laws, or Anti-Corruption Laws**[290](index=290&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk) - The Borrower warrants that its financial statements as of **March 31, 2025**, are accurate and that no material adverse change has occurred since that date[294](index=294&type=chunk)[295](index=295&type=chunk) - The Borrower affirms compliance with all applicable laws, including environmental regulations, consumer credit laws, and **OFAC sanctions programs**[304](index=304&type=chunk)[306](index=306&type=chunk)[308](index=308&type=chunk) [SECTION 7. Conditions Precedent](index=60&type=section&id=SECTION%207%20CONDITIONS%20PRECEDENT) This section specifies the conditions that must be met before initial and subsequent loan borrowings [Conditions for Initial Borrowing](index=60&type=section&id=Section%207.1.%20Initial%20Borrowing) Before the first loan can be made, the Borrower must satisfy several one-time conditions. These include delivering legal opinions, corporate resolutions, executed loan documents, lien search results, and an initial borrowing base certificate. The Agent must also receive payoff letters for prior debt and all necessary 'know your customer' documentation - Key deliverables for the initial borrowing include legal opinions, corporate authorizing resolutions, executed loan and collateral documents, and satisfactory lien searches[314](index=314&type=chunk)[315](index=315&type=chunk) - An initial borrowing base certificate as of **June 30, 2025**, must be delivered to the Administrative Agent[316](index=316&type=chunk) [Conditions for All Loans](index=62&type=section&id=Section%207.2.%20All%20Loans) For every borrowing (including the first), certain conditions must be met. The Borrower must submit a proper borrowing request, all representations and warranties must be true and correct, there must be no existing Default or Event of Default, and the new borrowing must not cause the total outstanding loans to exceed the available limits - Each borrowing request is treated as a representation by the Borrower that all conditions are met[318](index=318&type=chunk) - Ongoing conditions for borrowing include the truthfulness of representations, absence of any default, and remaining within the Available Borrowing Base and total Commitments[317](index=317&type=chunk) [SECTION 8. Covenants](index=63&type=section&id=SECTION%208%20COVENANTS) This section outlines the affirmative and negative obligations the Borrower must adhere to, including financial covenants [Affirmative Covenants (Sections 8.1-8.6, 8.20, 8.22, 8.24, 8.26-8.27)](index=63&type=section&id=Affirmative%20Covenants) The Borrower agrees to a set of affirmative covenants, which are actions it must take. These include maintaining its legal existence, carrying adequate insurance, paying taxes, complying with all laws (including OFAC), maintaining its properties, and providing regular financial reports. The Borrower must also adhere to its general underwriting guidelines and provide notice of any changes to its beneficial ownership - The Borrower must maintain its legal existence, licenses, and permits[320](index=320&type=chunk) - The Borrower must provide monthly, quarterly, and annual financial statements, along with compliance certificates and a borrowing base certificate[357](index=357&type=chunk)[358](index=358&type=chunk)[359](index=359&type=chunk) - The Borrower must notify the Agent of any regulatory investigations, including those from the **Consumer Financial Protection Bureau (CFPB)**[326](index=326&type=chunk) - Cash proceeds from Collateral must be deposited into a controlled account **within three business days of receipt**[371](index=371&type=chunk) [Negative Covenants (Sections 8.7-8.19, 8.21, 8.25)](index=65&type=section&id=Negative%20Covenants) The Borrower agrees to negative covenants, which are actions it must not take without Lender consent. These include restrictions on incurring additional debt, creating liens, making certain investments, engaging in mergers or asset sales, and making restricted payments like dividends or share buybacks except under specific conditions. The agreement also establishes key financial covenants that must be maintained Financial Covenants (Section 8.7) | Covenant | Requirement | | :--- | :--- | | **Consolidated Net Worth** | Must not be less than $325,000,000 | | **Fixed Charge Coverage Ratio** | Net Income Available for Fixed Charges to Fixed Charges must be at least 2.25 to 1.0 (tested quarterly) | | **Leverage Ratio** | Total Debt must not exceed 225% of Consolidated Adjusted Net Worth | | **Asset Quality Indicator (Consolidated)** | Must be less than or equal to 26% (tested monthly) | - **Indebtedness:** The Borrower is limited to specific types of debt, including the Obligations under this agreement, certain subordinated debt, the **2021 Unsecured Bond Debt**, and debt from