World Acceptance (US:WRLD)2025-05-22 20:10Part I Business 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 credit13 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 202520 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 returns27 - As of March 31, 2025, the company employed 2,838 people, with 85.44% identifying as female4951 Risk Factors 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 operations69119 - 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 inflation7677 - 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 stored909394 - 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 acquisitions104108111 - 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 changes308081 - 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 risk118207 Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None155 Cybersecurity 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 - The Board of Directors, through its Audit and Compliance Committee, has primary oversight responsibility for cybersecurity matters159163 - 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 condition162 Properties 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 locations167168 Legal Proceedings 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 losses169172 Mine Safety Disclosures This item is not applicable to the company - None173 Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 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 repurchases176 - 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 stock178 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] This item is reserved Management's Discussion and Analysis of Financial Condition and Results of Operations 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)31208 - The company's critical accounting policies, which involve significant management judgment, include the allowance for credit losses, share-based compensation, and income taxes211 Comparison of Fiscal 2025 Versus Fiscal 2024 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 forfeited196 - 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 loans187 Liquidity and Capital Resources 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, 2025227228230 - 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 gain221223 - 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' equity235 - 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 facilities225239 Quantitative and Qualitative Disclosures About Market Risk 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, 2025243 - A hypothetical 1% change in interest rates would result in an approximate $2.6 million change in the company's annual interest expense243 Financial Statements and Supplementary Data 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 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 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 losses313315317 - 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 facility330332333 - 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 achievement371 - The company acquired 6 loan portfolios through asset purchases for a total price of $18.9 million in fiscal 2025393 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 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 firm435 Controls and Procedures 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, 2025436 - 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, 2025439440 - 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 controls437 Other Information 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, 2025444 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not Applicable445 Part III Directors, Executive Officers and Corporate Governance 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 Statement446 Executive Compensation 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 Statement447 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 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 Statement448 Certain Relationships and Related Transactions, and Director Independence 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 Statement449 Principal Accountant Fees and Services 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 Statement450 Part IV Exhibits and Financial Statement Schedules 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 96451453 Form 10-K Summary No Form 10-K summary is provided - None456