World Acceptance (US:WRLD)2020-10-22 20:41Financial Data and Key Metrics Changes - The overall loan book is down approximately 20% year-over-year, but there was a sequential uptick in volumes observed during the quarter [10][11] - The 90-day past due delinquency decreased by $11.8 million during the quarter, contributing to a decrease in the allowance from 4% to 2.8% [23][24] - The 60-day past due contractual delinquency was reported at 6.2% in September, down from 7.9% in June and 8% in September of the previous year [21] Business Line Data and Key Metrics Changes - Former customer returns increased by about 2% sequentially, with September ending approximately 19% higher than the previous year [8] - New customer applications were down around 47% year-over-year, but there was a gradual increase in application volume throughout Q1 and Q2 [10] - The small loan portfolio (loans under $2,500) decreased from 66% at September last year to a little over 60% at September of this year [38] Market Data and Key Metrics Changes - The company is experiencing a shift in its portfolio towards more tenured and lower-risk customers, which has positively impacted credit performance [15][16] - The overall market for portfolio acquisitions remains active, with the company seeing increased interest in acquisitions during the quarter [40][41] Company Strategy and Development Direction - The company emphasizes portfolio acquisitions as part of its long-term growth strategy and is focused on prudent marketing investments to manage customer acquisition costs [12][41] - The management is cautious about returning to previous levels of new customer volume until acquisition costs normalize [12] Management's Comments on Operating Environment and Future Outlook - Management noted that future performance is contingent on potential stimulus measures and overall unemployment rates [11] - The company has increased provisions for unforeseen risks, indicating a conservative approach to future losses [17] Other Important Information - The company has $26 million available for share repurchases under its debt agreement, which can increase to 50% of consolidated income [30] - The diluted share count was impacted by the higher share price, which increased the number of dilutive shares [27] Q&A Session Summary Question: Loan growth and demand outlook - Management observed an uptick in demand, with former customer returns increasing and new customer applications gradually returning to normal levels [8][10] Question: Delinquencies and charge-offs - The portfolio has shifted towards lower-risk customers, and management expects charge-offs to reflect the current macroeconomic backdrop if no further stimulus is provided [13][16] Question: 10-Q amendment and past due loans - The amendment was due to a shift in internal reporting methods, with no impact on provisioning numbers [20] Question: Share repurchase timing and impact - Share repurchases were weighted towards the end of the quarter, and the diluted share count will fluctuate based on share price [27][28] Question: Future charge-off rates - Management indicated that if the portfolio mix remains the same, a charge-off rate of 14.5% is a reasonable estimate for modeling [32] Question: Market competition and pricing power - The decrease in yield is attributed to a shift in customer mix, with fewer new customers being brought in [38] Question: Portfolio acquisition opportunities - There is still a market for portfolio acquisitions, with increased interest observed in the current quarter [40][41]