Permitted Facilities[334](index=334&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk) - **Restricted Payments (Dividends/Share Repurchases):** **Share repurchases up to $100M** are permitted during the Share Repurchase Period, and other restricted payments are allowed, provided no default exists, Excess Availability is **>= 15%**, and the pro forma leverage ratio does not exceed **200%**[365](index=365&type=chunk) - **Mergers and Asset Sales:** Mergers, consolidations, and sales of a substantial part of assets are generally prohibited, with specific exceptions for transactions between the Borrower and its Restricted Subsidiaries or in connection with a Permitted Facility[343](index=343&type=chunk) [SECTION 9. Events of Default and Remedies](index=78&type=section&id=Section%209%20Events%20of%20Default%20and%20Remedies) This section defines events that constitute a default and the remedies available to the Lenders [Events of Default](index=78&type=section&id=Section%209.1.%20Events%20of%20Default) This section lists the specific events that constitute a default under the agreement. These include failure to pay principal or interest, breach of covenants, incorrect representations, cross-defaults on other indebtedness (exceeding $2.5 million), bankruptcy or insolvency proceedings, the occurrence of a material Level Two Regulatory Event, or a change of control - Payment defaults on interest have a **5-day grace period**; principal payments have no grace period[374](index=374&type=chunk)[375](index=375&type=chunk) - A breach of financial covenants (Section 8.7) is an immediate Event of Default[375](index=375&type=chunk) - A cross-default is triggered if the Borrower defaults on other debt exceeding **$2.5 million**, including the **2021 Unsecured Bond Debt**[375](index=375&type=chunk) - Bankruptcy or insolvency proceedings, or the appointment of a receiver, constitute an Event of Default[376](index=376&type=chunk)[377](index=377&type=chunk) [Remedies for Default](index=81&type=section&id=Section%209.3%20%26%209.4.%20Remedies) Upon an Event of Default, the Lenders, directed by the Required Lenders, have several remedies. For non-bankruptcy defaults, they can terminate the commitments and/or declare all outstanding loans and obligations immediately due and payable (acceleration). For bankruptcy-related defaults, this acceleration is automatic. They can also demand cash collateral for outstanding letters of credit - For most defaults, the Required Lenders can direct the Administrative Agent to terminate commitments and accelerate the debt[379](index=379&type=chunk) - In the event of bankruptcy, all obligations automatically become due and payable without any notice or action required[382](index=382&type=chunk) - Upon acceleration, the Borrower must provide cash collateral equal to **105% of the outstanding amount of all Letters of Credit**[380](index=380&type=chunk)[382](index=382&type=chunk) [SECTION 10. Change in Circumstances](index=83&type=section&id=Section%2010%20Change%20in%20Circumstances) This section addresses the impact of changes in law on Lender obligations and borrower repayments [Change of Law](index=83&type=section&id=Section%2010.1.%20Change%20of%20Law) If a change in law makes it illegal for a Lender to maintain its loans, that Lender's obligation to lend terminates. The Borrower must then prepay the outstanding principal and interest owed to that specific Lender on demand - If a change in law makes a Lender's participation unlawful, its commitment is terminated, and the Borrower must repay that Lender immediately[387](index=387&type=chunk) [SECTION 11. The Administrative Agent](index=84&type=section&id=Section%2011%20The%20Administrative%20Agent) This section defines the Administrative Agent's role, authority, and protections within the agreement [Agent's Role and Authority](index=84&type=section&id=Agent%27s%20Role%20and%20Authority) This section defines the role, powers, and protections for the Administrative Agent (Bank of Montreal). The Agent acts on behalf of the Lenders but is not a fiduciary. Its duties are primarily administrative and are expressly set forth in the loan documents. The Agent is authorized to take actions as directed by the Required Lenders, is protected from liability except in cases of gross negligence or willful misconduct, and is indemnified by the Lenders for costs incurred on their behalf - Each Lender irrevocably appoints Bank of Montreal as its Administrative Agent to act on its behalf[392](index=392&type=chunk) - The Agent is not liable for actions taken or omitted, except in cases of its own gross negligence or willful misconduct, and is entitled to rely on instructions from the Required Lenders[396](index=396&type=chunk) - The Agent may resign, and a successor can be appointed by the Required Lenders. If no successor is appointed within 30 days, the retiring Agent can appoint one[400](index=400&type=chunk) [SECTION 12. Miscellaneous](index=89&type=section&id=Section%2012.