World Acceptance (US:WRLD)2021-06-02 21:22Branch Operations - As of March 31, 2021, the company operated 1,205 branches across 16 states, with over 100 branches in Texas, Georgia, Tennessee, and South Carolina[21] - In fiscal 2021, the company merged 38 branches due to insufficient returns or efficiency reasons, with no new branches opened or purchased[21] - The company plans to potentially open or acquire new branches in fiscal 2022, depending on market conditions and regulatory approvals[21] - The company’s expansion is contingent upon identifying attractive locations and hiring suitable personnel for new branches[22] - The Company merged 38 branches during fiscal 2021 due to insufficient returns, with potential for further mergers based on profitability[21] Loan Products and Performance - Consumer installment loans accounted for 85.8% of total revenues in fiscal 2021, with average annual percentage rates at 51.8%[23][25] - The company’s gross loans receivable totaled approximately $1.1 billion, with 36.5% of loans having an annual percentage rate of 36% or lower[26] - The company’s loan products include small loans ranging from $250 to $2,450 and large loans from $2,500 to $21,400, with terms generally from 4 to 48 months[24] - As of March 31, 2021, the total number of loans was 742,731 with an average gross loan balance of $1,487, resulting in a total gross loan balance of $1,104,746 thousand[34] - For fiscal 2021, 69.2% of the Company's loan originations were refinancings of existing loans, compared to 66.9% in 2020 and 66.2% in 2019[38] - Approximately 14.7% of the Company's loans in fiscal 2021 were generated through the origination of new loans to previous customers, up from 12.7% in 2020 and 12.5% in 2019[40] - The average annual percentage rate of the company’s portfolio was 51.8% as of March 31, 2021, with specific allowable interest and fees varying by state[25] - Interest and fee income from consumer installment loans is standardized, with terms generally ranging from 4 to 18 months[23] Customer Demand and Market Conditions - The company has experienced declines in customer demand due to reduced marketing and the impact of federal economic stimulus[19] - The Company experienced significant seasonal fluctuations in operating results, with the highest loan demand generally occurring from October through December[35] - The Company allows refinancing of delinquent loans on a case-by-case basis, with such refinancings representing 1.5% of the Company's loan volume in fiscal 2021[39] - Loan demand peaks from October to December, while the lowest demand occurs from January to March, indicating significant seasonal fluctuations[35] Regulatory Environment - The company is subject to extensive regulation, supervision, and licensing under various federal and state statutes[60] - Texas regulation requires approval for the acquisition of more than 10% of the voting or common stock of a consumer finance company[62] - The Dodd-Frank Act established the CFPB, which has significant regulatory authority over consumer financial products, potentially impacting the Company's operations[70] - Legislative proposals for a federal usury cap could materially affect the Company's ability to operate profitably if enacted[71] - The Company is subject to various state and federal regulations that govern its lending operations, including the Truth in Lending Act and the Equal Credit Opportunity Act[68] - Proposed federal legislation could impose a national 36% annualized credit rate cap, which would severely impact the Company's ability to operate profitably[71] - Regulatory changes could materially affect the Company's lending practices, operations, profitability, or prospects[67] Employee and Workforce Management - As of March 31, 2021, the company employed 3,175 full and part-time employees across its sixteen-state footprint[53] - The gender demographics of the team members as of March 31, 2021, were 85.0% female and 14.9% male[55] - The Company has invested in upgraded systems and processes for workforce management to meet changing business needs[52] - The Company maintains strong relations with its employees, with the majority of field leadership promoted from within[52] - The company provides a comprehensive suite of benefits, including healthcare, 401(k) plans, and paid time off[55] Insurance and Additional Services - The captive insurance subsidiary reinsured about 10.8% of the credit insurance sold, contributing approximately $1.5 million to total revenue in fiscal 2021[27] - The Company offers automobile club memberships in 13 states, generating commission income without administrative responsibilities[31] - The Company does not perfect its security interest in collateral for smaller loans, relying instead on non-filing insurance for loss reimbursement[30] - The Company’s captive insurance subsidiary is regulated by the insurance authorities of the Turks and Caicos Islands[66] - State insurance regulations require that insurance agents be licensed and govern the commissions paid in connection with credit insurance sales[65] Advertising and Marketing - Advertising expenses as a percent of revenue were approximately 3.3%, 4.1%, and 4.1% in fiscal 2021, 2020, and 2019, respectively[45] COVID-19 Response - The Company has implemented flexible branch hours and a digital loan application process in response to COVID-19[56] - The Company has implemented enhanced safety measures in branches due to COVID-19, affecting customer demand and operational trends[18] Financial Performance - The Company prepared approximately 77,000, 84,000, and 91,000 tax returns in fiscal years 2021, 2020, and 2019, respectively, generating net revenue of approximately $18.1 million, $20.9 million, and $21.5 million during the same periods[32] - The total gross loans receivable amounted to $1,104,746,261, with 36.5% of loans having an interest rate below 36%[26]