World Acceptance (US:WRLD)2024-07-26 16:34Financial Data and Key Metrics Changes - In Q1 2025, the company experienced moderate growth in its customer base of around 50 basis points, but the average loan balance declined slightly, with a year-over-year decrease of almost 7% from June 30, 2023 [3][46] - The average loan balance has decreased over 11% from the peak average loan size at the end of fiscal year 2023 [3] - Gross yields improved across all customer types, and the company reported a 9.9% reduction in G&A expenses compared to the first quarter last year [46][48] Business Line Data and Key Metrics Changes - For returning former customers, the average balance of originations decreased by 13%, while the average yield significantly increased, leading to the lowest first pay default rates among non-refinance originations [46][47] - New customer loan volume was down about 8% in dollars year-over-year, but the decline in the number of new customers was only 3.5% [17] - Refinanced loan volume in dollars decreased by 5% year-over-year, while the number of refinances increased by 6% [18] Market Data and Key Metrics Changes - The company noted an increase in the number of former customers, reaching the highest number in July in at least 10 years, with lower average balances and higher yields [66] - The expected loss rates have decreased compared to the previous year, contributing to improved credit quality [41][73] Company Strategy and Development Direction - The company is focused on achieving modest, single-digit growth with high credit quality through specific strategies for each customer type [46] - Management emphasized a low total cost of acquisition for performing customers and plans to continue investing wisely [5][12] - The company is also in the process of creating a warehouse facility as a first step in the securitization process, expected to roll out in the fiscal third quarter [63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the long-term incentive plan targets of $16.35 and $20.45 earnings per share, contingent on growth, yields, and delinquency rates [19][10] - The company expects yields and delinquency trends to convert into revenue and income trends, with a focus on improving portfolio performance [37][46] Other Important Information - The company is cooperating with federal supervision as part of a new regulatory framework, which is a learning process for both the company and the supervising body [14][61] - The company has adjusted its acquisition channels to increase approval rates while minimizing losses [17] Q&A Session Summary Question: Clarification on earnings accrual for the year - Management confirmed they are still accruing for $20.45 of earnings for the year, with growth, yields, and delinquency being key factors [10] Question: Expected loss rates and their impact - Management acknowledged that expected loss rates increased faster this year compared to last year, but they remain lower than the previous year [41] Question: Regulatory environment impact - Management indicated that there have been no significant changes in the regulatory environment that have impacted business operations [81] Question: Status of securitization of loans - Management confirmed they are in the process of creating a warehouse facility as the first step in the securitization process [63]