%20Miscellaneous) This section contains standard legal clauses covering governing law, assignments, amendments, and confidentiality [Miscellaneous Provisions](index=89&type=section&id=Miscellaneous%20Provisions) This section contains standard legal clauses governing the agreement. Key provisions include terms for withholding taxes, assignments and participations, amendments, governing law, jurisdiction, waiver of jury trial, and confidentiality. Amendments generally require the consent of the Borrower and the Required Lenders, but certain fundamental changes require unanimous Lender consent - **Governing Law:** The agreement is governed by the internal laws of the **State of New York**[444](index=444&type=chunk) - **Jurisdiction and Jury Trial Waiver:** The Borrower submits to the nonexclusive jurisdiction of courts in **New York City** and all parties irrevocably waive their right to a jury trial[451](index=451&type=chunk) - **Assignments:** Lenders may assign their rights and obligations to an Eligible Assignee, subject to **minimum amounts ($5,000,000)** and necessary consents (from the Borrower and Administrative Agent, unless an Event of Default has occurred)[428](index=428&type=chunk) - **Amendments:** Amendments generally require the consent of the **Required Lenders (66 2/3%)**. However, **unanimous Lender consent** is required for certain material changes, such as extending the Termination Date, releasing substantially all collateral, or changing the definition of Required Lenders[434](index=434&type=chunk)[435](index=435&type=chunk) - **Confidentiality:** The Agent and Lenders agree to keep information confidential, with standard exceptions for regulatory requests, legal proceedings, and disclosure to advisors or potential assignees under confidentiality agreements[454](index=454&type=chunk) [SECTION 13. Permitted Facilities and Transfers](index=101&type=section&id=SECTION%2013.%20PERMITTED%20FACILITIES%20AND%20TRANSFERS) This section details the conditions under which the Borrower may engage in asset securitizations or similar financings [Permitted Facilities and Transfers](index=101&type=section&id=Section%2013.1.%20Permitted%20Facilities%20and%20Transfers) This section allows the Borrower to engage in asset securitizations or similar structured financings ("Permitted Facilities") under strict conditions. These conditions include obtaining prior consent from the Administrative Agent, ensuring the facility is non-recourse to the Borrower (other than for standard securitization undertakings), and maintaining at least 10% Excess Availability on a pro forma basis after the transfer of receivables. The net cash proceeds from such a facility must be remitted to the Administrative Agent to pay down the Obligations - The Borrower may engage in asset securitizations (Permitted Facilities) subject to Administrative Agent consent and other conditions[458](index=458&type=chunk) - Key conditions for a Permitted Facility include: no existing default, maintaining pro forma **Excess Availability of at least 10%**, and ensuring no adverse selection of receivables for the facility[458](index=458&type=chunk)[459](index=459&type=chunk) - **Net cash proceeds from any Permitted Facility must be used to pay down the outstanding Obligations** under this credit agreement[459](index=459&type=chunk) - The Administrative Agent agrees to release its lien on collateral transferred to a Permitted Facility upon receipt of a valid Release Request[464](index=464&type=chunk) [Exhibits and Schedules](index=114&type=section&id=Exhibits%20and%20Schedules) This section provides an overview of the detailed information and standardized forms contained in the agreement's exhibits and schedules [Schedules](index=132&type=section&id=Schedules) The schedules provide specific, detailed information referenced in the main agreement. They include the commitment amounts and closing fees for each lender, a comprehensive list of all subsidiaries and their ownership structures, and a detailed list of the company's deposit accounts. Several schedules indicate there was no existing litigation, tax disputes, indebtedness, or liens to report as of the agreement date Schedule 1.1 - Lender Commitments | Lender | Commitment | | :--- | :--- | | **BMO Bank N.A.** | $135,000,000.00 | | **Wells Fargo Bank, National Association** | $135,000,000.00 | | **Axos Bank** | $130,000,000.00 | | **First Horizon Bank** | $100,000,000.00 | | **SouthState Bank, N.A.** | $50,000,000.00 | | **Forbright Bank** | $50,000,000.00 | | **Texas Capital Bank** | $40,000,000.00 | | **Total** | $640,000,000.00 | Schedule 1.2 - Closing Fees | Lender | Closing Fee | | :--- | :--- | | **BMO Bank N.A.** | $202,500.00 | | **Wells Fargo Bank, National Association** | $202,500.00 | | **Axos Bank** | $195,000.00 | | **First Horizon Bank** | $150,000.00 | | **SouthState Bank, N.A.** | $75,000.00 | | **Forbright Bank** | $75,000.00 | | **Texas Capital Bank** | $60,000.00 | | **Total** | $960,000.00 | - **Schedule 6.2** provides a detailed list of all subsidiaries of World Acceptance Corporation, their jurisdiction, and ownership percentage[533](index=533&type=chunk) - **Schedules 6.8, 6.9, 6.11, and 8.11** all state **"-None-"**, indicating no pending litigation, tax disputes, existing indebtedness for borrowed money, or existing liens at the time of the agreement[534](index=534&type=chunk)[535](index=535&type=chunk)[536](index=536&type=chunk)[537](index=537&type=chunk) [Exhibits](index=114&type=section&id=Exhibits) The exhibits provide the standardized forms to be used for various actions and reports required under the agreement. These include the Borrowing Base Certificate (Exhibit A), the Officer's Certificate of Compliance (Exhibit B), the Assignment and Acceptance form for transferring a lender's interest (Exhibit C), and the Release Request form for releasing collateral (Exhibit D) - **Exhibit A (Borrowing Base Certificate):** A form used to calculate the available borrowing amount based on eligible finance receivables[475](index=475&type=chunk) - **Exhibit B (Compliance Certificate):** A form to be signed by a corporate officer certifying compliance with the agreement's covenants[480](index=480&type=chunk) - **Exhibit C (Assignment and Acceptance):** The legal form used when a Lender sells or assigns its commitment to another financial institution[484](index=484&type=chunk) - **Exhibit D (Release Request):** The form used by the Borrower to request the release of liens on specific collateral, typically for a sale or transfer to a Permitted Facility[500](index=500&type=chunk)
World Acceptance (WRLD) - 2025 Q4 - Annual Report
2025-05-22 20:10
Part I [Business](index=6&type=section&id=Item%201.%20Business) World Acceptance Corporation operates **1,024 branches** in **16 states**, providing small and medium-term installment loans and related services to individuals with limited credit access - The company operates **1,024 branches** in **16 states**, primarily serving individuals with limited access to consumer credit[13](index=13&type=chunk) Loan Products Overview (Fiscal 2025) | Loan Type | Minimum Origination | Maximum Origination | Minimum Term (Months) | Maximum Term (Months) | | :--- | :--- | :--- | :--- | :--- | | Small loans | $150 | $2,450 | 4 | 33 | | Large loans | $2,500 | $25,200 | 9 | 60 | | Tax advance loans | $500 | $7,000 | 8 | 35 | - Interest and fee income from installment loans constituted **82.3% of total revenues** in fiscal 2025[20](index=20&type=chunk) Gross Loans Receivable by State (as of March 31, 2025) | State | Percentage of Total | Gross Loan Balance (thousands) | | :--- | :--- | :--- | | Texas | 21% | $258,524 | | Georgia | 12% | $140,116 | | Illinois | 10% | $125,219 | | Tennessee | 8% | $101,711 | | South Carolina | 8% | $98,424 | | Other | 41% | $501,762 | | **Total** | **100%** | **$1,225,636** | - The company's tax preparation services generated approximately **$37.2 million in net revenue** in fiscal 2025, preparing around **82,000 returns**[27](index=27&type=chunk) - As of March 31, 2025, the company employed **2,838 people**, with **85.44% identifying as female**[49](index=49&type=chunk)[51](index=51&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from adverse regulatory changes like interest rate caps, credit performance issues, intense competition, cybersecurity threats, and restrictive debt covenants - Federal legislative or regulatory actions, particularly the imposition of a national **36% annualized credit rate cap**, would almost certainly eliminate the company's ability to continue its current operations[69](index=69&type=chunk)[119](index=119&type=chunk) - The company's lending activities are exposed to **high borrower default risk**, as its customers generally have limited access to credit and are more susceptible to adverse economic conditions like unemployment and inflation[76](index=76&type=chunk)[77](index=77&type=chunk) - A cyberattack or data breach could lead to significant financial losses, regulatory penalties, litigation, and reputational damage due to the large volume of confidential customer information processed and stored[90](index=90&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - The company depends substantially on its **revolving credit agreement ($580.0 million facility)** for liquidity. The agreement contains restrictive covenants that could limit its ability to obtain additional financing, pay dividends, or make strategic acquisitions[104](index=104&type=chunk)[108](index=108&type=chunk)[111](index=111&type=chunk) - A significant concentration of revenue in certain states, such as **Texas (21% of gross loans)**, increases exposure to regional economic downturns or adverse state-level regulatory changes[30](index=30&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) - The Consumer Financial Protection Bureau (CFPB) has the authority to regulate the company's activities. Although the CFPB withdrew its direct supervisory order in May 2025, future rulemaking or enforcement actions remain a significant risk[118](index=118&type=chunk)[207](index=207&type=chunk) [Unresolved Staff Comments](index=31&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[155](index=155&type=chunk) [Cybersecurity](index=31&type=section&id=Item%201C.%20Cybersecurity) The company's cybersecurity risk management program, based on NIST CSF, is overseen by the Audit and Compliance Committee, with no material incidents reported - The cybersecurity risk management program is designed and assessed based on the **NIST Cybersecurity Framework (NIST CSF)**[157](index=157&type=chunk) - The Board of Directors, through its **Audit and Compliance Committee**, has primary oversight responsibility for cybersecurity matters[159](index=159&type=chunk)[163](index=163&type=chunk) - The company is not aware of any cybersecurity incidents that have materially affected or are reasonably likely to materially affect its business, strategy, or financial condition[162](index=162&type=chunk) [Properties](index=33&type=section&id=Item%202.%20Properties) The company leases its Greenville, SC headquarters and **1,024 branch locations**, typically averaging **1,600 square feet**, under three-to-five-year terms - The company leases its corporate headquarters in Greenville, SC, and most of its **1,024 branch locations**[167](index=167&type=chunk)[168](index=168&type=chunk) [Legal Proceedings](index=33&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal actions but does not anticipate any reasonably possible losses from pending matters to be material to its financial condition - The company is involved in litigation in the normal course of business but does not currently believe any pending matters will result in material losses[169](index=169&type=chunk)[172](index=172&type=chunk) [Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - None[173](index=173&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=34&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ (WRLD), has not paid dividends since 1989, and actively repurchases shares, including **225,985 shares** for **$32.0 million** in Q4 FY2025 - The company has not declared or paid any cash dividends on its common stock since April 1989, instead retaining earnings for business use and share repurchases[176](index=176&type=chunk) - On April 30, 2025, the Board of Directors approved a new share repurchase program authorizing the company to repurchase up to **$20.0 million** of its outstanding common stock[178](index=178&type=chunk) Issuer Purchases of Equity Securities (Quarter Ended March 31, 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | January 2025 | 42,849 | $118.84 | | February 2025 | 183,136 | $146.93 | | March 2025 | — | — | | **Total** | **225,985** | **$141.60** | [[Reserved]](index=36&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income increased **16.0%** to **$89.7 million** in fiscal 2025 due to lower general and administrative expenses, despite a **1.5%** revenue decline, with liquidity supported by operations and a **$580.0 million** credit facility Key Operating Data (Years Ended March 31) | Metric | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Gross loans receivable | $1,225.6M | $1,277.1M | $1,390.0M | | Net charge-offs as % of avg. net loans | 17.5% | 17.7% | 23.7% | | Return on average equity | 21.0% | 19.1% | 5.8% | | Branches open (at period end) | 1,024 | 1,048 | 1,073 | - The company's loan demand is seasonal, with the highest demand in the **third fiscal quarter (Oct-Dec)** and the lowest demand and highest repayment in the **fourth fiscal quarter (Jan-Mar)**[31](index=31&type=chunk)[208](index=208&type=chunk) - The company's critical accounting policies, which involve significant management judgment, include the allowance for credit losses, share-based compensation, and income taxes[211](index=211&type=chunk) [Comparison of Fiscal 2025 Versus Fiscal 2024](index=37&type=section&id=Comparison%20of%20Fiscal%202025%20Versus%20Fiscal%202024) Net income increased **16.0%** to **$89.7 million** in fiscal 2025, driven by a **10.3%** decrease in general and administrative expenses, primarily from a **$18.5 million** stock-based compensation reversal, despite a **1.5%** revenue decline Financial Performance Comparison (FY 2025 vs. FY 2024) | Metric | FY 2025 | FY 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $89.7M | $77.3M | +16.0% | | Total Revenues | $564.8M | $573.2M | -1.5% | | Provision for Credit Losses | $169.2M | $157.0M | +7.8% | | G&A Expenses | $240.9M | $268.6M | -10.3% | | Interest Expense | $42.7M | $48.2M | -11.5% | - The significant decrease in personnel expense was mainly due to the reversal of **$18.5 million** in stock-based compensation for the **$20.45 Performance Shares** and **$3.5 million** for the **$16.35 Performance Shares**, as performance targets were deemed unlikely to be met or were partially forfeited[196](index=196&type=chunk) - The decrease in interest and fee income was primarily due to a **4.7% decrease in average net loans receivable** and a portfolio shift away from larger, lower-interest-rate loans[187](index=187&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by a **$580.0 million** revolving credit facility and **$300 million** in senior unsecured notes, with a **1.0:1.0 debt-to-equity ratio** and **$18.8 million** available for share repurchases under debt covenants - The company has a revolving credit facility with aggregate commitments of **$580.0 million**, of which **$316.7 million** was available for borrowing as of March 31, 2025[227](index=227&type=chunk)[228](index=228&type=chunk)[230](index=230&type=chunk) - During fiscal 2025, the company repurchased and extinguished **$89.0 million** of its **7.0% senior notes** on the open market, recognizing a **$1.0 million gain**[221](index=221&type=chunk)[223](index=223&type=chunk) - As of March 31, 2025, the company's **debt-to-equity ratio was 1.0 to 1.0**, with **$446.9 million in debt outstanding** and **$439.5 million in shareholders' equity**[235](index=235&type=chunk) - Debt covenants limit share repurchases. As of March 31, 2025, the company could repurchase approximately **$18.8 million** of shares under the terms of its debt facilities[225](index=225&type=chunk)[239](index=239&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate exposure on its **$262.5 million** variable-rate revolving credit facility, where a **1%** rate change impacts annual interest expense by **$2.6 million** - The company is exposed to interest rate risk on its revolving credit facility, which had an outstanding balance of **$262.5 million** at March 31, 2025[243](index=243&type=chunk) - A hypothetical **1% change in interest rates** would result in an approximate **$2.6 million change** in the company's annual interest expense[243](index=243&type=chunk) [Financial Statements and Supplementary Data](index=42&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal years 2023-2025, including balance sheets, statements of operations, equity, and cash flows, along with detailed notes on accounting policies and financial matters [Consolidated Financial Statements](index=45&type=section&id=Consolidated%20Financial%20Statements) As of March 31, 2025, total assets were **$1.01 billion**, liabilities **$568.1 million**, and equity **$439.5 million**, with **$564.8 million** in revenues and **$89.7 million** net income for the year Consolidated Balance Sheet Highlights (as of March 31) | Account | 2025 | 2024 | | :--- | :--- | :--- | | Total Assets | $1,007,627,647 | $1,056,351,043 | | Loans receivable, net | $812,968,685 | $847,440,309 | | Total Liabilities | $568,147,183 | $631,923,827 | | Total Shareholders' Equity | $439,480,464 | $424,427,216 | Consolidated Statement of Operations Highlights (Year Ended March 31) | Account | 2025 | 2024 | 2023 | | :--- | :--- | :--- | :--- | | Total Revenues | $564.8M | $573.2M | $616.5M | | Provision for credit losses | $169.2M | $157.0M | $259.5M | | Income before income taxes | $112.0M | $99.4M | $27.1M | | Net Income | $89.7M | $77.3M | $21.2M | | Diluted EPS | $16.30 | $13.19 | $3.60 | [Notes to Consolidated Financial Statements](index=51&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies, including the CECL model for credit losses, debt structure (e.g., **$580.0 million** revolving credit facility), and significant events like the **$18.5 million** stock-based compensation reversal in FY2025 - The allowance for credit losses is determined using a **CECL model** that pools loans by customer tenure and applies historical migration analysis to estimate expected losses[313](index=313&type=chunk)[315](index=315&type=chunk)[317](index=317&type=chunk) - The company's debt consists of a **$580.0 million senior revolving credit facility** and **7.0% senior unsecured notes due 2026**. Substantially all assets are pledged as collateral for the revolving credit facility[330](index=330&type=chunk)[332](index=332&type=chunk)[333](index=333&type=chunk) - During Q2 of fiscal 2025, the company reversed **$18.5 million** in previously recognized stock-based compensation expense because the performance target for the **'$20.45 Performance Shares'** was determined to be no longer probable of achievement[371](index=371&type=chunk) - The company acquired **6 loan portfolios** through asset purchases for a total price of **$18.9 million** in fiscal 2025[393](index=393&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=91&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no disagreements with its independent registered public accounting firm on any accounting, financial disclosure, or auditing matters - The Company had no disagreements on accounting or financial disclosure matters with its independent registered public accounting firm[435](index=435&type=chunk) [Controls and Procedures](index=91&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of March 31, 2025, with no material changes during the fourth quarter - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[436](index=436&type=chunk) - Based on an assessment using the **COSO framework**, management concluded that the company's internal control over financial reporting was effective as of March 31, 2025[439](index=439&type=chunk)[440](index=440&type=chunk) - There were no changes to internal control over financial reporting during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[437](index=437&type=chunk) [Other Information](index=93&type=section&id=Item%209B.%20Other%20Information) No directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q4 fiscal 2025 - No directors or officers adopted, modified, or terminated any **Rule 10b5-1** or non-Rule 10b5-1 trading arrangements during the quarter ended March 31, 2025[444](index=444&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=93&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not Applicable[445](index=445&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=94&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's 2025 Proxy Statement - Required information is incorporated by reference from the company's Proxy Statement[446](index=446&type=chunk) [Executive Compensation](index=94&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the company's 2025 Proxy Statement - Required information is incorporated by reference from the company's Proxy Statement[447](index=447&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=94&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of beneficial owners, management, and equity compensation plans is incorporated by reference from the company's 2025 Proxy Statement - Required information is incorporated by reference from the company's Proxy Statement[448](index=448&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=94&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related party transactions, and director independence is incorporated by reference from the company's 2025 Proxy Statement - Required information is incorporated by reference from the company's Proxy Statement[449](index=449&type=chunk) [Principal Accountant Fees and Services](index=94&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's 2025 Proxy Statement - Required information is incorporated by reference from the company's Proxy Statement[450](index=450&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=95&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements, independent auditor reports, and all exhibits filed as part of the Form 10-K, with schedules omitted as information is elsewhere - This item lists the financial statements and exhibits filed with the annual report. The Exhibit Index begins on page 96[451](index=451&type=chunk)[453](index=453&type=chunk) [Form 10-K Summary](index=95&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary is provided - None[456](index=456&type=chunk)
World Acceptance: Litmus Test For The State Of The Economy
Seeking Alpha· 2025-05-05 08:25
Group 1 - The focus is on fundamental analysis and disciplined market research to identify investment opportunities [1] - Emphasis on small cap companies with strong fundamentals and growth potential, large cap companies facing temporary setbacks, and stable companies with solid dividend yields [1] Group 2 - No stock or derivative positions in mentioned companies, indicating an unbiased perspective [2] - The article expresses personal opinions and is not influenced by compensation from companies mentioned [2]
World Acceptance (WRLD) Upgraded to Buy: Here's Why
ZACKS· 2025-05-02 17:05
Core Viewpoint - World Acceptance (WRLD) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [4]. Company Performance and Outlook - The upgrade reflects an improvement in World Acceptance's underlying business, suggesting that investors may push the stock price higher due to this positive trend [5][10]. - For the fiscal year ending March 2026, World Acceptance is expected to earn $14.91 per share, which represents a decrease of 8.5% from the previous year, although estimates have increased by 1.6% over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7][9]. - The upgrade to Zacks Rank 2 places World Acceptance in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].
World Acceptance (WRLD) - 2025 Q4 - Earnings Call Transcript
2025-04-29 18:40
Financial Data and Key Metrics Changes - The company ended the fiscal year with an outstanding letter of $1.22 billion, representing a 4% decrease year over year, while the customer base increased by 3.5%, marking the first year of customer growth since fiscal year 2022 [3][4] - The average balance per customer decreased by 7.3% year over year, following a 7.1% decrease last year, indicating efforts to improve gross yields which improved by over 100 basis points this year [4][6] - The annualized charge-off rate was reported at 17.5%, with expectations of a natural reduction of 125 to 150 basis points with normal portfolio growth [4][5] Business Line Data and Key Metrics Changes - Non-refinance loan volume increased by 12.6% year over year, following a 10% increase last year, while refinance loan volume improved slightly by 3% year over year [7][10] - The company experienced a 25% increase in tax return revenue during the fourth quarter, contributing nearly $7 million to earnings [6] - The portfolio composition is shifting towards smaller loans, with large loans decreasing from nearly 60% two years ago to 48% at the end of fiscal year 2025 [11][12] Market Data and Key Metrics Changes - The company reported a significant increase in the number of new customers, with a 36% increase in customers with less than six months of tenure compared to December 2023, amounting to a $32 million increase [5][6] - The average balance for new loans in April 2026 was reported to be 24% lower than in April 2023, while gross yields were 800 basis points higher [9][10] Company Strategy and Development Direction - The company is focusing on returning to its roots by emphasizing small loans, which historically made up a larger portion of the portfolio [11][18] - A new credit card product is being piloted internally, with plans for wider rollout later in the fiscal year, aimed at better aligning yield with risk and expanding market reach [12][13] Management's Comments on Operating Environment and Future Outlook - Management noted no significant changes in consumer behavior despite external economic factors, indicating stability in demand and payment patterns [17][18] - The company is optimistic about the impact of improved training and loan servicing management on delinquency rates moving forward [6][12] Other Important Information - The company has repurchased over $115 million of bonds, with plans for more repurchases depending on negotiations with banks and bond limitations [26][27] Q&A Session Summary Question: Has there been a shift in consumer behavior since mid to late February? - Management indicated no significant increase or decrease in demand or changes in payments [17] Question: What is driving the shift to smaller loans? - The shift is attributed to a strategic return to focusing on small loan customers rather than changes in consumer demand [18] Question: What is driving the strong revenue growth in tax preparation? - Revenue growth is driven by market research, increased pricing, and sustained demand during the tax season [20]
World Acceptance (WRLD) - 2025 Q4 - Earnings Call Transcript
2025-04-29 15:02
Financial Data and Key Metrics Changes - The company ended the fiscal year with an outstanding letter of $1,220,000,000, representing a 4% decrease year over year, while the customer base increased by 3.5%, marking the first year of customer growth since fiscal year 2022 [3][4] - The average balance per customer decreased by 7.3% year over year, following a 7.1% decrease in the previous year [4] - The fourth quarter EPS benefited from a $2,800,000 after-tax accrual release of share-based compensation expense, equating to approximately $0.38 per share [7] Business Line Data and Key Metrics Changes - Non-refinance loan volume increased by 12.6% year over year, following a 10% increase in the previous year, while maintaining high credit quality and low first payment default rates [8] - Refinance loan volume improved slightly by 3% year over year, with a temporary dip in March that rebounded in April [10] - The portfolio composition shifted towards small loans, with large loans decreasing from nearly 60% two years ago to 48% at the end of fiscal year 2025 [11][12] Market Data and Key Metrics Changes - The company experienced a 25% increase in tax return revenue, amounting to nearly $7,000,000 in the fourth quarter [7] - The approval rates for new customers increased by around 50% compared to the third and fourth quarters of fiscal year 2024 [12] Company Strategy and Development Direction - The company is focusing on returning to its roots by emphasizing small loans, which historically made up a larger portion of its portfolio [11][17] - A new credit card product is being piloted internally, with plans for wider testing and eventual customer offering later in the fiscal year [12][13] - The strategy aims to align yield with risk, manage both installment and revolving credit, and expand market reach [13] Management's Comments on Operating Environment and Future Outlook - Management has not observed significant changes in consumer demand or payment behavior despite external economic factors [16] - There is optimism regarding the impact of improved training and loan servicing management on delinquency rates [6] - The company expects natural reductions in annualized charge-off rates with normal portfolio growth [4] Other Important Information - The company has repurchased over $115,000,000 of bonds, with plans for more repurchases depending on negotiations with banks [24][25] Q&A Session Summary Question: Any shift in consumer behavior since mid to late February? - Management indicated no significant increase or decrease in demand or change in payments [16] Question: Is the shift to smaller loans due to underwriting or consumer demand? - The shift is primarily a return to the company's historical focus on small loans rather than a change in consumer demand [17][18] Question: What is driving the strong revenue growth in tax preparation? - The growth is attributed to market research, increased pricing, and minimal reduction in demand during tax season [19]